Key takeaway

In 2025, the company continued to optimize product performance and structure, sustaining steady revenue growth. Despite significant investments across multiple product lines, the core business maintained robust profitability. Due to higher upfront expenses driven by the transformation and upgrading strategy, non-GAAP net profit declined year-over-year. However, net profit showed substantial year-on-year growth, supported by the scale of investment income from 1X. As a key domestic supplier in the 1X supply chain, the company holds a distinct strategic positioning advantage. Furthermore, the company fully embraces embodied AI, driving the R&D and commercialization of multiple product lines such as smart robotic lawn mowers, quadrupedal robotic dogs, and humanoid robots. We are optimistic about the company's ability to translate its substantial investments into high earnings growth in the future.

Event

In 2025, the company reported an operating revenue of RMB 1.018 billion, representing a year-on-year increase of 4.88%; net profit attributable to the parent company reached RMB 173 million, up 166.85% year-on-year; while non-GAAP net profit attributable to the parent company stood at RMB 41 million, down 22.04% year-on-year.

Looking at Q4 alone, the company achieved operating revenue of RMB 369 million in Q4 2025, a year-on-year increase of 5.65%; net profit attributable to shareholders was RMB 150 million, a year-on-year increase of 505.66%; non-GAAP net profit attributable to shareholders was RMB 21 million, a year-on-year increase of 15.00%.

Quick Take

The main business maintained steady growth on the revenue side, with high investments under the transformation and upgrading strategy.

The company's revenue maintained steady growth throughout 2025. In 2025, the company achieved operating revenue of RMB 1.018 billion, representing a year-on-year increase of 4.88%. Throughout the year, the company continued to optimize product performance and structure while actively expanding into European and American markets, maintaining stable revenue performance. In terms of revenue by business segment, the main business of garden tools generated revenue of RMB 972 million in 2025, representing a year-on-year increase of 4.32%, while other businesses generated revenue of RMB 46 million, reflecting an 18.48% year-on-year growth.

The profitability of the core business continued to grow steadily, while upfront investment costs remained relatively high amid the push for transformation and upgrading strategies. In terms of profitability, the company achieved a gross margin of 29.48% in 2025, representing a year-on-year increase of 3.24 percentage points. The gross margin for garden tools reached 28.99%, up 2.46 percentage points year-on-year. The company's smart manufacturing center at its headquarters and the production base of its Thai subsidiary were successfully completed and began operations. This enabled comprehensive digital transformation and intelligent upgrades across all production lines, resulting in significant improvements in profitability. From an expense perspective, the company's operating expense ratio for 2025 was 27.38%, representing an 8.09 percentage points increase year-over-year. Specifically, the selling, administrative, R&D, and financing expense ratios were 4.24%, 11.44%, 12.02%, and -0.31% respectively, with corresponding year-over-year increases of 0.33, 3.10, 4.54, and 0.12 percentage points. The absolute values of administrative and R&D expenses increased significantly, rising by 43.93% and 68.47% year-on-year, respectively. This was primarily due to the company's multiple business lines and corresponding subsidiaries (Gaoke, Huazhijian, Zhike) still being in the investment phase and rapid expansion period, leading to higher initial costs.

In terms of profitability, the company reported a net profit attributable to shareholders of RMB 173 million in 2025, representing a year-on-year increase of 166.85%, with a corresponding net profit margin of 16.95%, up 10.29 percentage points year-on-year. The adjusted net profit attributable to shareholders (excluding non-recurring gains and losses) was RMB 41 million, down 22.04% year-on-year, with a corresponding adjusted net profit margin of 3.99%, a decrease of 1.38 percentage points year-on-year. Amidst the backdrop of investment pressure, the company's net profit margin after deducting non-recurring items remained largely stable year-on-year. The significant increase in net profit attributable to shareholders was primarily driven by a substantial rise in non-recurring gains and losses, with the main contributor being the investment income generated from fair value changes in the overseas AI robot company 1X. The related income amounted to RMB 166 million in 2025, while the investment income from fair value changes in 2024 was RMB 9 million.

Transitioning from traditional garden machinery to intelligent manufacturing, the company has been continuously advancing in the field of intelligent robot since 2025.

Currently, the company has gradually established an intelligent robot R&D team specializing in software/hardware and complete systems/key components across various fields, including smart lawnmowers, quadruped robotic dogs, and AI-related robot industries. We are optimistic that the company's strategic transformation toward full-scale intelligent integration will progressively translate into improved earnings performance.

(1) Smart lawn mower robot: an extension of the core business and the first milestone in intelligent transformation. In 2025, the company's smart robotic lawn mowers received small-batch orders. In early 2026, Shanghai Zhongjian Gaoke unveiled its smart robotic lawn mower brand GOALKER and product lineup at the Consumer Electronics Show (CES) in Las Vegas, USA.

(2) Quadruped robotic dog: The product is making strides in both B2B and B2C sectors, with strong potential for large-scale adoption. From the product perspective: ① B2B: Currently, the company is actively expanding the application scenarios of Jiangsu Jianmi Lingrui P1 quadruped robots (including extended applications in public safety) and advancing relevant business collaborations. ② B2C: Shenzhen Huazhijian was established in January 2025, with product plans currently under review and refinement; in August 2025, the wholly-owned subsidiary Shanghai Huazhijian will be established to launch new intelligent ecosystem products. In December 2025, the company's board of directors approved the preliminary R&D and related work for the "Smart Boutique" project. This initiative involves collaboration with an industry-leading terminal equipment provider to jointly analyze application scenarios and define product lines for quadruped robots and smart robots. The partnership will also focus on co-developing software systems for these robots, while forming a dedicated team for joint R&D, supply chain management, and market services to drive product development and commercialization efforts. From the production perspective: In June 2025, the Zhongjian Zhike Shanghai Pilot Center was officially launched, and the first intelligent production line project was delivered, laying the foundation for accelerating the commercialization of the company's AI and robot innovations.

(3) Humanoid robot: Continue to monitor the progress of 1X's production scaling, while remaining optimistic about the company's collaboration with other overseas manufacturers. In March 2025, at the NVIDIA GTC conference, 1X demonstrated the humanoid robot Neo Gamma's ability to perform basic tasks in a living room, including vacuuming and watering plants under partial teleoperation, as it prepares for home deployment.

Investment recommendation

We assess that the company is poised to enter a phase of simultaneous high investment and high growth. Excluding the impact of factors such as changes in the fair value of external investments on non-recurring gains and losses, we project the company's net profit attributable to shareholders to reach RMB 112 million, RMB 183 million, and RMB 279 million in 2026, 2027, and 2028, respectively, representing year-on-year growth rates of -35.24%, 63.87%, and 52.16%. This corresponds to PE multiples of 148.05x, 90.28x, and 59.31x for 2026-2028, respectively. We maintain "Buy" rating.

Risks:

1. International trade friction risk: the international environment is highly complex, global economy faces multiple uncertainties, and global industrial and supply chain stability is under pressure, increasing uncertainty in the global economic environment. The company will continue to monitor global market changes, strengthen business judgment, enhance planning and management, and consolidate its international position.

2) Exchange rate fluctuation risk: The company's export revenue accounts for over 90% of its current core business revenue, representing a significant proportion. The company's export revenue is primarily settled in foreign currencies such as US dollars and euros, and exchange rate fluctuations significantly impact the selling price of the company's products as well as foreign exchange gains and losses. As the company's business scale expands in the future, its holdings of foreign currency assets (including cash equivalents and accounts receivable) are expected to increase continuously. Should unfavorable exchange rate fluctuations occur, the company may incur foreign exchange losses, adversely affecting its financial performance.

3) Market fluctuation risk: The company's products are currently sold primarily in Europe, Australia, the United States, and other regions/countries. During the reporting period, the company's export revenue accounted for over 90% of its total operating revenue. Overseas sales represent a significant portion of the company's income and serve as the primary source of both revenue and profit, exerting a substantial influence on the company's financial performance. If there are significant changes in overseas market demand—such as an economic downturn in major consumer regions and reduced market demand—this will substantially impact the company's operational performance.

4) New business expansion risk: The company has ventured into the field of artificial intelligence robot, which is currently in the investment phase and has not yet contributed to the company's financial performance. It may face various uncertainties, including industry development trends, entry standards of potential or prospective partners, the expertise of the management team, technological R&D progress, and changes in external market conditions. Regarding progress, there is considerable uncertainty in the technical solutions for related products, the progress of capacity investment and construction, the pace of mass production, and the production scale.