Key takeaway

The company's automotive air intake system continues to scale up and the newly consolidated Anhui Kaizheng provides incremental contributions, driving sustained high revenue growth. However, factors such as the consolidation of low-margin businesses and annual price reductions from new energy customers are putting short-term pressure on profitability. Looking ahead, while consolidating its core air intake system business, the company is entering the interior parts, overseas manufacturing, and automotive instrument sectors through acquisitions of Kaizheng, PLASSEIN, and Indonesia PT.OEM, and is also deploying new PEEK materials targeting embodied intelligence and other emerging tracks. We suggest monitoring the industrialization progress of the company's new PEEK materials and the ramp-up of overseas production capacity to position for medium-to-long-term growth potential.

Event

The company released its 2025 annual report and 2026 first quarter report. In 2025, it achieved revenue of RMB1.14bn, up 31.73% YoY; net profit attributable to shareholders of the parent company was RMB136mn, up 4.07% YoY; and recurring net profit attributable to shareholders of the parent company was RMB124mn, up 3.91% YoY. In 1Q26, it achieved revenue of RMB291mn, up 35.17% YoY; net profit attributable to shareholders of the parent company was RMB27mn, down 19.55% YoY; and recurring net profit attributable to shareholders of the parent company was RMB26mn, down 18.89% YoY.

Quick Take

Revenue sustains high growth, customer structure optimized, and income diversified. Breaking down 2025 full-year revenue by product: revenue from automotive engine intake and exhaust system parts was RMB670mn (up 26.34%), motorcycle parts revenue was RMB335mn (up 19.4%), and newly added automotive interior and exterior trim parts revenue was RMB71mn. The growth momentum mainly came from two sources: first, continued scaling up by core customers in the automotive and motorcycle air intake system sector; second, the revenue contribution from the consolidation of Anhui Kaizheng (automotive interior and exterior trim parts), which was acquired in 2025. Meanwhile, the customer structure is becoming more decentralized, with the concentration ratio of the top five customers declining from 59.46% in 2024 to 46.83%. The revenue characteristics in 1Q26 continued the high-growth inertia.

Gross margin under short-term pressure, overall expenses manageable. The gross margin in 2025 was 29.07% (down 3.46 pcts YoY), and 22.94% in 1Q26; the net profit margin was 11.97% in 2025 (down 3.18 pcts YoY), and 8.62% in 1Q26. We attribute the fluctuation in the company's gross margin in 2025 mainly to: ① the consolidation of the low-margin automotive interior and exterior trim parts business (with a gross margin of 10.59% in 2025); ② the full-year 2025 gross margin for automotive products (26.65%) being lower than that for motorcycle products (31.37%), while its revenue growth outpaced the motorcycle business; and ③ higher direct material costs and annual price reduction pressure from automotive customers (extending into 1Q26). Gross margin continued to face pressure in 1Q26, as cost growth (+54%) significantly outpaced revenue growth (+35%). On the expense side, share-based payment expenses (RMB8.71mn) were a major factor affecting profit in 2025. After adjusting for this, net profit attributable to shareholders of the parent company grew by 10.71% YoY.

Actively pursuing strategic M&A to expand product categories and advance global deployment. In 2025, the company took the lead with a strategic acquisition of Kaizheng, entering the automotive interior trim parts sector. The company has long-standing ties with mainstream automakers such as Geely, GAC, and BYD in its core business, providing strong channel synergy. Following the acquisition of Kaizheng, it can now recommend interior trim products to customers simultaneously, achieving horizontal category expansion. Subsequently, the company consolidated Malaysia-based PLASSEIN into its reporting scope. In 1Q26, the company announced plans to acquire a 75% stake in Indonesia's PT. OEM, marking its entry into the automotive instrument panel sector and the Southeast Asian market.

Accelerating the industrialization of PEEK precision components and advancing global production capacity build-out. In August 2025, the company established a joint venture with DMI (whose actual controller is Professor Xu Dizhong), holding an 80% stake and contributing precision mold and precision manufacturing capabilities, taking the lead in deploying innovation and application of lightweight materials such as PEEK. Currently, the company is actively engaging potential customers in downstream sectors such as automotive, embodied intelligence, high-end equipment, and medical devices. It has initiated product sampling and testing verification for multiple interested clients while advancing business negotiations concurrently.

Investment recommendation: We estimate the company's 2026-2028 revenue at approximately RMB1.542bn/1.90bn/2.349bn, with net profit of RMB137mn/179mn/231mn, corresponding to P/E multiples of approximately 92x/70x/55x. Considering the potential earnings elasticity from its deployment in PEEK precision components, we assign an "Overweight" rating.

Sensitivity analysis:Under an optimistic scenario, the company's revenue grows rapidly. We estimate the company's 2026-2028 revenue at approximately RMB1.582bn/1.987bn/2.502bn, with net profit of approximately RMB152mn/202mn/265mn, corresponding to P/E multiples of approximately 83x/62x/48x. In the conservative scenario, the company's revenue grows slowly. Its operating revenue is estimated at approximately RMB1.522bn, RMB1.858bn, and RMB2.274bn for 2026-2028, with net profit of approximately RMB130mn, RMB170mn, and RMB218mn, corresponding to P/E multiples of about 97x, 74x, and 58x.

Risks: downstream customer sales fall short of expectations; profitability falls short of expectations; robotics business progress falls short of expectations.