Key takeaway

The company's embodied intelligence business mainly comprises two areas: “key robot components” and “complete robot manufacturing and scenario deployment.” Its technology roadmap extends along the “materials-components-complete robots-scenarios” value chain, ultimately using its proprietary brand to cover the full process from complete robot manufacturing to scenario implementation. The company's Shandong base is now operational, with ample potential orders from domestic and overseas customers. This year is expected to mark the beginning of rapid growth. The company plans to issue convertible bonds to raise RMB810mn for robot body manufacturing, software algorithms, and scenario development. Continuous iron casting has high technical barriers. Its materials offer advantages in performance and cost and are expected to replace sand castings and forged steel parts, with significant room for future growth. The company is a global leader. Since 2015, the company has vertically expanded along the value chain into machined parts, creating a dualgrowth engine of “continuous iron casting + machining.” Its products have achieved mass adoption in air compressors, hydraulic equipment, transmission systems, and other fields. Its clear first-mover advantage should support steady growth in its core business.

The company is an innovative enterprise specializing in fluid technology and embodied intelligence. Centered on its capabilities in key material R&D, precision manufacturing, and scenario deployment, it has built an end-to-end business system covering key materials and components for high-end equipment, complete robot manufacturing, and embodied intelligence scenario deployment, providing customers with one-stop system solutions. In 1Q-3Q26, the company's robotics business generated revenue of RMB173mn, up 1,173.73% YoY, with its revenue contribution rising to 15.20%. Revenue in 3Q alone approached RMB100mn, exceeding revenue for 1H and increasing sharply QoQ.

Continuous iron casting has high technical barriers, and the company is a global leader. Its dual-growth engine of continuous iron casting and machining supports steady growth in its core business . Continuous iron casting requires tight control over process parameters, demanding years of experience from producers. The company has mastered five core areas of know-how in continuous iron casting technology: raw material ratios, trace element addition, undercooling control, graphite sleeve structural design, and control of drawing speed and cadence. It ranks first in China and second globally by market share. Continuously cast iron offers performance and cost advantages, with significant potential for substitution. Since 2015, the company has vertically expanded along the value chain into machined components, establishing a one-stop service capability integrating continuous casting and machining. Its products have achieved mass adoption in air compressors, hydraulic equipment, transmission systems and other fields, giving the company a first-mover advantage. The company continues to broaden its product portfolio and extend into downstream machining to increase product value added.

The company made early inroads into robotics through financial investments. The company's embodied intelligence business primarily comprises two areas: key robot components, and complete robot manufacturing and scenario deployment. Its technology roadmap extends along the materials - components-complete robots-scenarios value chain, ultimately using its proprietary brand to cover the entire process from complete robot manufacturing to scenario implementation. The company's RV reducer components have achieved mass adoption by its core customer, Beijing Chietom. It is gradually expanding its process chain and developing other customers. Its harmonic reducer circular splines have passed validation at several leading domestic reducer manufacturers and entered mass adoption. The company's business model is not simple contract manufacturing. It sources supporting materials from leading domestic complete robot manufacturers, completes robot assembly and vertical model development, and then sells directly to downstream customers under its proprietary brand and through its own channels. The company's Shandong base is operational and has secured volume orders. It also has ample potential orders in other Chinese provinces and has achieved a breakthrough in Malaysia. This year is expected to mark the beginning of surging revenue and orders for its robotics business. The company plans to issue convertible bonds to raise RMB810mn for robot body manufacturing, software algorithms and scenario development.

Earnings forecast: We project the company's net profit attributable to shareholders of the parent company in 2026E-2028E to be RMB169mn, RMB253mn and RMB362mn, respectively. We assign "Buy" rating.

Risks: Risks associated with new business and technology development; cyclical fluctuations in downstream industries.