Zhejiang Shibao Company Limited (002703.SZ) has staged a strong comeback! From December 16 to 19, the stock surged by the daily limit for four consecutive trading sessions. As a long-time "active stock" in the A-share market, Zhejiang Shibao has frequently been in the spotlight in recent years. In 2022, its stock price skyrocketed by up to 302.33% from its low, followed by a 180.11% surge in 2023. The latest rally is tied to a major breakthrough in autonomous driving.
On December 15, China's Ministry of Industry and Information Technology officially granted the first batch of conditional L3 autonomous driving permits for two models, which will undergo road tests in designated areas of Beijing and Chongqing. The two models are from Chongqing Changan Automobile Co., Ltd. (Changan) and BAIC BluePark McFAR Automotive Co., Ltd. (BAIC). This marks a critical step toward the commercial application of L3 autonomous driving in China.
What is L3 autonomous driving? According to the "Classification of Driving Automation" standard issued by China's Standardization Administration, autonomous driving is categorized into six levels (L0 to L5). Until now, the highest level permitted for road use in China was L2. To simplify, as explained by Li Xiang of Li Auto: L2 = driver assistance, L3 = conditional automation (hands-off but ready to take over), L4 = high automation (driverless in specific scenarios), and L5 = full automation (no human intervention needed).
The potential market for autonomous driving in China is enormous—possibly reaching trillions of yuan. A Deloitte report predicts rapid advancements in vehicle intelligence and connectivity over the next 3–5 years, with 30 million autonomous vehicles expected to be operational in China by 2030. McKinsey estimates that China could become the world's largest autonomous driving market, generating over $500 billion (approximately RMB 3.58 trillion) in revenue from new car sales and mobility services by 2030.
Zhejiang Shibao is a key player in the autonomous driving sector, specializing in the R&D, manufacturing, and sales of automotive steering systems and critical components. According to its 2025 interim report, the company is among the first in China to independently develop electric power steering (EPS) and intelligent steering systems, providing advanced active steering solutions for autonomous vehicles.
During an institutional investor meeting on September 22, Zhejiang Shibao revealed: "The company has strong technical expertise in steer-by-wire and rear-wheel steering, with confirmed orders from several major automakers. The first mass-production project for steer-by-wire is expected to launch in the second half of 2026, while rear-wheel steering will enter production in Q4 this year. These products target L3+ autonomous driving models and high-performance luxury vehicles, featuring high technical barriers and promising market prospects."
Notably, the company's focus on "L3+ autonomous driving" highlights its forward-looking strategy and technological depth, even before the recent L3 model approvals.
Financially, Zhejiang Shibao reported robust growth, with net profits attributable to shareholders surging by 766.55% in 2023 and 112.56% in 2024. For the first three quarters of 2025, revenue rose 35.44% year-on-year to RMB 2.462 billion, while net profit grew 33.66% to RMB 150 million. However, its gross margin has shown a declining trend, dropping to 17.78% in Q1-Q3 2025 from 20.51% and 19.70% in the same periods of 2023 and 2024, respectively.
The margin pressure stems from intense competition in the auto industry. During the September 22 meeting, the company acknowledged: "Fierce price wars among automakers have led to significant price cuts for our products. Although cost reductions were achieved, the steeper price declines resulted in lower gross margins. Price negotiations with most clients concluded by mid-year, and stability is expected in H2." Despite this, Q3 2025 gross margin remained flat at 17.41%, compared to 18.16% in Q1 and 17.88% in Q2.
As a supplier to automakers, Zhejiang Shibao faces margin pressures amid the industry's price wars. However, the company expressed confidence in improving profitability, citing slower growth in operating expenses as scale expands.
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