Shenwan Hongyuan Group Co., Ltd. released a research report forecasting that Zhejiang Sanhua Intelligent Controls Co.,Ltd. (02050) will achieve net profit attributable to shareholders of RMB 4.253 billion, RMB 4.650 billion, and RMB 5.099 billion for 2025-2027, representing year-on-year growth of 37.2%, 9.4%, and 9.6%, respectively. The firm conducted a sum-of-the-parts valuation for the company's traditional refrigeration components and automotive thermal management businesses and, considering the A-H share premium, derived a corresponding reasonable market capitalization of RMB 143.3 billion. Compared to Sanhua's H-share market capitalization of HKD 140.8 billion, and referencing the HKD to RMB exchange rate of 0.9067 as of December 26, 2025, there remains an upside potential of 12.3%. This marks the initiation of coverage with an "Add" investment rating. Shenwan Hongyuan's key views are as follows: A+H dual listing enhances global competitiveness. Sanhua is a leader in traditional refrigeration components and automotive thermal management, officially listing on the Shenzhen Stock Exchange in 2005. In June 2025, it successfully issued H-shares, achieving a dual listing in both the A and H markets, which further broadens its financing channels and is expected to significantly boost its international influence. As of the third quarter of 2025, the company reported total operating revenue of RMB 24.03 billion, a 17% year-on-year increase, and a net profit attributable to shareholders of RMB 3.24 billion, with growth exceeding 40% year-on-year. Mature businesses: The company maintains a leading position in its traditional refrigeration and automotive components operations. Having deep expertise in traditional refrigeration components for decades, Sanhua holds top market shares for various products. In the first half of 2025, the refrigeration components business contributed 64% of revenue, making it the largest revenue source. With increasing ownership of domestic appliances like air conditioners and vast potential in overseas markets, demand for refrigeration components is poised for stimulation, and the company is well-positioned to maintain steady business growth leveraging its industry-leading status. In automotive components, by transferring underlying technologies accumulated over years in refrigeration, Sanhua has secured leading market shares in multiple product categories within the highly concentrated global thermal management market. It has established deep partnerships with renowned domestic and international traditional automakers and new energy vehicle manufacturers, earning widespread customer recognition. Emerging businesses: Energy storage & robotics operations unlock new growth potential. Energy storage thermal management shares significant similarities with traditional refrigeration and automotive thermal management. Leveraging its existing expertise for technological reuse, Sanhua established an energy storage thermal management company in the first quarter of 2022 and secured cooperation with industry benchmark enterprises by year-end by providing energy storage thermal management system solutions. The year 2023 marked the first full sales year for the new energy storage entity, during which the company proactively pursued market opportunities for components in energy storage applications while developing complete energy storage thermal management units, forming a relatively comprehensive product series and becoming a designated supplier for leading customers. In robotics, since 2025, several companies have achieved commercial delivery of humanoid robots, accelerating global commercialization. Sanhua has been actively investing in the robotics industry since 2022, focusing particularly on bionic robot electromechanical actuators. It established a robotics division in 2025 and is simultaneously advancing the construction of production bases domestically and overseas, positioning itself to efficiently support global core clients in achieving mass production goals for robots. Risk warnings include fluctuations in raw material prices, foreign exchange rate volatility, and potential slower-than-expected development progress in the humanoid robotics industry.
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