Industrial Securities has issued a research report initiating coverage on Zhaowei Machinery (02692) with an "Add" rating. The company is a leading global supplier of micro transmission and drive systems, deeply integrating transmission, micro motors, and electronic control systems to build its competitive moat through technology, talent, client base, and certifications. Benefiting from opportunities in the automotive electronics and smart vehicle industry, combined with its technological advantages in micro transmission and drive systems and accumulated customer resources, the company is poised for performance growth in the smart vehicle sector. It is also expanding into dexterous hands for humanoid robots and their joint modules, which offer advantages such as high precision, long service life, and multiple active degrees of freedom, thereby extending its long-term growth potential.
The bank forecasts the company's net profit attributable to shareholders for 2025-2027 to be RMB 271 million, RMB 369 million, and RMB 523 million, respectively, representing year-on-year increases of 20.4%, 36.0%, and 41.7%. As of the close on March 11, 2026, the company's Hong Kong stock price corresponds to price-to-earnings ratios of 64.8x, 50.3x, and 37.4x for 2025-2027.
Zhaowei Machinery, a top global supplier of micro transmission and drive systems, was founded in Shenzhen in 2001. It listed on the Shenzhen Stock Exchange in December 2020 and became a dual-listed A+H company following its Hong Kong IPO in March 2026, which raised a net amount of HKD 1.828 billion to advance its internationalization strategy. The company started with precision gear manufacturing and now focuses on micro transmission and drive systems as its core business, alongside precision components, molds, and other products. According to Frost & Sullivan data cited in the company's prospectus, based on 2024 sales revenue, Zhaowei is the largest integrated micro transmission and drive system provider in China and the fourth largest globally, with market shares of 3.9% and 1.4%, respectively.
The company maintains a sustainable competitive edge and demonstrates solid performance growth. It has deep expertise in the micro transmission and drive system industry, integrating transmission, micro motors, and electronic control systems to build a strong moat through technology, talent, client relationships, and certifications. Its products enable drive control within extremely small volumes, meeting stringent requirements for precision, miniaturization, and intelligence. As of the end of the third quarter of 2025, the company held 405 relevant patents, ranking first in China's integrated micro transmission and drive system industry. Its products are widely used in downstream sectors such as smart vehicles, consumer technology, medical technology, advanced industrial manufacturing, and embodied robots.
In the smart vehicle sector, Zhaowei has launched multiple products for smart cockpits, chassis domains, and body electronics, collaborating with companies like Bosch, BYD, Li Auto, and Changan. It is benefiting from growth opportunities in automotive electronics and smart vehicle trends. For the first three quarters of 2025, the company's revenue increased by 18.7% year-on-year to RMB 1.255 billion, while net profit attributable to shareholders rose by 14.4% to RMB 182 million. Gross profit margin and net profit margin were 32.7% and 14.5%, respectively.
The company is also advancing in the field of robotic dexterous hands. According to Frost & Sullivan data cited in its prospectus, global sales revenue for the dexterous hand industry is projected to reach RMB 22.3 billion by 2029, up from RMB 600 million in 2024, representing a compound annual growth rate of 106.0%, driven by increased shipments of embodied intelligent robots and higher penetration of dexterous hands. Leveraging its vertically integrated capabilities in electronic control, motors, and transmission, Zhaowei is developing dexterous hands and joint modules. It launched its self-developed dexterous hand in December 2024 and introduced two differentiated products, the DM17 and LM06, in July 2025. The DM17 utilizes a full direct-drive solution with 17 active degrees of freedom, capable of performing complex and precise movements through multi-joint, multi-level force and position cooperative compliance control. The LM06 employs a linkage mechanism with 6 degrees of freedom and a grasping load capacity of 20kg, suitable for high-intensity operational scenarios. In the first three quarters of 2025, revenue from the company's embodied robot solutions reached RMB 15.53 million, a year-on-year increase of 281.0%. With ongoing technological iterations, customer certifications, and commercialization efforts, revenue from dexterous hands is expected to see significant future growth, contributing to long-term performance highlights.
Risk factors include technological risks, potential delays in order fulfillment, slower-than-expected commercialization of dexterous hands, intensified market competition, overseas political and policy risks, and operational risks.
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