Jiangsu Hengli Hydraulic Co., Ltd. (601100.SH), a leader in hydraulic components, has delivered robust Q3 2025 results, benefiting from the recovery in excavator markets and advancements in robotics. The company reported a 24.53% year-on-year revenue growth and a 30.60% surge in net profit for the quarter, outpacing its H1 performance.
Key financial highlights include: - **Revenue**: RMB 7.79 billion (+12.31% YoY) for the first nine months, with Q3 alone contributing RMB 2.62 billion (+24.53% YoY). - **Net Profit**: RMB 2.09 billion (+16.49% YoY) for the nine-month period, with Q3 net profit reaching RMB 658 million (+30.60% YoY). - **Margins**: Gross margin stood at 41.96%, while net margin improved to 26.85%, reflecting strong pricing power.
However, operating cash flow declined 19.75% YoY to RMB 1.06 billion, attributed to rising receivables (up 19.86% from end-2024) and inventory buildup (+23.48%). Notably, contract liabilities surged 42.97%, signaling strong demand and prepayments from customers.
**Growth Drivers**: 1. **Excavator Market Recovery**: Domestic excavator sales rose 21.5% YoY in Jan-Sep 2025, boosting demand for Hengli’s hydraulic cylinders (sales volume +15% in H1). 2. **Non-Excavator Expansion**: Sales of hydraulic pumps and valves for non-excavator applications grew over 30%, supported by gains in aerial platforms, loaders, and agricultural machinery. 3. **Global Footprint**: The Mexico plant, its largest overseas facility, commenced operations in June 2025, enhancing international revenue (13.16% of total assets).
**Robotics Opportunity**: Hengli’s linear actuator project, including planetary roller screws critical for humanoid robots (e.g., Tesla’s Optimus), has entered mass production. With 50+ new products launched and nearly 300 clients onboard, the segment could become a major profit driver. Analysts estimate screws alone may account for ~20% of a robot’s $20,000 cost.
**Shareholder Moves Raise Eyebrows**: Contrary to the bullish performance, controlling shareholder Shenuo Technology (HK) announced plans in August 2025 to sell up to 3% of shares (40.22 million) by end-November. By late September, 1.05 million shares (0.78%) had been offloaded. Historically, Shenuo’s past divestments in 2020–2021 coincided with peak valuations.
Despite the sell-off, Hengli’s stock rose 23% post-announcement to RMB 96.08 (Oct 31), doubling YTD. Investors remain optimistic, but the timing of insider sales warrants caution.
**Outlook**: While traditional and robotics businesses show promise, the latter’s contribution is yet to materialize. Stakeholder actions suggest vigilance amid the rally.
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