Guotai Haitong Securities issued a research report assigning an "Overweight" rating to TSUGAMI CHINA (01651). It forecasts the company's revenue for FY2026E-FY2028E to be RMB 5.182 billion, RMB 5.823 billion, and RMB 6.562 billion, respectively, with net profits of RMB 1.018 billion, RMB 1.108 billion, and RMB 1.263 billion for the same periods. The company has a deep-rooted presence in the machine tool industry and, leveraging its solid product capabilities and customer channels, is poised for continued expansion into areas such as AI liquid cooling and humanoid robotics. Based on the PE valuation method and comparisons with peer companies, the firm applied a 2026 fiscal year PE multiple of 18x, concluding that TSUGAMI CHINA's reasonable market capitalization is HKD 18.326 billion, with a target price of HKD 48.78.
Having specialized in precision machine tools for twenty-two years, TSUGAMI CHINA has demonstrated rapid earnings growth. The company focuses on high-end CNC machine tools, including precision lathes, precision machining centers, and precision grinding machines, which are widely used in high-precision processing sectors such as automotive, 3C, pneumatic, and hydraulic applications. Committed to achieving high speed, high precision, and high rigidity as quality objectives, the company has gained broad recognition from industrial clients. In the first half of the 2026 fiscal year, the company reported revenue of approximately RMB 2.497 billion, a 26.2% year-on-year increase; its net profit attributable to shareholders was RMB 502 million, surging 47.7% year-on-year. The gross profit margin reached 34.6%, up 2.5 percentage points from the previous year, while the net profit margin stood at 20.1%, an increase of 2.9 percentage points.
Orders related to AI liquid cooling connectors are growing rapidly and are expected to support subsequent performance growth. As the AI server liquid cooling industry enters a phase of bulk equipment procurement, the company, with its focus on automatic lathes, holds a distinct cost-performance advantage in machining quick liquid cooling connectors. From January to September 2025, TSUGAMI CHINA secured equipment orders with dozens of customers, accounting for approximately 5% of the domestic order value.
The company is actively expanding into new fields, with its humanoid robot-related business accelerating development. From a medium to long-term perspective, the rapid expansion of autonomous driving, AI applications, and advancements in humanoid robotics technology are driving increasing demand for small, precision components. Through continuous cost-reduction and efficiency-improvement measures, the company has significantly enhanced its products' cost-performance ratio and market competitiveness. Currently, several of its equipment models have been successfully applied to process key components for humanoid robots, including planetary roller screws, harmonic reducers, and planetary reducers. Between January and September 2025, the company signed equipment orders with dozens of clients, involving automatic lathes, turret lathes, cylindrical grinding machines, and thread rolling machines.
Potential risks include market demand falling short of expectations and macroeconomic fluctuations.
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