Guosheng Securities has initiated coverage on Johnson Electric Holdings (00179) with a "Buy" rating. As a leading motor manufacturer, the company benefits from increasing value per vehicle for automotive motors driven by vehicle intelligence. It is also expanding into AIDC liquid cooling and humanoid robotics, which are expected to support future business growth. The firm forecasts Johnson Electric's net profit attributable to shareholders for fiscal years 2026 to 2028 to be $280 million, $300 million, and $330 million, representing year-on-year increases of 8%, 6%, and 9%, respectively.
Guosheng Securities' key views are as follows:
The company is driven by its dual core businesses in automotive and industrial/commercial products, supported by a global footprint spanning 20 countries across four continents. Through strategic acquisitions of core assets and divestment of non-core operations, Johnson Electric has systematically built its worldwide presence. It currently focuses on two main product categories: automotive products and industrial/commercial products, with core offerings in micro motors. Automotive products primarily include micro motors for vehicles, chassis motors, and thermal management motors.
Concurrently, the company is strategically positioning itself in the robotics sector and developing the AIDC liquid cooling market, building a diversified product portfolio. Its robotics business focuses on providing innovative drive system solutions for robots and related automation scenarios, currently in a phase of strategic investment and layout. The AIDC liquid cooling business centers on liquid cooling pump products, which are poised to benefit from growing demand for new cooling solutions in AI data centers.
Technological iteration in the automotive industry is driving growth in the micro motor market. For automotive motors, accelerated adoption of vehicle intelligence is expanding application scenarios for micro motors. Compared to traditional fuel vehicles, new energy vehicles incorporate significantly more micro motors, numbering in the hundreds per vehicle. The global automotive micro motor market is projected to reach approximately RMB 160.2 billion by 2032, with a compound annual growth rate of 4% from 2026 to 2032. Johnson Electric currently holds the second-largest global market share in micro motors and has established partnerships with key clients such as Bosch, Continental, and Volkswagen, creating high barriers for new entrants.
In chassis motors, domestic Chinese companies started later, while international firms have long dominated the mid-to-high-end market with first-mover technological advantages, holding over 70% market share in areas like brake-by-wire. Johnson Electric has achieved clear product performance advantages through sustained R&D investment and now serves customers including Nexteer, ZF, and JTEKT.
The thermal management market is expanding steadily, with the global market size projected to reach $85-90 billion by 2030. Johnson Electric's products, known for their high efficiency, reliability, and low power consumption, hold strong market competitiveness. Major customers include leading automakers such as Volkswagen, Ford, BMW, Geely, and BYD.
Expansion into AIDC liquid cooling and humanoid robotics represents a dual-engine strategy for future growth. Liquid cooling offers advantages such as low energy consumption, high heat dissipation efficiency, and low noise, making it a mainstream solution for high-performance computing scenarios. According to IDC forecasts, China's liquid cooling server market will reach $16.2 billion by 2029, with a five-year CAGR of 47%. Johnson Electric's thermal management pump technology shares commonalities with liquid cooling applications; its liquid cooling pumps feature efficient heat dissipation, energy savings, space efficiency, and long service life, positioning the company to benefit from rising downstream demand.
In humanoid robotics, the industry is approaching mass production, and Johnson Electric is actively expanding its presence. Current products include rotary joints with high torque density and reliability, featuring compact designs for easy integration; linear joints emphasizing high thrust and precision, with peak force up to 8,500N; dexterous hand actuators focused on miniaturization, high precision, and low power consumption; and frameless torque motors that enhance torque density and system-level integration capabilities. Additionally, the company has established a joint venture with Shanghai Mechanical & Electrical Industry to focus on full-joint modules for humanoid robots.
Potential risks include fluctuations in raw material prices; slower-than-expected progress in new business development and capacity utilization; weaker-than-anticipated industry demand; and risks related to the accuracy and timeliness of third-party industry data.
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