Investment Rating - The report maintains a "Positive" investment rating for the mechanical equipment industry [5]. Core Insights - The humanoid robot industry is expected to see rapid production scaling opportunities in the first half of 2026, driven by advancements in brain models and control technologies [3][8]. - Tesla and other leading companies have demonstrated significant progress in motion control technology for humanoid robots, indicating a shift towards mass production focus [3][8]. - The report identifies three main challenges for mass production: the development of dexterous hands, an AI brain capable of understanding the real world, and the ability to scale production efficiently, with the AI brain being the most critical challenge [8]. Summary by Sections Industry Overview - The humanoid robot industry is entering a rapid development phase, with a focus on production capabilities [3][8]. - Recent demonstrations by Tesla and Yuzhu Robotics highlight advancements in motion control technology [8]. Production Challenges - The report outlines three key challenges for humanoid robot production: hardware improvements, breakthrough functionalities, and efficiency/cost management [8]. - The AI brain's maturity is highlighted as the most significant barrier to achieving mass production [8]. Investment Opportunities - The report suggests that companies with strong manufacturing and management capabilities in component production will benefit the most from the upcoming production ramp-up [3]. - Specific investment targets include Top Group (601689, Buy), Sanhua Intelligent Control (002050, Buy), Wuzhou New Spring (603667, Buy), Hengli Hydraulic (601100, Not Rated), and Zhenyu Technology (300953, Buy) [3].

Core Insights - The global hydraulic industry has a projected market size of approximately $53.5 billion in 2024, with a compound annual growth rate (CAGR) of 5.3% from 2021 to 2030, expected to exceed $69.4 billion by 2030 [7][10]. Industry Overview - The hydraulic industry has evolved through various stages, including theoretical foundations, industrial applications, technological breakthroughs, integration with electronics, and a shift towards intelligence [2]. - The industry plays a crucial role in global industrial development, characterized by advanced technology and widespread applications [2]. Application Distribution - The industrial sector accounts for a significant portion of hydraulic applications, with an estimated share of about 56% in 2024. This sector includes fixed industrial equipment and production lines [3]. - The mobile sector includes hydraulic systems used in movable machinery such as excavators, cranes, and agricultural equipment [3]. Product Distribution - Pump products dominate the hydraulic components market, holding a market share of approximately 28.1%, driven by high demand across various industries and continuous technological advancements [4]. - Valve products account for about 22.5% of the market share [4]. Market Trends - Emerging applications such as hydraulic systems for offshore wind installation vessels and hydraulic energy storage plants are experiencing significant demand growth [7]. - Key technological trends include energy efficiency, lightweight design, and intelligent connectivity, with companies increasing R&D investments in smart hydraulic systems and predictive algorithms [9]. Regional Insights - The Asia-Pacific region is identified as the largest consumer market for hydraulic products, while Europe and North America focus on high-value customized products, maintaining technological barriers in precision hydraulics and electro-hydraulic integration [9].

Ac t i o n | 18 Dec 2025 11:38:03 ET │ 15 pages Hengli Hydraulic (601100.SS) Raise TP to Rmb135 on Stronger Core Business Guidance and Humanoid Robot Rerating CITI'S TAKE We increase our 2025/26/27E earnings forecasts by 2%/7%/11% as mgmt. turned more bullish than before on 2026 outlook due to recent strong order wins on components for both excavator and non-excavator such as agricultural machinery. For excavator components, the orders are mainly from Chinese OEM's overseas sales and the leading US excavato ...

Core Viewpoint - Hengli Hydraulic's stock has shown significant growth this year, with a year-to-date increase of 106.88%, despite a recent decline in the last five trading days [1] Group 1: Stock Performance - As of December 19, Hengli Hydraulic's stock price reached 107.10 CNY per share, with a market capitalization of 143.60 billion CNY [1] - The stock experienced a 2.95% decline over the last five trading days, but has increased by 16.22% over the last 20 days and 13.82% over the last 60 days [1] Group 2: Financial Performance - For the period from January to September 2025, Hengli Hydraulic reported a revenue of 7.79 billion CNY, representing a year-on-year growth of 12.31% [2] - The net profit attributable to shareholders for the same period was 2.09 billion CNY, reflecting a year-on-year increase of 16.49% [2] Group 3: Shareholder Information - As of September 30, 2025, the number of shareholders for Hengli Hydraulic was 36,900, a decrease of 15.76% from the previous period [2] - The average number of circulating shares per shareholder increased by 18.70% to 36,379 shares [2] Group 4: Dividend Distribution - Hengli Hydraulic has distributed a total of 6.18 billion CNY in dividends since its A-share listing, with 3.11 billion CNY distributed over the last three years [3] Group 5: Institutional Holdings - As of September 30, 2025, Hong Kong Central Clearing Limited was the fourth largest circulating shareholder, holding 118 million shares, an increase of 15.19 million shares from the previous period [3] - Other notable institutional shareholders include Huatai-PB CSI 300 ETF and E Fund CSI 300 ETF, with varying changes in their holdings [3]

Core Viewpoint - Hengli Hydraulic's stock price has shown significant volatility, with a year-to-date increase of 103.65%, but a recent decline of 4.67% over the past five trading days, indicating potential market fluctuations and investor sentiment shifts [1]. Financial Performance - For the period from January to September 2025, Hengli Hydraulic reported a revenue of 7.79 billion yuan, reflecting a year-on-year growth of 12.31%. The net profit attributable to shareholders was 2.09 billion yuan, marking a 16.49% increase compared to the previous year [2]. - The company has distributed a total of 6.18 billion yuan in dividends since its A-share listing, with 3.11 billion yuan distributed over the last three years [3]. Shareholder Information - As of September 30, 2025, the number of shareholders for Hengli Hydraulic was 36,900, a decrease of 15.76% from the previous period. The average number of circulating shares per shareholder increased by 18.70% to 36,379 shares [2]. - Among the top ten circulating shareholders, Hong Kong Central Clearing Limited holds 118 million shares, an increase of 15.19 million shares from the previous period. Other notable shareholders include Huatai-PB CSI 300 ETF and E Fund CSI 300 ETF, which saw slight reductions in their holdings [3]. Market Activity - On December 18, Hengli Hydraulic's stock price fell by 2.04% to 105.43 yuan per share, with a trading volume of 687 million yuan and a turnover rate of 0.48%. The total market capitalization stood at 141.36 billion yuan [1]. - The net outflow of main funds was 22.68 million yuan, with significant selling pressure observed, as large orders accounted for 13.47% of total sales [1]. Business Overview - Hengli Hydraulic, established on June 2, 2005, and listed on October 28, 2011, specializes in the research, production, and sales of high-pressure hydraulic cylinders. The revenue composition includes hydraulic cylinders (50.70%), hydraulic pumps and valves (38.16%), components and castings (7.28%), hydraulic systems (3.16%), and others (0.69%) [1]. - The company operates within the machinery equipment sector, specifically in engineering machinery and components, and is associated with concepts such as shield machines and engineering machinery [1].

Core Viewpoint - Citigroup reports that the China Construction Machinery Industry Association announced an increase in construction machinery shipments for November, with significant demand for crawler cranes, which saw a year-on-year increase of 102% [1] Group 1: Market Demand and Performance - Crawler cranes are experiencing the strongest demand in the Chinese market, with shipments in November increasing by 102% year-on-year [1] - The demand surge is attributed to equipment replacement needs and strong demand in renewable energy sectors, such as wind energy [1] Group 2: Competitive Landscape - In contrast, the shipment volume of tower cranes in China saw a year-on-year decline, with the drop expanding from 17% in October to 49% in November [1] - The market share of the top four large excavator manufacturers decreased from 59.7% in 2024 to 58.7% in the first nine months of this year, indicating intensified competition among Chinese machinery manufacturers [1] Group 3: Company Preferences - Citigroup maintains its preference ranking for the domestic construction machinery industry, listing Hengli Hydraulic (601100), Sany Heavy Industry (600031) H-shares, Sany Heavy Industry (600031) A-shares, Zoomlion (000157) and lastly, Construction Machinery (600984) [1]

Group 1 - The core viewpoint of the article highlights the strong demand for crawler cranes in the Chinese market, with a year-on-year increase in shipments of 102% in November [1] - The demand for crawler cranes is driven by equipment replacement needs and strong demand in renewable energy sectors such as wind energy [1] - In contrast, the shipment volume of tower cranes in China saw a significant year-on-year decline, with a drop from 17% in October to 49% in November [1] Group 2 - The market share of the top four large excavator manufacturers in China decreased from 59.7% in 2024 to 58.7% in the first nine months of this year, indicating intensified competition among Chinese machinery manufacturers [1] - The preference ranking for the domestic engineering machinery industry remains unchanged, with the order being Hengli Hydraulic (601100.SH), Sany Heavy Industry (06031) H-shares, Sany Heavy Industry (600031.SH) A-shares, Zoomlion (01157), and finally Construction Machinery (600984.SH) [1]

Investment Rating - The industry is rated as "Positive" for the next 12 months, indicating an expected increase of over 10% relative to the CSI 300 index [35] Core Views - The demand for engineering machinery is expected to continue growing due to favorable domestic construction activity and the implementation of significant investment projects as outlined in the "14th Five-Year Plan" [2][27] - In November, the production of industrial robots reached approximately 70,200 units, marking a year-on-year increase of 20.60%, with expectations for total production to exceed 700,000 units in 2025 [2][27] - The report maintains "Buy" ratings for specific companies including Zoomlion (000157), Hengli Hydraulic (601100), Jiechang Drive (603583), and Haomai Technology (002595) [2][27] Industry News - In November, sales of various types of forklifts reached 119,749 units, a year-on-year increase of 14.1% [10] - The domestic sales of forklifts for the first 11 months of 2025 totaled 843,005 units, reflecting a growth of 14.3% [10] - Beijing Zhuoyue Intelligent Technology Co., Ltd. successfully completed a strategic financing round of 200 million yuan [11] - Hitachi Construction Machinery will change its name to LANDCROS, pending shareholder approval [11] Industry Data - As of December 12, 2025, the comprehensive steel price index (CSPI) was recorded at 91.76 [12] - WTI and Brent crude oil prices were reported at $56.82 and $60.56 per barrel, respectively, as of December 16, 2025 [13] Company Announcements - Suzhou Sileck Precision Equipment Co., Ltd. announced a partnership with investment institutions to enhance project reserves and overall competitiveness [17] - Wuxi Chemical Equipment Co., Ltd. plans to establish a wholly-owned subsidiary in South Korea with an investment of up to $100,000 [18] Market Review - From December 10 to December 16, 2025, the CSI 300 index fell by 2.19%, while the machinery equipment sector declined by 2.95%, underperforming the CSI 300 by 0.76 percentage points [19] - The price-to-earnings ratio (PE, TTM) for the machinery equipment sector was 43.94 times, with a valuation premium of 218.89% relative to the CSI 300 [20]

Group 1 - The demand for crawler cranes in the Chinese market is the strongest among major types of construction machinery, with a year-on-year shipment increase of 102% in November [1] - The strong demand is driven not only by equipment replacement needs but also by robust demand in the renewable energy sector, such as wind energy [1] - The shipment volume of tower cranes in China saw a year-on-year decline that expanded from 17% in October to 49% in November, indicating continued weakness in the real estate sector [1] Group 2 - The market share of the top four large excavator manufacturers decreased from 59.7% in 2024 to 58.7% in the first nine months of this year, reflecting intensified competition among machinery manufacturers [1] - The preference ranking for the domestic construction machinery industry remains unchanged, with the order being Hengli Hydraulic, Sany Heavy Industry H-shares, Sany Heavy Industry A-shares, Zoomlion, and finally, XCMG [1]

Group 1 - The mechanical sector has shown strong performance in 2025, with the Shenwan Mechanical Equipment Index rising by 36.11%, outperforming the Shanghai Composite Index by 19.74 percentage points and the Shenzhen Component Index by 8.78 percentage points [4][16][19] - In the first three quarters of 2025, the mechanical industry reported revenues of 15,135.34 billion yuan, a year-on-year increase of 7.35%, and a net profit attributable to shareholders of 1,080.76 billion yuan, up 16.80% year-on-year [4][22][27] - The public fund allocation ratio for the mechanical equipment sector increased by 0.25 percentage points in Q3 2025 compared to Q3 2024, indicating improved fundamentals and positive policy impacts [29] Group 2 - The equipment manufacturing industry has maintained export resilience, with significant growth in new overseas markets. From January to October 2025, the export delivery value of general equipment, specialized equipment, and transportation equipment reached 6,173.20 billion yuan, 5,319.30 billion yuan, and 4,124 billion yuan respectively, with year-on-year growth rates of 5.5%, 9.3%, and 24.20% [5][33][36] - The overseas sales of engineering machinery continued to grow, with a year-on-year increase of 11.84% in export value from January to October 2025, driven by technological innovation and diversified market strategies [37][41] - The motorcycle industry has established a strong competitive advantage in overseas markets, with exports reaching 1,101.85 million units and 7.278 billion USD in value from January to October 2025, reflecting a year-on-year increase of 22.28% and 28.2% respectively [42][43] Group 3 - The emergence of new manufacturing scenarios signifies a profound transformation from "single technology upgrades" to "systematic ecological restructuring," enhancing production efficiency, product quality, and innovation capabilities [5][46] - Human-shaped robots are expected to address customization challenges in traditional manufacturing, with a market space projected to expand significantly as they transition from industrial applications to household use [47][54] - The intelligent logistics equipment market in China is expected to grow rapidly, with a projected market size of 1,261 billion yuan in 2025, driven by advancements in IoT and AI technologies [64][72]