Summary of Key Points Core Viewpoint - The trading activity for Hengli Hydraulic (stock code: 601100) on September 16, 2025, shows significant institutional interest with multiple large transactions occurring at a consistent price of 85.4 yuan per share, indicating a stable valuation in the market [1][2]. Group 1: Trading Activity - On September 16, 2025, Hengli Hydraulic had multiple transactions with a consistent trading price of 85.4 yuan per share [1][2]. - The total transaction amounts for Hengli Hydraulic on this date included 8540 million yuan for 100,000 shares, 6575.8 million yuan for 77,000 shares, and 4270 million yuan for 20,000 shares, among others [2]. - The buying institutions included major players such as China International Capital Corporation and UBS Securities, indicating strong institutional support [1][2]. Group 2: Institutional Participation - The majority of the trades were executed by institutional investors, with significant volumes traded by entities like Morgan Stanley and UBS, reflecting a robust interest from the institutional sector [2]. - The highest single transaction recorded was 8540 million yuan, showcasing a substantial commitment from institutional buyers [2]. - The presence of multiple transactions from various institutional firms suggests a strategic accumulation of shares in Hengli Hydraulic [2].

Market Performance - The engineering machinery sector rose by 1.36% on September 16, with Hangcha Group leading the gains [1] - The Shanghai Composite Index closed at 3861.87, up 0.04%, while the Shenzhen Component Index closed at 13063.97, up 0.45% [1] Key Stocks in Engineering Machinery Sector - Hangcha Group (603298) closed at 26.69, up 6.38% with a trading volume of 175,200 shares and a transaction value of 460 million [1] - Fushite (301446) closed at 29.35, up 5.42% with a trading volume of 26,600 shares and a transaction value of 76.74 million [1] - Noli Co., Ltd. (603611) closed at 25.35, up 4.97% with a trading volume of 126,000 shares and a transaction value of 310 million [1] - Anhui Heli (600761) closed at 21.76, up 4.87% with a trading volume of 243,100 shares and a transaction value of 522 million [1] - Other notable stocks include Jinzhi Technology (301279), Zhongli Co., Ltd. (603194), and Weiman Sealing (301161) with respective gains [1] Capital Flow Analysis - The engineering machinery sector saw a net inflow of 61.61 million from main funds, while retail investors experienced a net outflow of 103 million [2][3] - Main funds showed significant inflows in stocks like Hengli Hydraulic (601100) and Zhejiang Dingli (603338) [3] Individual Stock Fund Flows - Hengli Hydraulic (601100) had a main fund net inflow of 1.53 billion, but retail investors showed a net outflow of 938.69 million [3] - Zhejiang Dingli (603338) recorded a main fund net inflow of 1.16 billion, with retail investors experiencing a net outflow of 1.49 billion [3] - Other stocks like Helen Zhe (300201) and Noli Co., Ltd. (603611) also showed varied fund flows, indicating mixed investor sentiment [3]

Company Overview - Jiangsu Hengli Hydraulic Co., Ltd. is located in Wujin High-tech Zone, Changzhou, Jiangsu Province, established on June 2, 2005, and listed on October 28, 2011 [1] - The company's main business involves the research, production, and sales of high-pressure hydraulic cylinders, with revenue composition as follows: hydraulic cylinders 50.70%, hydraulic pumps and valves 38.16%, parts and castings 7.28%, hydraulic systems 3.16%, and others 0.69% [1] Stock Performance - On September 16, Hengli Hydraulic's stock rose by 5.11%, trading at 95.65 yuan per share, with a transaction volume of 1.056 billion yuan and a turnover rate of 0.85%, resulting in a total market capitalization of 128.25 billion yuan [1] Fund Holdings - The Qianhai Kaiyuan Fund has one fund heavily invested in Hengli Hydraulic, specifically the Qianhai Kaiyuan Quality Leading 6-Month Holding Mixed A (012483), which reduced its holdings by 39,300 shares in the second quarter, maintaining 561,200 shares, accounting for 4.84% of the fund's net value, making it the third-largest holding [2] - The fund has a total scale of 548 million yuan, with a year-to-date return of 20.93% and a one-year return of 40.98%, ranking 4064 out of 8174 and 4100 out of 7982 in its category, respectively [2] Fund Manager Profile - The fund manager of Qianhai Kaiyuan Quality Leading 6-Month Holding Mixed A is Yang Delong, who has a cumulative tenure of 15 years and 25 days, managing assets totaling 1.961 billion yuan [3] - During his tenure, the best fund return achieved was 82.77%, while the worst was -23.23% [3]

Company Overview - Jiangsu Hengli Hydraulic Co., Ltd. is located in Wujin High-tech Zone, Changzhou, Jiangsu Province, and was established on June 2, 2005. The company was listed on October 28, 2011. Its main business involves the research, production, and sales of high-pressure hydraulic cylinders [1] - The revenue composition of the company is as follows: hydraulic cylinders 50.70%, hydraulic pumps, valves, and motors 38.16%, parts and castings 7.28%, hydraulic systems 3.16%, and others 0.69% [1] Stock Performance - On September 16, Hengli Hydraulic's stock rose by 5.11%, reaching a price of 95.65 CNY per share, with a trading volume of 1.061 billion CNY and a turnover rate of 0.85%. The total market capitalization is 128.25 billion CNY [1] Fund Holdings - According to data from the top ten holdings of funds, one fund under Guotai Haitong Asset Management has a significant position in Hengli Hydraulic. The Guotai Junan High-end Equipment Mixed Fund A (017933) held 5,900 shares in the second quarter, accounting for 3.38% of the fund's net value, making it the ninth-largest holding [2] - The Guotai Junan High-end Equipment Mixed Fund A was established on March 1, 2023, with a latest scale of 8.0771 million CNY. Year-to-date, it has achieved a return of 9.62%, ranking 5,857 out of 8,174 in its category. Over the past year, it has returned 19.29%, ranking 6,077 out of 7,982, while since inception, it has incurred a loss of 8.72% [2] Fund Manager Information - The fund manager of Guotai Junan High-end Equipment Mixed Fund A is Li Yu, who has been in the position for 2 years and 201 days. The total asset size of the fund is 12.5552 million CNY. During his tenure, the best fund return was -8.8%, and the worst was -9.73% [3]

Summary of Jiangsu Hengli Hydraulic Conference Call Company Overview - **Company**: Jiangsu Hengli Hydraulic Co Ltd - **Industry**: Hydraulic components and systems, specifically focusing on excavator hydraulic cylinders, pumps, and valves - **Market Position**: Leading supplier in China with over 40% market share in excavator hydraulic cylinders [11][40] Key Points and Arguments Financial Performance - **2Q25 Results**: Revenue increased by 11% year-over-year (Y/Y) and net profit rose by 18% Y/Y, both exceeding consensus and historical averages [16] - **Guidance**: FY25 guidance remains unchanged, but there is potential upside for FY27 and beyond due to strong business momentum [17][31] - **Revenue Forecasts**: FY27 revenue estimates increased by 4% and FY28 by 12%, with net profit estimates raised by 3% and 11% respectively [17] Growth Drivers - **Domestic Demand**: Strong recovery in domestic demand, particularly for excavator cylinders, driven by infrastructure projects like the mega-dam and Xinjiang-Tibet Railway [16][22] - **International Expansion**: Orders from Europe and the US are rebounding, with the Mexico plant expected to achieve profitability by 2026, mitigating tariff risks [16][24] - **FA & Robotics Segment**: This segment is projected to be a core growth engine, with potential revenues reaching Rmb4.5 billion by FY28 under the bull case scenario [18][19] Strategic Initiatives - **Diversification**: Since 2022, Hengli has focused on diversifying its business to reduce reliance on excavator products and supply chain concentration [11][40] - **New Product Development**: Expansion into linear motion products and humanoid robotics is expected to contribute to revenue from 2025 onward [11][40][29] Margin and Profitability - **Gross Margin**: 2Q25 gross margin reached 44%, the highest since the 2020 upcycle, with expectations for further improvement as product mix shifts towards higher-value models [16][30] - **Long-term Margin Potential**: Management believes there is no upper limit to margin improvement as new products ramp up and manufacturing efficiency is optimized [30] Risks and Challenges - **Market Risks**: Key risks include lower-than-expected excavator sales volumes, slower market share gains for pumps and valves, and potential trade tensions leading to higher tariffs [42] - **Execution Risks**: The FA & robotics segment faces risks related to slower adoption and execution delays, which could impact revenue growth [19] Additional Insights - **Market Share Expansion**: International markets remain underpenetrated, with significant opportunities for share gains, particularly in Japan and Europe [23] - **Non-Excavator Segments**: Growth in agricultural machinery and new energy segments, with plans for a new plant in Brazil to capture market share [27] - **Aerial Work Platforms**: Currently weak demand, but Hengli is positioned to capitalize on recovery when market conditions improve [28] Valuation - **Price Target**: DCF-based price target raised to Rmb116 from Rmb105, reflecting the bullish outlook on growth and profitability [12][17] - **Valuation Metrics**: The company is expected to maintain strong financial ratios, with a projected revenue growth of 14.6% in FY25 and 19.8% in FY26 [10] This summary encapsulates the key takeaways from the conference call, highlighting the company's strong market position, growth potential, and strategic initiatives while also addressing the associated risks and challenges.

Market Overview - On September 15, the engineering machinery sector rose by 0.7% compared to the previous trading day, with Changling Hydraulic leading the gains [1] - The Shanghai Composite Index closed at 3860.5, down 0.26%, while the Shenzhen Component Index closed at 13005.77, up 0.63% [1] Stock Performance - Key stocks in the engineering machinery sector showed varied performance, with notable gainers including: - Changling Hydraulic: Closed at 47.46, up 6.27% with a trading volume of 65,800 shares and a turnover of 310 million yuan [1] - Tuoshan Heavy Industry: Closed at 40.61, up 5.59% with a trading volume of 49,600 shares and a turnover of 197 million yuan [1] - Weiman Sealing: Closed at 38.86, up 5.43% with a trading volume of 128,500 shares and a turnover of 490 million yuan [1] - Conversely, some stocks experienced declines, such as: - Hengli Drill Tools: Closed at 43.37, down 2.76% with a trading volume of 22,600 shares and a turnover of 97.64 million yuan [2] - Fushite: Closed at 27.84, down 2.73% with a trading volume of 24,700 shares and a turnover of 70.44 million yuan [2] Capital Flow - The engineering machinery sector saw a net outflow of 205 million yuan from main funds, while retail investors contributed a net inflow of 266 million yuan [2][3] - Specific stock capital flows indicated: - Liugong: Main funds net inflow of 64.71 million yuan, with retail funds net outflow of 28.77 million yuan [3] - Hengli Hydraulic: Main funds net inflow of 64.11 million yuan, with retail funds net outflow of 28.22 million yuan [3] - Zhonglian Heavy Industry: Main funds net inflow of 58.49 million yuan, with retail funds net outflow of 14.21 million yuan [3]

Group 1 - The core viewpoint of the news is that Hengli Hydraulic has seen a significant increase in its stock price, rising by 5.01% to reach 90.69 CNY per share, with a total market capitalization of 121.599 billion CNY [1] - 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 [1] - The company's main business revenue composition includes hydraulic cylinders (50.70%), hydraulic pumps, valves, and motors (38.16%), parts and castings (7.28%), hydraulic systems (3.16%), and others (0.69%) [1] Group 2 - From the perspective of fund holdings, Changcheng Fund has one fund heavily invested in Hengli Hydraulic, specifically the Changcheng Industry Rotation Mixed A fund, which held 343,900 shares, accounting for 3.06% of the fund's net value [2] - The Changcheng Industry Rotation Mixed A fund has achieved a year-to-date return of 30.19%, ranking 2638 out of 8246 in its category, and a one-year return of 48.12%, ranking 3307 out of 8054 [2] - The fund manager, Yang Yu, has been in charge for 4 years and 49 days, with the fund's total asset size at 8.09 billion CNY [3]

Group 1 - The core viewpoint of the news is the performance and market position of Hengli Hydraulic, which saw a stock price increase of 5.01% to 90.69 CNY per share, with a total market capitalization of 1215.99 billion CNY [1] - Hengli Hydraulic, established on June 2, 2005, specializes in the research, production, and sales of high-pressure hydraulic cylinders, with its main revenue sources being hydraulic cylinders (50.70%), hydraulic pumps and valves (38.16%), parts and castings (7.28%), hydraulic systems (3.16%), and others (0.69%) [1] Group 2 - From the perspective of fund holdings, one fund under Guotai Haitong Asset Management has a significant position in Hengli Hydraulic, with Guotai Junan High-end Equipment Mixed Fund A (017933) holding 5900 shares, accounting for 3.38% of the fund's net value, ranking as the ninth largest holding [2] - The Guotai Junan High-end Equipment Mixed Fund A was established on March 1, 2023, with a current scale of 807.71 million CNY, achieving a year-to-date return of 9.52% and a one-year return of 19.15% [2]

Group 1 - The core viewpoint of the news is the performance and market position of Hengli Hydraulic, which saw a 5.01% increase in stock price, reaching 90.69 CNY per share, with a total market capitalization of 121.599 billion CNY [1] - 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 [1] - The company's main business revenue composition includes hydraulic cylinders (50.70%), hydraulic pumps, valves, and motors (38.16%), parts and castings (7.28%), hydraulic systems (3.16%), and others (0.69%) [1] Group 2 - From the perspective of fund holdings, Zhejiang Merchants Securities Asset Management has a fund that heavily invests in Hengli Hydraulic, specifically the Zhejiang Dingying Event-Driven Mixed Fund (LOF) [2] - In the second quarter, this fund increased its holdings by 1,800 shares, bringing the total to 6,000 shares, which represents 4.39% of the fund's net value, ranking it as the eighth largest holding [2] - The fund has achieved a return of 20% year-to-date, ranking 4,209 out of 8,246 in its category, and a one-year return of 43.22%, ranking 3,801 out of 8,054 [2]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Industrials - **Outlook**: The industrial sector in China is facing a challenging trajectory in 2H25, with persistent macro headwinds and a cautious outlook due to muted demand and external risks, particularly from US tariffs [10][11][24][25]. Core Insights 1. **Earnings Performance**: In 1H25, 39% of companies reported earnings beats, a notable increase from 20% in 2H24, indicating improved performance against lower expectations [1]. 2. **Manufacturing Activity**: The Manufacturing PMI fell below 50 during Apr-Aug 2025, reflecting weak domestic consumption and cooling export orders [11][12]. 3. **Corporate Profits**: Industrial profits declined by 1.7% year-on-year to RMB 4 trillion (approximately USD 559 billion) in 7M25, with a slight recovery noted in July due to government measures [14]. 4. **Capex Intentions**: There is a significant contraction in Japan's machine tool orders to China, indicating a risk-off sentiment among manufacturers [16][20]. 5. **Destocking Cycle**: The destocking phase is nearing an end, but restocking is not yet in sight, as businesses await improved demand and profit margins [21]. Investment Strategies Barbell Strategy - **High-Risk Basket**: Focus on sectors like AI infrastructure, factory automation, and humanoid robots. Key picks include: - **AI Infra**: Kingboard Laminates (KBL), Shengyi Technology (SYTECH), Han's CNC [26][27]. - **Factory Automation**: Wuxi Lead, UBTECH, Hengli Hydraulic [43][46]. - **Low-Risk Basket**: Emphasize infrastructure and export sectors, with a preference for: - **China Infrastructure**: CRRC, Lesso, China State Construction International (CSCI) [5][61]. - **Export**: Techtronic, Shenzhou, Stella, focusing on high dividend yields [5]. Key Company Insights 1. **Kingboard Laminates (KBL)**: Reported 1H25 earnings growth of 28% to HKD 933 million, with expectations of improved gross margins in 2H25 due to price increases [28][29]. 2. **Shengyi Technology (SYTECH)**: Anticipates a 10-15% increase in shipments of AI-related materials, with ongoing expansion plans [33][34]. 3. **Wuxi Lead**: Expected to benefit from an EV battery capex cycle turnaround, with new orders projected to exceed previous guidance [47][48]. 4. **UBTECH**: Revised delivery guidance for humanoid robots upwards, indicating strong demand in the auto and electronics sectors [52][53]. 5. **CRRC**: Upgraded to Buy due to strong earnings and increased high-speed rail tenders, with a target price raised to HKD 7.30 [62][64]. Additional Considerations - **Policy Response**: The effectiveness of government policies in stimulating demand remains uncertain, with a need for decisive action to restore private sector confidence [24]. - **Market Sentiment**: The overall sentiment in the industrial sector is cautious, with a preference for companies with strong balance sheets and exposure to structural growth themes [25]. This summary encapsulates the key points discussed in the conference call, highlighting the current state of the China industrial sector, investment strategies, and specific company insights.