HXG(SH:603112) Shenwan Hongyuan Securities·2026-03-02 10:26Investment Rating - The investment rating for Huaxiang Co., Ltd. is maintained at "Buy" [2][7]. Core Insights - The company reported its 2025 performance, achieving total revenue of 4.129 billion yuan, a year-on-year increase of 8%, and a net profit attributable to shareholders of 562 million yuan, up 19% year-on-year. The fourth quarter showed accelerated performance with a revenue of 1.146 billion yuan, a 10% increase year-on-year, and a net profit of 156 million yuan, up 21% year-on-year [7]. - The compressor parts business is closely tied to the home appliance industry, which saw a slight decline in total sales. The domestic market benefited from the "old-for-new" policy, while exports faced a downturn after a strong first quarter. The company expects revenue from compressor parts to remain stable in Q1 2026 [7]. - The automotive parts business is expected to continue its double-digit growth due to strategic cooperation with Huayu Automotive, while the engineering machinery segment is anticipated to rebound as the company expands its customer base [7]. Financial Summary - Total revenue projections for 2026 are set at 4.742 billion yuan, with a year-on-year growth of 14.9%. The net profit is expected to reach 708 million yuan, reflecting a 26% increase [6][9]. - The company's gross margin is projected to improve from 23.3% in 2025 to 23.8% in 2026, with a return on equity (ROE) increasing from 13.5% to 15.3% over the same period [6][9].