Core Viewpoint - The announcement of share reduction by the controlling shareholder of Jiahe Intelligent is seen as a negative signal for the company's financial health, especially following a significant decline in net profit and the exit of major shareholders [1][9]. Group 1: Shareholder Actions - Dongguan Wenfu Industrial Investment Co., Ltd. plans to reduce its holdings by up to 6 million shares, representing 1.59% of the total share capital [1]. - The top ten shareholders' combined holding has decreased from 42.37% in mid-2024 to 33.95% in mid-2025, indicating a significant exit of major shareholders [1][2]. Group 2: Financial Performance - In the first half of 2025, the company reported a 10.82% decline in revenue, with a gross margin dropping to 14.07%, down 4.11 percentage points from the 2023 peak [5][6]. - The net profit for the first half of 2025 fell by 38.12% to 0.25 billion, with the non-recurring net profit plummeting by 90.6% to only 0.25 million [6][7]. Group 3: Industry Context - The consumer electronics industry, particularly in the audio product sector, is facing intense competition, leading to a situation where brand owners are gaining more market power while ODM manufacturers like Jiahe Intelligent struggle [4][7]. - The company relies heavily on major clients such as Harman and Beats, which increases its vulnerability to pricing pressures and order reductions [7][8]. Group 4: Future Outlook - The company's new business segments, such as smart wearables, contribute minimally to overall revenue, with smart wearables accounting for only 10.08% of revenue in the first half of 2025 [8]. - The outlook remains pessimistic due to the slow expansion of new business areas and the ongoing decline in traditional business performance [7][8].

Core Viewpoint - The announcement of share reduction by the controlling shareholder of Jiahe Intelligent is perceived as a warning sign for the company's financial health, especially following a significant decline in profitability and shareholder confidence [1][2]. Company Performance - Jiahe Intelligent's controlling shareholder, Dongguan Wenfu Investment Co., Ltd., plans to reduce its stake by up to 6 million shares, representing 1.59% of the total share capital [1]. - The company reported a net profit decline of over 90% in the first half of 2025, with a net profit of only 2.51 million yuan, indicating severe profitability issues [4]. - In 2023, despite a revenue increase of 9.44%, the net profit fell by 23.58% to 133 million yuan, with a net profit margin decrease of 2.41 percentage points to 5.58% [2]. Industry Context - The consumer electronics sector, particularly in audio products, is facing intense competition, leading to a significant drop in Jiahe Intelligent's gross margin, which fell to 14.07% in the first half of 2025, down 4.11 percentage points from 2023 [3]. - The company's reliance on ODM (Original Design Manufacturer) business model has resulted in weak bargaining power, primarily serving clients like Harman and Beats, while competitors like Edifier have successfully leveraged their own brands for higher margins [3][5]. - The market for TWS (True Wireless Stereo) earphones is experiencing a slowdown, with global shipment growth declining, further exacerbating the company's challenges [5][6]. Future Outlook - The company faces multiple risks, including a high concentration of revenue from a few major clients, which increases vulnerability to order reductions or price cuts [5][6]. - Emerging business segments, such as smart wearables, contribute minimally to overall revenue, with smart wearables accounting for only 10.08% of revenue in the first half of 2025 [7]. - The reduction in R&D expenses may further weaken the company's competitive position, as it struggles to innovate in a rapidly evolving market [6][7].

Core Viewpoint - Huakin Technology, the world's largest electronic ODM, is expanding its international presence and diversifying its product offerings, with significant growth in overseas markets and a strong focus on R&D and innovation [1][4][8]. Group 1: Company Overview - Huakin Technology has an annual shipment volume exceeding 200 million terminal devices and reported nearly 110 billion yuan in revenue last year [1]. - The company went public on the Shanghai Stock Exchange in August 2023 and plans to initiate a Hong Kong IPO in August 2025 to accelerate its international strategy [1]. - Huakin's major clients include renowned brands such as Samsung, OPPO, Xiaomi, and Lenovo [1]. Group 2: Global Expansion Strategy - The company has established a global manufacturing footprint with bases in Dongguan, Nanchang, Vietnam, India, and Mexico, each focusing on different product lines and market needs [1][4]. - The Vietnam base achieves over 2 million units shipped monthly, while the Indian base is expected to exceed 1 million units in 2024, focusing on smartphones and wearables [4][6]. - The Mexican base aims to enhance delivery capabilities for high-end products in the North American market [4]. Group 3: Technological Development - Huakin Technology has invested 14.75 billion yuan in R&D over the past three years, with a 30% increase in R&D spending in the first half of 2025 [8]. - The company has built a robust R&D network across multiple locations, with R&D personnel constituting 28.4% of its workforce [8]. - As of the end of 2024, Huakin has received 5,950 intellectual property authorizations, including 1,330 effective invention patents [8]. Group 4: Market Position and Growth - Huakin Technology transitioned from an IDH to an ODM model, achieving a compound annual growth rate of 50% from 2011 to 2013, and became the top global smartphone ODM in 2013 [6]. - The company is actively seeking new growth avenues in AIoT and smart automotive sectors, expanding its product range to over ten categories [7]. - The integration of local industry chains in regions like Zhangjiang has provided Huakin with a conducive environment for innovation and talent acquisition [9].

Core Viewpoint - The company, Aux Electric, has faced challenges in its recent IPO on the Hong Kong Stock Exchange, with its stock price declining significantly on its debut, reflecting a lack of enthusiasm from the market despite its status as the fifth largest air conditioning manufacturer globally [3][4]. Group 1: Company Overview - Aux Electric has been in the air conditioning industry for 30 years, reporting nearly 30 billion yuan in revenue and a net profit of 2.91 billion yuan last year [3]. - The company plans to issue over 200 million shares globally, raising approximately 3.994 billion HKD, with 95% allocated for international placement and 5% for public offering in Hong Kong [4]. - The controlling shareholder, Aux Holdings, owned by the Zheng family, holds 81.91% of the company post-IPO, down from 96.36% prior to the listing [4]. Group 2: Market Performance - On its first trading day, Aux Electric's stock price fell by 5.4% to 16.48 HKD, with a market capitalization of approximately 25.7 billion HKD [3]. - As of September 3, the stock price further declined to 15.72 HKD, marking a 4.16% drop [3]. - The company's current price-to-earnings ratio (TTM) stands at 7.85, which is lower than its peers, indicating a lack of market confidence [5]. Group 3: Strategic Focus - Aux Electric aims to allocate at least 40% of the funds raised from its IPO to expand its overseas market presence, including establishing R&D centers and production bases [6]. - The company reported that overseas revenue accounted for 57.1% of its total revenue in Q1 2025, with the Asian market being a significant contributor [6]. - The ODM (Original Design Manufacturing) model has been a key strategy for Aux Electric, but it faces challenges as competition intensifies and profit margins shrink [7]. Group 4: Domestic Market Challenges - The company's revenue from the Chinese market has been declining, with Q1 2025 figures showing 40.16 billion yuan from China, a 9.6% increase, compared to 53.36 billion yuan from overseas, which grew by 44.2% [8]. - Aux Electric's competitive edge in pricing has diminished due to aggressive pricing strategies from competitors, leading to a significant drop in market share [8][9]. - The average selling price of Aux Electric's air conditioners is the lowest among major competitors, which has impacted its profitability, with a gross margin of 19.8% for its air conditioning business [9].

Core Viewpoint - After a long journey to go public, Aux Electric has finally listed on the Hong Kong Stock Exchange, but the market response has been lukewarm, with its stock price declining significantly on its debut [2][3]. Group 1: Company Overview - Aux Electric is the fifth largest air conditioning manufacturer globally, with nearly 30 billion yuan in revenue and a net profit of 2.91 billion yuan last year [2]. - The company has faced challenges in the domestic market due to intense price competition, which has diminished its previous advantages in low pricing and online sales [2][8]. - Aux Electric's controlling shareholder, Aux Holdings, retains 81.91% of the company's shares post-listing, with the Zheng family holding significant stakes [3]. Group 2: Listing Journey - Aux Electric's path to listing has been fraught with difficulties, initially attempting to list on the A-share market before ultimately opting for the Hong Kong Stock Exchange due to uncertainties in the A-share timeline [4][5]. - The company raised approximately 39.94 billion HKD through the issuance of over 200 million shares, with 95% allocated for international placement [3][4]. Group 3: Financial Performance - The company's operating cash flow has decreased from around 4 billion yuan in 2022 to 2.52 billion yuan in 2024, indicating financial strain [7]. - In the first quarter of 2025, Aux Electric's overseas revenue accounted for 57.1% of total revenue, with significant growth in markets outside of China [6][8]. Group 4: Market Position and Competition - Aux Electric's market share in China has been declining, with its revenue from the domestic market growing by only 9.6% in the first quarter of this year, while overseas revenue grew by 44.2% [8]. - The company has lost its competitive edge in pricing to rivals like Gree and Midea, with its air conditioning products facing intense competition in both online and offline markets [8][9]. - The gross margin for Aux Electric's air conditioning business was reported at 19.8% in the first quarter of 2025, significantly lower than that of leading competitors [9].

Investment Rating - The report assigns a "Cautious Accumulate" rating to the company [1][24]. Core Insights - The AI ASIC server and Ethernet switch markets are experiencing high demand, positioning the company favorably for rapid revenue growth as projects enter mass production. The transition to ODM is expected to enhance profitability, with profit growth outpacing revenue growth [2][9]. Financial Summary - The company’s projected revenue for FY2023 to FY2027 is as follows: - FY2023: $7,961 million - FY2024: $9,646 million (+21%) - FY2025: $11,630 million (+21%) - FY2026: $14,568 million (+25%) - FY2027: $16,917 million (+16%) [4][16] - Adjusted net profit is projected to grow significantly, with estimates of $296 million in FY2023, $461 million in FY2024, $635 million in FY2025, $819 million in FY2026, and $940 million in FY2027 [4][16]. Business Segments - The company operates in two main segments: Connectivity & Cloud Solutions (CCS) and Advanced Technology Solutions (ATS). The CCS segment includes server and storage businesses, while ATS encompasses aerospace, defense, industrial, and medical technology [26][30]. - Revenue from the ATS segment is expected to grow steadily, while the CCS segment is anticipated to see rapid growth driven by AI demand, particularly in 400G and 800G switches [18][19]. Market Position - The company is a leading player in the EMS and ODM sectors, with a strong focus on high-value end markets. It has a robust project pipeline in AI ASIC and Ethernet switches, which are expected to drive future growth [26][30]. - The company has established a solid customer base, including major clients like Amazon, Dell, and Google, with a significant portion of revenue derived from top customers [30][35]. Valuation - The report employs a DCF valuation method, estimating a target price of $202 per share, corresponding to a market capitalization of $23.4 billion [24][25]. - The company’s PEG ratio is calculated at 1.4, reflecting its strong earnings growth relative to peers in the EMS and ODM industries [22][24].

Group 1: Business Model Performance - ODM model revenue for 2024 is 1.096 billion CNY, a year-on-year increase of 37.10% [1] - OBM model revenue for 2024 is 549 million CNY, a year-on-year increase of 27.58% [1] - Trade model revenue for 2024 is 1.111 billion CNY, a year-on-year increase of 44.58% [1] Group 2: Growth Strategies - Product upgrades focus on high-end adult bicycles and children's bikes to meet overseas demand for differentiated, high-cost performance products [2] - Digital empowerment through 3D design and online interaction systems to enhance customer customization experience and improve ODM response efficiency [2] - Market expansion in Europe and America, leveraging cross-border e-commerce channels to increase customer coverage [2] Group 3: Market and Sales Insights - Sales in the U.S. account for approximately 10%, primarily through cross-border e-commerce, with no significant impact from tariff increases [2] - Inventory levels in Europe and America have returned to normal after recent adjustments [2] - Sales distribution: Europe accounts for about 30%, America for about 50%, with products covering over 80 countries [3] Group 4: Future Growth Focus - Emphasis on dual-driven growth from ODM and OBM through technological innovation, brand building, and channel optimization [2] - Plans to increase participation in domestic and international exhibitions to explore new markets and maintain close customer relationships [3] - Development of E-BIKE smart systems and exploration of new materials and technologies [3]

Investment Rating - The report gives a "Strong Buy" rating for the company, marking its first coverage [5]. Core Views - The company, Ousheng Electric, is a leading player in the air power equipment sector, focusing on air compressors and expanding into pneumatic tools and cleaning devices. The company has established a strong presence in the U.S. market over the past 15 years and is transitioning from an OEM to a solution provider [4][14]. - Revenue growth is expected to rebound significantly in 2024, with a projected increase of 45%, reaching 1.8 billion RMB, driven by new product categories and a recovery in inventory levels in the U.S. tool industry [4][27]. - The company has a robust competitive edge through established relationships with major retailers like Walmart and Lowe's, and it is enhancing its product offerings with high-margin products [4][51]. Summary by Sections Company Overview - Ousheng Electric specializes in air power equipment, including air compressors and wet/dry vacuum cleaners, and is also venturing into smart care robots. The company has developed core technologies since its establishment in 2009 and has seen significant growth in sales to major U.S. retailers since 2015 [4][14][19]. Revenue Performance - The company experienced a doubling of revenue before 2021, reaching 1.3 billion RMB. However, revenue stagnated in 2022-2023 due to high inventory levels in the U.S. tool industry. A recovery is anticipated in 2024, with revenue expected to grow by 45% [4][27]. Profitability Analysis - The gross margin is projected to recover from 2022 to 2024, primarily due to a shift towards higher-margin products and a decrease in raw material costs. The gross margins for vacuum cleaners and air compressors are approximately 40% and 25%, respectively, with net profit margins expected to rise from 8.8% in 2021 to 14% in 2024 [4][30]. Market Position and Competitive Advantage - Ousheng Electric is a leader in the North American air compressor market, with a strong focus on pneumatic tools. The company benefits from established relationships with major retailers and a commitment to R&D, with a research expense ratio of around 5% [4][51]. Product Categories and Growth Potential - The company has seen rapid growth in its wet/dry vacuum cleaner segment, with a significant portion of sales coming from brand authorization agreements. The revenue from this segment is expected to exceed 900 million RMB in 2024, accounting for over half of total revenue [4][27]. - The service robot segment is also poised for growth, with the market for elderly care robots in China projected to grow at a CAGR of around 15% over the next five years [4][30]. Future Outlook - The company anticipates continued revenue growth of 41%, 27%, and 27% for the years 2025 to 2027, respectively, with net profits expected to reach 346 million RMB in 2025 [4][5].

Core Viewpoint - Zhonglu Co., Ltd. has faced regulatory scrutiny from the Shanghai Securities Regulatory Commission due to non-operational fund occupation involving its actual controller, Chen Rong, and its investment fund, Zhonglu Advantage [1] Group 1: Regulatory Actions - The Shanghai Securities Regulatory Commission issued an administrative supervision decision against Zhonglu Co., Ltd., requiring corrective actions due to a transfer of 3 million yuan to Anqing Kalafei IoT Technology Co., Ltd. without any goods or services in return [1] - The Shanghai Stock Exchange has also issued a regulatory warning to Zhonglu Co., Ltd., Anqing Kalafei, and Chen Rong [1] Group 2: Financial Performance - In 2024, Zhonglu Co., Ltd. reported a revenue of 976 million yuan, a year-on-year increase of 0.28%, but a net loss attributable to shareholders of 19.83 million yuan, marking a shift from profit to loss [1] - Zhonglu Advantage, in which Zhonglu Co., Ltd. holds a 99% stake, reported net losses of 10.29 million yuan in 2023 and 4.47 million yuan in 2024 [2] Group 3: Business Model Transition - Zhonglu Co., Ltd. has shifted its manufacturing model from primarily OEM (Original Equipment Manufacturer) to a combination of ODM (Original Design Manufacturer) and OEM, aiming to improve certification efficiency and reduce costs [3] - The company explained that under the ODM model, the production factory is primarily responsible for 3C certification, which streamlines the certification process for products [3] - The transition to ODM also helps mitigate patent infringement disputes, as the design responsibilities shift away from the company [3]

Group 1: Company Overview - The company, Shenzhen Longte Intelligent Control Co., Ltd., has established a subsidiary named Longteng Future, focusing on automotive parts manufacturing and innovation [2][3]. - The company’s revenue from exports to the U.S. is relatively low, accounting for approximately 4% of total revenue [3]. Group 2: Financial Performance - In Q1 2025, the company experienced a 5.9% year-on-year decline in revenue, primarily due to reduced demand for consumer electronics PCBA [4]. - The net profit for Q1 2025 decreased by 24.85%, attributed to increased sales and R&D expenditures, as well as rising management and financial costs due to exchange rate losses, which increased by approximately 3 million compared to Q1 2024 [4]. Group 3: Research and Development - The company emphasizes R&D investment and plans to continue allocating resources to enhance product intelligence and value [4]. - Future R&D investments will be adjusted based on strategic planning and market demands to align with long-term development goals [4]. Group 4: Product and Market Focus - The main ODM product lines include electronic oil pump controllers, electronic water pump controllers, cooling fan controllers, and charging door actuators [3]. - The company’s small energy storage products are primarily sold in Kenya, Nigeria, and Tanzania [4]. - The company targets international markets including Africa, North America, Southeast Asia, and Europe, with a significant focus on Africa [3].