Core Viewpoint - The company reported a decline in net profit and revenue for Q3 2025, primarily due to decreased sales and increased share-based payment expenses, but continues to focus on high-end product launches and expanding into civil applications in the aerospace industry, maintaining a "buy" rating [1][4]. Financial Performance - For Q1-Q3 2025, the company achieved revenue of 400 million yuan, a year-on-year increase of 5.01%, while net profit attributable to shareholders was 64 million yuan, a year-on-year decrease of 11.53% [1]. - In Q3 2025, revenue was 106 million yuan, reflecting a year-on-year decrease of 15.97% and a quarter-on-quarter decrease of 35.32%. Net profit for Q3 was 15 million yuan, down 37.56% year-on-year and 46.80% quarter-on-quarter [1]. - The gross margin for Q1-Q3 2025 was 38.71%, a decrease of 3.97 percentage points year-on-year, and the net margin was 15.90%, down 3.01 percentage points year-on-year [2]. Cost and Expense Analysis - The company's expense ratio for Q1-Q3 2025 was 22.79%, an increase of 2.09 percentage points year-on-year. The breakdown includes sales expense ratio at 8.61%, management expense ratio at 6.88%, R&D expense ratio at 7.53%, and financial expense ratio at -0.24% [2]. - The increase in management expenses was attributed to rising operating income and corresponding cost increases, while R&D expenses rose due to increased investment and personnel [2]. Product and Market Strategy - The company has established a complete product layout, forming a competitive advantage with a fully controllable supply chain, with applications across various sectors including aerospace, energy, automotive, and medical [3]. - Recent innovations include high-value products such as high-speed blade tip grinding centers and five-axis horizontal machining centers, contributing to new revenue growth [3]. - The company is expanding into emerging fields like low-altitude economy and humanoid robotics, providing high-precision manufacturing equipment for components in drones and helicopters [3]. Profit Forecast and Valuation - The company has revised down its net profit forecasts for 2025-2027 by 5.82%, 10.38%, and 7.64%, respectively, projecting net profits of 163 million, 210 million, and 268 million yuan, with a three-year compound growth rate of 27.25% [4]. - The estimated EPS for 2025, 2026, and 2027 is 1.22, 1.58, and 2.01 yuan, respectively, with a target price of 81.74 yuan based on a PE ratio of 67 times for 2025 [4].

Investment Rating - The investment rating for the company is "Buy" with a target price of RMB 81.74 [7]. Core Views - The company reported a revenue of RMB 400 million for the first three quarters of 2025, representing a year-on-year increase of 5.01%, while the net profit attributable to shareholders was RMB 64 million, a decrease of 11.53% year-on-year. The third quarter saw a revenue of RMB 106 million, down 15.97% year-on-year and 35.32% quarter-on-quarter, primarily due to a decrease in sales revenue and an increase in share-based payment expenses [1]. - The company is focusing on high-end product launches to achieve domestic substitution and is deepening its engagement in the aerospace industry while continuously expanding applications in the civilian sector. The outlook for the company leading high-end machine tool domestic substitution is positive [1]. Summary by Sections Financial Performance - For the first three quarters of 2025, the company's gross margin was 38.71%, down 3.97 percentage points year-on-year, and the net profit margin was 15.90%, down 3.01 percentage points year-on-year. The decline in gross margin is attributed to the lower gross margin of the automation production line business, which is rapidly increasing in proportion [2]. - The expense ratio for the first three quarters of 2025 was 22.79%, an increase of 2.09 percentage points year-on-year. The sales expense ratio, management expense ratio, R&D expense ratio, and financial expense ratio were 8.61%, 6.88%, 7.53%, and -0.24%, respectively [2]. Product and Market Positioning - The company has a complete product layout, forming a competitive advantage of full industry chain autonomy. It has four general technology platform products and four specialized technology platform products, widely used in aerospace, energy, automotive, shipbuilding, molds, low-altitude economy, and medical fields [3]. - The company is expanding into emerging fields, focusing on low-altitude economy and humanoid robots. It is developing high-end precision manufacturing equipment for components of drones and helicopters, and its control algorithms and servo drives can be adapted for humanoid robot control systems [4]. Profit Forecast and Valuation - The company's net profit forecasts for 2025-2027 have been revised down by 5.82%, 10.38%, and 7.64%, respectively, to RMB 163 million, RMB 210 million, and RMB 268 million, with a three-year compound growth rate of 27.25%. The corresponding EPS is projected to be RMB 1.22, RMB 1.58, and RMB 2.01 [5]. - The company is assigned a PE valuation of 67 times for 2025, leading to a target price of RMB 81.74, down from the previous value of RMB 87.10 [5].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 110.56 yuan per share, based on a 29 times PE valuation for 2026E [5][7]. Core Insights - The company, Qiaofeng Intelligent, is a leading enterprise in the metal cutting machine tool sector, focusing on high-end CNC machine tools and benefiting from the domestic substitution process in China [2][3]. - The company has shown significant revenue growth, with a projected revenue of 1.76 billion yuan in 2024, up 21.02% year-on-year, and a net profit of 205 million yuan, up 21.33% year-on-year [2][3]. - The company is expanding into the robotics processing equipment field, which is expected to further enhance its growth potential [4]. Summary by Sections Company Overview - Qiaofeng Intelligent, established in 2009, specializes in the R&D, production, sales, and service of mid-to-high-end CNC machine tools, recognized as a national-level specialized "little giant" enterprise [2][21]. - The company has a comprehensive product range, including vertical machining centers, gantry machining centers, and horizontal machining centers, serving various industries such as general equipment, consumer electronics, automotive parts, and aerospace [2][3][21]. Market Opportunity - The high-end machine tool market in China is vast, with domestic enterprises still underperforming compared to global standards, indicating a strong need for domestic substitution [3][4]. - The company is well-positioned to benefit from this trend due to its strong product quality, complete product layout, and self-sufficient key components [3][4]. Growth Potential - The company plans to enhance its production capacity through new projects and is actively pursuing overseas expansion opportunities [4]. - It is also developing new products in key sectors such as new energy vehicles and aerospace, which are expected to contribute significantly to revenue [4][5]. Financial Performance - The company has demonstrated robust financial growth, with a projected revenue increase to 2.52 billion yuan in 2025, representing a 43.02% year-on-year growth, and a net profit of 325 million yuan, up 58.37% [5][6]. - The revenue from the vertical machining center segment has been a major contributor, accounting for 83.8% of total revenue in the first half of 2025 [33][34]. Profitability - The company maintains a strong profitability profile, with a gross margin around 30%, which is higher than many peers in the industry [46][49]. - The net profit margin has also improved, reaching 15% in the first half of 2025, reflecting effective cost control and product quality [46][49].