Summary of Jerry Corporation Conference Call Company Overview - **Company**: Jerry Corporation - **Industry**: Oil and Gas, specifically focusing on natural gas power generation and related services Key Points and Arguments Market Position and Strategy - Jerry Corporation has secured production capacity from suppliers like Siemens and Geely, showcasing its leading position in the oil and petrochemical industry and its ability to acquire overseas EPC projects [2][3] - The company emphasizes its natural gas business, particularly in the Middle East, where capital expenditure is rapidly increasing, positioning power generation as a potential third growth curve [2][3] Financial Performance and Business Model - The gas turbine power generation business has two main profit models: leasing and sales. The leasing model generates annual rent of approximately 2 to 2.5 million RMB per megawatt, with gross margins of 70% to 80% and net profit margins of 40% to 50%, significantly higher than the sales model [2][6] - Jerry Corporation currently has 300 megawatts in the leasing market and has signed contracts for an additional 600 megawatts, totaling over 900 megawatts of capacity. If fully leased, this could generate annual revenue of 2 billion RMB, corresponding to around 1 billion RMB in net profit, indicating substantial profit elasticity [2][6] Expansion Plans - The company plans to expand its power generation business into regions like the Middle East and North Africa, which have significant electricity demand gaps, providing ample growth opportunities. It has already secured a 6 billion RMB order in Algeria for gas turbine equipment [4][8] - The goal is to elevate the power segment's revenue to match the current drilling and completion equipment revenue level of approximately 8 billion RMB, aiming for a net profit of around 1.6 billion RMB [4][8] Competitive Advantages - Jerry Corporation's success in entering the North American data center market is attributed to its modular manufacturing model and customization capabilities. The gas turbine units consist of a gas turbine and generator, with the turbine accounting for 50% to 60% of total costs [5] - Major manufacturers like Siemens outsource small gas turbine assembly to Jerry due to lower manufacturing barriers and the high labor costs involved in the assembly process, where Jerry has a cost advantage [5] Future Outlook - The company is transitioning from a traditional oil service provider to a comprehensive energy solutions provider, with a focus on innovation and research and development to enhance its competitive strength and long-term growth potential [8] - Jerry Corporation's valuation is currently low, with a projected P/E ratio of only 13 times for the next year (2026), but the new business opportunities are expected to enhance performance and long-term growth prospects [3]

Investment Rating - The report maintains an "Overweight" rating for the mechanical equipment industry, specifically recommending AI equipment, humanoid robots, and related sectors [1]. Core Insights - The expansion of AI data centers in the U.S. is driving increased demand for power generation, particularly benefiting domestic equipment manufacturers [2]. - The introduction of Google's Gemini 3 model indicates a sustained growth in AI computing infrastructure, leading to increased demand for PCB and liquid cooling equipment [3]. - The humanoid robot sector is expected to experience a significant upward trend, particularly with upcoming catalysts in December and early 2026 [4]. Summary by Sections Recommended Companies - The report suggests a focus on companies such as North China Huachuang, SANY Heavy Industry, Zhongwei Company, and others across various segments including semiconductor equipment, engineering machinery, and automation [1][13]. Investment Highlights - **Gas Turbines**: The U.S. AI data center expansion is expected to boost demand for gas turbine power generation, with significant opportunities for domestic brands like Jereh and Haomai Technology [2]. - **AI Equipment**: The performance of Google's Gemini 3 has exceeded expectations, indicating a robust demand for AI computing infrastructure, particularly in PCB and liquid cooling solutions [3]. - **Humanoid Robots**: The humanoid robot sector is poised for a major rally, driven by key developments from Tesla and other domestic players [4]. Industry Trends - The mechanical equipment sector is projected to recover, with a focus on electric forklifts and automation solutions driven by labor shortages and technological advancements [17][49]. - The global market for warehouse automation solutions is expected to grow significantly, with AMR solutions leading the way due to their efficiency and flexibility [49]. Financial Projections - The report forecasts substantial growth in net profits for various companies within the sector, with specific projections for 2025-2027 indicating a positive outlook for companies like Zhongli and Jereh [19][25][32].

Group 1: Excavator Sales and Market Outlook - In October, domestic excavator sales increased by 2.4% year-on-year, while exports rose by 12.9% [3] - Total excavator sales in October reached 18,096 units, marking a 7.77% year-on-year growth, with domestic sales at 8,468 units and exports at 9,628 units [3] - The domestic market is expected to remain stable, driven by demand from water conservancy projects and labor substitution, while overseas markets show strong capital expenditure in mining sectors [3] Group 2: Oil Service Equipment and Saudi Aramco - Saudi Aramco reported a Q3 adjusted net profit of $28 billion and operating cash flow of $36.1 billion, both showing slight year-on-year increases [4] - The company has adjusted its natural gas production capacity goals, increasing the target growth from over 60% to approximately 80% by 2030 [4] - The demand for oil service equipment is expected to rise due to ongoing energy transition and increased investment in downstream operations [4][5] Group 3: Robotics Sector and Upcoming Catalysts - The robotics sector is anticipated to experience a significant upward trend in November, driven by key events such as Tesla's third-generation robot release and the IPO application of Yushu [5] - Core stocks in the robotics supply chain are recommended for focus, including Top Group, Zhejiang Rongtai, and Hengli Hydraulic [5] - The sector is expected to benefit from concentrated catalysts in the upcoming months, suggesting a favorable investment environment [5]

Group 1: Inflation Trends - The core inflation continues to rise steadily, with October CPI increasing by 0.2% year-on-year and 0.2% month-on-month, while PPI shows a year-on-year decline of 2.1% but a month-on-month recovery to 0.1% [3][5] - The main drivers for the recent rise in core CPI include anti-involution governance, fiscal stimulus, and rising gold prices, while long-term recovery relies on improving consumer capacity and high-quality consumption scenarios [3][5] - Food price drag has lessened, with core service prices rising seasonally, reaching the highest level since March 2024 [3][5] Group 2: Market Dynamics - The strong dollar has led to outflows of foreign capital from Hong Kong stocks, with a net outflow of 791.8 million HKD since the end of September [9][10] - The dollar's strength is attributed to U.S. government shutdowns, hawkish Fed statements, and weakness in non-dollar currencies, impacting liquidity in Hong Kong [8][9] - Despite short-term pressures, the Hong Kong market is expected to reach new highs in the medium term, driven by inflows of incremental capital and high-quality assets [10] Group 3: Aviation Sector Outlook - The Chinese aviation sector is entering a "super cycle," with a significant rise in profitability expected as supply and demand recover, leading to higher ticket prices [14][15] - The supply side is constrained by airspace bottlenecks, while demand is supported by a growing aviation population and recovery in customer structure [14] - The long-term logic of the aviation sector suggests a strategic increase in positions, particularly in high-quality networks, as demand continues to strengthen [15] Group 4: Machinery Industry Performance - The machinery industry is projected to see overall improvement by 2025, with significant revenue growth and profit increases reported in the first three quarters of 2025 [17] - Key growth areas include humanoid robots and engineering machinery, driven by advancements in AI manufacturing and increased orders from overseas markets [18] - The energy equipment sector is also recovering, with a focus on rational competition and price recovery in the photovoltaic equipment market [18]

Investment Rating - The report maintains an "Overweight" rating for the machinery equipment industry, particularly highlighting opportunities in oil service equipment and engineering machinery driven by domestic demand and overseas expansion [1]. Core Insights - The machinery equipment sector is expected to benefit from both domestic and international demand, with a notable increase in excavator sales projected for October 2025, showing a year-on-year growth of 7.77% [1]. - The oil service equipment segment is poised for growth due to Saudi Aramco's increased natural gas production plans and the rising demand for domestic equipment in international markets [2]. - The humanoid robot sector is anticipated to experience a surge in November 2025, driven by key catalysts such as Tesla's third-generation release and IPO applications from industry players [3]. Summary by Sections Engineering Machinery - In October 2025, excavator sales reached 18,096 units, with domestic sales at 8,468 units (up 2.44% year-on-year) and exports at 9,628 units (up 12.9% year-on-year) [1]. - The report emphasizes the resilience of the domestic market, particularly in small excavators driven by water conservancy projects and labor substitution [1]. - The overseas market is expected to see significant growth, particularly in regions like the US, Africa, and South America, with a strong outlook for the next 2-3 years [1]. Oil Service Equipment - Saudi Aramco's Q3 report indicated a net profit of $28 billion, with a focus on cost control and increased oil production to maintain cash flow [2]. - The company has raised its natural gas production target for 2030, which is expected to enhance the demand for oil service equipment [2]. - The report recommends companies like Jereh and Neway for their potential in the Middle Eastern market [2]. Humanoid Robots - The humanoid robot sector is expected to see a significant uptick in activity in November 2025, with several key industry events and product launches [3]. - The report identifies core companies in the humanoid robot supply chain, including Top Group and Zhejiang Rongtai, as potential investment opportunities [3]. - The focus is on companies that are well-positioned to benefit from the upcoming technological advancements and market demand [3].

Core Viewpoint - The mechanical industry is expected to have significant investment opportunities in the technology innovation sector by 2026, with structural opportunities arising from both domestic demand recovery and high export demand [2][5]. Group 1: Technology Innovation and AI Infrastructure - The AI infrastructure is expected to benefit from high capital expenditure and rapid technological iterations, leading to new opportunities in the mechanical sector. Overseas capital expenditure for computing power is exceeding expectations, driving demand for PCB equipment and AIDC [2][5]. - The next generation of chips, such as Rubin, may increase processing requirements for PCB, cold plates, and quick connectors, while also promoting new technologies like micro-channel liquid cooling, enhancing the value of equipment and consumables [2][5]. Group 2: Humanoid Robots - The humanoid robot industry is anticipated to accelerate by 2026, with a focus on leading companies expanding production. The period from 2022 to 2025 is seen as a transition from prototype to small-scale engineering, with 2026 potentially marking the year of mass production for Tesla [7]. - Attention should be given to the performance upgrades of domestic humanoid robots and the rapid development of application scenarios [7]. Group 3: Export Chain - The export chain should focus on sectors with global competitiveness, such as engineering machinery, hardware tools, motorcycles, and oil service equipment, which are expected to benefit from internationalization and reforms [3][12]. - The engineering machinery sector is seeing significant growth in exports, particularly in the U.S. due to the recent interest rate cuts, which are likely to boost demand [11]. Group 4: Specialized Equipment - Specialized equipment sectors are expected to experience turning points and technological changes, with a focus on areas like solid-state batteries and nuclear fusion, as well as segments like 3C equipment and coal machinery that are showing signs of recovery [3][15]. - The lithium battery equipment sector is projected to see a growth spurt, with domestic capital expenditure expected to maintain a growth rate of around 20% [16]. Group 5: General Cyclical Opportunities - The general cyclical sector is expected to see a bottoming out, with structural opportunities emerging in areas like machine tools, injection molding machines, and industrial gases, as demand recovers [13][14]. - The demand for industrial gases is expected to improve, although there may still be pressure on gas prices [14]. Group 6: 3C Automation Equipment - The 3C automation equipment sector is anticipated to enter a hardware innovation phase in 2026, driven by new product trends such as foldable screens and AI glasses [17].

Investment Rating - The report maintains an "Overweight" rating for the machinery equipment industry [1] Core Views - The domestic engineering machinery sector is experiencing a comprehensive recovery, with significant sales growth in various types of cranes in September, indicating an upward cycle [2] - Liquid cooling technology is identified as a key beneficiary of increased AI computing capital expenditures, with a projected market size for liquid cooling systems reaching 125 billion yuan by 2026 [3] - The oil service equipment market is expected to remain stable despite recent oil price declines, driven by ongoing expansion in the Middle East and increasing domestic market share [4] - The semiconductor equipment sector is poised for growth due to U.S. export controls, which may enhance the market share of domestic manufacturers [4] - The humanoid robot market is anticipated to see significant catalysts with the upcoming launches of Tesla's Gen3 and Yushun's products [5] Summary by Sections Engineering Machinery - In September, domestic sales of various cranes showed significant year-on-year growth, with increases of 41% for automotive cranes, 67% for crawler cranes, and 30% for truck-mounted cranes, indicating a strong recovery in the sector [2] - The report highlights the potential for increased market share in overseas markets starting in 2025, with strong earnings visibility for the next 2-3 years [2] Liquid Cooling Equipment - Liquid cooling technology is essential for addressing data center heat dissipation challenges, offering advantages such as low energy consumption and high cooling efficiency [3] - The report estimates that the market for ASIC liquid cooling systems will reach 12.5 billion yuan by 2026, with Nvidia's liquid cooling systems projected to reach 26.8 billion yuan [3] Oil Service Equipment - Despite a recent drop in oil prices, the demand for oil service equipment is expected to remain stable due to low production costs in the Middle East and ongoing capital expenditures in LNG [4] - The report suggests that domestic leaders like Jereh and Neway will continue to strengthen their positions in the international market [4] Semiconductor Equipment - U.S. export controls on semiconductor equipment are expected to benefit domestic manufacturers, with a rapid increase in the localization rate of critical manufacturing equipment [4] - The report recommends focusing on companies involved in etching, thin film deposition, and advanced packaging equipment [4] Humanoid Robots - The launch of the Zhiyuan G2 robot and the anticipated releases from Tesla and Yushun are expected to drive growth in the humanoid robot sector [5] - The report emphasizes the high level of catalysts in this segment, suggesting a focus on core companies involved in humanoid robotics [5]

Investment Rating - The report maintains a "Recommended" rating for the company, with expected net profits for 2025-2027 being 30.85 billion, 37.52 billion, and 44.14 billion respectively, corresponding to PE ratios of 17x, 14x, and 12x [4][6]. Core Insights - The company reported steady revenue growth, achieving 10.42 billion in revenue for the first three quarters of 2025, a year-on-year increase of 29.49%, and a net profit of 1.808 billion, up 13.11% year-on-year. The gross margin was 31.29%, down 3.73 percentage points, while the net margin was 17.9%, down 2.59 percentage points [1]. - The company has significantly increased its contract liabilities and advance payments, with contract liabilities rising from 1.303 billion at the end of 2024 to 1.654 billion, and advance payments increasing from 0.547 billion to 1.141 billion, providing support for future business growth [2]. - The company continues to maintain a leading position in the oil and gas sector, securing large overseas contracts and increasing market share in high-end equipment, particularly in electric fracturing projects and partnerships with major oil companies [3]. Financial Summary - For 2024A, the company expects total revenue of 13.355 billion, with a projected growth rate of -4.0%. By 2025E, revenue is expected to rise to 16.190 billion, reflecting a growth rate of 21.2%. The net profit attributable to shareholders is forecasted to be 2.627 billion in 2024A, increasing to 3.085 billion in 2025E, with growth rates of 7.0% and 17.4% respectively [5][9]. - The company’s gross margin is projected to be around 33.70% in 2024A, slightly decreasing to 33.36% in 2025E, while the net profit margin is expected to be 19.67% in 2024A and 19.06% in 2025E [8][9].

Group 1: Excavator Sales - In September, a total of 19,858 excavators were sold, representing a year-on-year increase of 25%, with domestic sales of 9,249 units (+22%) and export sales of 10,609 units (+29%), significantly exceeding market expectations [1][3][4] - The domestic excavator market has shown a clear upward trend from June to September, supported by factors such as labor substitution and water conservancy funding, despite weak fundamentals in real estate and infrastructure [1][3] - The structure of excavators in China is expected to shift towards a higher proportion of small excavators, which will continue to provide a stabilizing effect on the domestic market [1][3] Group 2: Oilfield Equipment - On October 10, international oil prices fell by approximately 2%, with Brent crude priced at $64 per barrel, primarily due to renewed tariffs announced by Trump and concerns over international trade [2][4] - The decline in oil prices is not expected to significantly impact the demand for oilfield equipment in the medium term, as the cost of oil production in the Middle East remains low and above the breakeven point [2][4] - The demand for LNG as a transitional energy source is expected to sustain, with continued capital expenditure growth in the Middle East, driving up equipment demand [2][4] Group 3: Investment Recommendations - Companies recommended for investment in the excavator sector include SANY Heavy Industry, Zoomlion, LiuGong, Shantui, and Hengli Hydraulic [1][3] - In the oilfield equipment sector, companies such as Jereh and Neway are highlighted as strong players due to high barriers to entry and increasing domestic market share [2][4]

Investment Rating - The report maintains an "Overweight" rating for the machinery equipment sector, with a strong recommendation for domestic demand exceeding expectations in engineering machinery and a strong push for oil service equipment with high growth certainty [1]. Core Insights - The report highlights significant growth in excavator sales, with a total of 19,858 units sold in September, representing a 25% year-on-year increase, driven by structural improvements and strong export demand [2]. - In the oil service equipment sector, the report notes that the impact of U.S. tariffs and falling oil prices on overseas operations is limited, with ongoing expansion in the Middle East and increasing domestic market share for local manufacturers [3]. - The report emphasizes the potential of humanoid robots and the upcoming launches of key products from Tesla and Yushun, suggesting a focus on core stocks in this area [3]. - The semiconductor equipment sector is expected to benefit from increased domestic production capabilities due to U.S. export controls, with a focus on enhancing the localization rate of critical manufacturing equipment [4]. Summary by Sections Engineering Machinery - Excavator sales in September reached 19,858 units, up 25% year-on-year, with domestic sales at 9,249 units (up 22%) and exports at 10,609 units (up 29%) [2]. - The report suggests that despite weak fundamentals in real estate and infrastructure, factors like machine replacement and water conservancy funding are supporting the growth of small excavators [2]. Oil Service Equipment - The report indicates that the recent drop in oil prices is unlikely to significantly affect the demand for oil service equipment, particularly in the Middle East, where production costs are low [3]. - It recommends focusing on companies like Jereh and Neway, which are well-positioned in this high-barrier market [3]. Humanoid Robots - The launch of the Zhiyuan G2 robot is highlighted, with features that enhance its operational capabilities, and the report anticipates significant market catalysts from Tesla's Gen3 and Yushun's upcoming products [3]. Semiconductor Equipment - The report discusses the implications of U.S. export controls on semiconductor equipment, predicting a rise in domestic production capabilities and investment opportunities in various segments of semiconductor manufacturing [4]. Lithium Battery Equipment - The report notes that recent export controls do not equate to a ban, and companies with compliance capabilities are expected to benefit from stable overseas market shares [8]. - It highlights the resurgence of demand for equipment suppliers as domestic battery manufacturers ramp up production in response to increasing sales of electric vehicles and energy storage systems [8]. Overall Recommendations - The report suggests a focus on a diverse range of companies across sectors, including engineering machinery, oil service equipment, humanoid robots, semiconductor equipment, and lithium battery equipment, indicating a robust outlook for these industries [1][4][8].