Core Viewpoint - Zhejiang Sanhua Intelligent Control Co., Ltd. is preparing for a listing on the Hong Kong Stock Exchange, with CICC and Huatai International as joint sponsors [1] Company Overview - Sanhua Intelligent is the largest manufacturer of refrigeration and air conditioning control components globally and a leading manufacturer of automotive thermal management system components [3] - The company operates in two main segments: refrigeration and air conditioning components, and automotive components, with ongoing expansion into emerging fields such as bionic robot electromechanical actuators [3] Market Position - According to Frost & Sullivan, Sanhua holds approximately 45.5% market share in the global refrigeration and air conditioning control components market and ranks fifth in the global automotive thermal management system components market with a 4.1% share [3] - In the refrigeration and air conditioning components sector, Sanhua is a key supplier for various markets, including household and commercial air conditioning, commercial refrigeration, industrial refrigeration, and small appliances [3] Product Portfolio - The company’s key products include various types of valves (electronic expansion valves, four-way reversing valves, shut-off valves, solenoid valves, and ball valves), heat exchangers (especially microchannel heat exchangers), pumps (like Omega pumps), and controllers (including variable frequency controllers and pressure sensors) [3] - In the automotive parts sector, Sanhua provides essential thermal management control solutions for both new energy vehicles and traditional fuel vehicles [4] Financial Performance - Revenue figures for Sanhua are projected to be approximately 21.35 billion RMB in 2022, 24.56 billion RMB in 2023, and 27.95 billion RMB in 2024, with corresponding profits of about 2.61 billion RMB, 2.93 billion RMB, and 3.11 billion RMB respectively [5][6] - The company’s gross profit margin is expected to remain stable, with gross profits of 5.46 billion RMB (25.6%), 6.74 billion RMB (27.4%), and 7.62 billion RMB (27.3%) for the years 2022, 2023, and 2024 [6]

Group 1: Financial Performance - In Q1 2025, the company achieved a revenue of 76.69 billion, representing a year-on-year growth of 19.10% [4] - The net profit attributable to shareholders was 9.03 billion, with a year-on-year increase of 39.47% [4] Group 2: Globalization Strategy - The company has established overseas production bases in Poland, Mexico, Thailand, and Vietnam to enhance its global development strategy [4] - In 2024, the export business to the U.S. accounted for less than 20%, with direct exports from China to the U.S. being under 5% [4] Group 3: Market Demand and Product Development - Demand for refrigeration and air conditioning components is on the rise, partly due to preemptive orders driven by tariff expectations and the implementation of a national replacement policy [4] - The company holds the leading global market share in key products such as electronic expansion valves and four-way valves, supporting steady business growth [4] Group 4: Risk Management - The company has effectively mitigated tariff risks through flexible capacity allocation at overseas factories and long-term partnerships with major manufacturers [4] - The dynamic response to tariff policy changes ensures business stability within controllable limits [4] Group 5: Robotics and Motor Technology - The company is making significant progress in its bionic robot actuator business, aiming to make it the third core growth point [5] - With an annual production capacity exceeding 100 million motors, the company leverages its extensive manufacturing system and technical expertise to expand into the bionic robotics sector [5]

Investment Rating - The report maintains an "Outperform the Market" rating for the company [5][28]. Core Views - The company is expected to achieve a slight increase in revenue and net profit in 2024, with projected revenue of 27.95 billion yuan, a year-on-year growth of 13.8%, and a net profit of 3.10 billion yuan, a year-on-year growth of 6.1% [1][7]. - The growth is attributed to the increasing orders in the new energy vehicle sector and the steady market share growth in the refrigeration and air conditioning business [1][7]. - The company is focusing on optimizing the performance of robotic components and expanding into new growth areas, particularly in bionic robotics [3][24]. Revenue and Profitability - The company achieved a sales gross margin of 27.47% in 2024, a slight decrease of 0.42 percentage points year-on-year, and a net profit margin of 11.13%, down 0.82 percentage points year-on-year [2][8]. - The refrigeration business gross margin was 27.35%, down 0.62 percentage points year-on-year, while the automotive parts business gross margin was 27.64%, up 0.53 percentage points year-on-year [2][8]. Business Segments - The refrigeration business generated revenue of 16.56 billion yuan in 2024, a year-on-year increase of 13.1%, while the automotive parts business revenue reached 11.39 billion yuan, a year-on-year increase of 14.9% [7][17]. - The company holds the global market share leader position in several thermal management products, including electronic expansion valves and heat management components for new energy vehicles [2][16]. Future Investments - The company plans to invest no less than 5 billion yuan in the "Future Industry Center Project," which includes projects for intelligent frequency controllers and robotic electromechanical actuators [26][27]. - This investment aims to enhance the company's capabilities in electronic control integration and system solutions, positioning it for potential growth [27][28]. Financial Forecasts - The company has slightly adjusted its profit forecasts, expecting net profits of 3.74 billion yuan, 4.37 billion yuan, and 5.34 billion yuan for 2025, 2026, and 2027 respectively [28]. - The expected earnings per share for the same years are projected to be 1.00 yuan, 1.17 yuan, and 1.43 yuan, with corresponding price-to-earnings ratios of 30, 25, and 21 times [28].