Investment Rating - The report maintains an "OUTPERFORM" rating for the company [2][5]. Core Views - The company has successfully achieved an IPO on the Hong Kong stock market, raising HKD 9.177 billion to expand production capacity in refrigeration and automotive sectors, and to develop electromechanical actuators for bionic robotics [3][9]. - The company has shown excellent growth in both refrigeration and automotive sectors, with a revenue of RMB 16.56 billion in the refrigeration sector (YoY +13.1%) and RMB 11.39 billion in the automotive sector (YoY +14.9%) for 2024 [4][10]. - The company is expected to benefit from Chinese appliance renewal policies in 2025, with a strong order backlog in the automotive sector [4][10]. Financial Summary - Revenue projections for the company are as follows: RMB 31.65 billion in 2025, RMB 36.28 billion in 2026, and RMB 41.65 billion in 2027, reflecting growth rates of 13%, 15%, and 15% respectively [2][4]. - Net profit is projected to be RMB 3.73 billion in 2025, RMB 4.34 billion in 2026, and RMB 5.07 billion in 2027, with growth rates of 20%, 17%, and 17% respectively [2][4]. - The diluted EPS is expected to increase from RMB 0.90 in 2025 to RMB 1.22 in 2027 [2][4]. Valuation - The company is assigned a target price of RMB 28.80 based on a 32x PE valuation for 2025, reflecting its growth potential in both existing and new markets [5][11].

Core Viewpoint - Sanhua Intelligent Control is approaching its Hong Kong IPO, with a global offering of 360.33 million H-shares and expected net proceeds of approximately HKD 7.741 billion for global R&D and capacity expansion [1][2]. Group 1: IPO Details - The IPO subscription period is from June 13 to June 18, with 25.22 million shares available for public offering in Hong Kong, accounting for 7% of the total offering [2]. - The price range for the H-shares is set between HKD 21.21 and HKD 22.53, with the final price expected to be announced by June 19 [2]. - The company has attracted 17 cornerstone investors, including Schroders and Singapore's sovereign fund, with total subscriptions amounting to approximately USD 562 million (around HKD 4.409 billion) [3]. Group 2: Business Overview - Sanhua Intelligent Control operates primarily in two sectors: refrigeration and air conditioning components, and automotive thermal management system components [1][4]. - The company has a significant market share, holding approximately 45.5% of the global refrigeration control components market and ranking fifth in the automotive thermal management system components market with a 4.1% share [4]. Group 3: Financial Performance - The company has seen continuous growth in net profit over the past decade, increasing from CNY 605 million in 2015 to an estimated CNY 3.099 billion in 2024 [4]. - In Q1 of this year, Sanhua Intelligent Control reported revenue of CNY 7.669 billion, a year-on-year increase of 19.1%, and a net profit of CNY 903 million, up 39.47% [5]. Group 4: Future Growth Strategies - The company is exploring a third growth area in the bionic robotics sector, with plans to develop bionic robot electromechanical actuators [5]. - Sanhua Intelligent Control aims to integrate customer product development and iteration processes to achieve mass production in the bionic robotics field [5].