Core Viewpoint - Zhejiang Rifa Precision Machinery Co., Ltd. recently conducted a roadshow to engage with institutional investors, discussing the company's operational status, core product advancements, and strategic planning [1][2]. Group 1: Investor Engagement - The roadshow attracted participation from 14 institutions, including major securities firms and asset management companies, indicating strong interest in the company's developments [2]. - The company’s Secretary of the Board, Qi Bing, provided insights into the company's performance and future direction during the discussions [2]. Group 2: Core Product Development - The focus was on the progress of the CNC thread grinding machine, which is utilized in high-precision applications across various industries, including new energy vehicles and humanoid robots [3]. - The company has established production capabilities for high-precision CNC thread grinding equipment and has made progress in market expansion, signing contracts with key clients such as Best and Sanlian Forging [3]. - However, the humanoid robot sector remains in its early stages, and large-scale production of related CNC grinding equipment is still anticipated to take time [3]. Group 3: Subsidiary Product Matrix - The company’s subsidiaries, Rifa Gride and Rifa Nippon, have a comprehensive product matrix covering grinding and cutting tools, with a strong presence in the aerospace sector [4]. - Rifa Gride focuses on CNC grinding machines and production lines, while Rifa Nippon specializes in cutting machine tools, serving various industries including traditional machinery and aerospace [4]. Group 4: Business Strategy - The company aims to become a benchmark enterprise in the intelligent manufacturing sector, focusing on high-precision and intelligent products [5]. - The strategy emphasizes leading with mainframe business, supporting high-end manufacturing, and leveraging intelligent manufacturing as a breakthrough point [5]. - Continuous improvement in machine quality and production efficiency is a priority to enhance market competitiveness and brand influence [5].

Core Viewpoint - The company has developed high-precision CNC thread grinding equipment for processing lead screws and nuts, which is recognized by customers in various industries, including electric vehicles and humanoid robots [2] Group 1: Company Developments - The company announced on November 7 that it has the production capacity for high-precision CNC thread grinding equipment [2] - Market expansion is progressing as planned, with contracts signed or strategic cooperation established with clients such as Best, Wuzhou Xinchun, and Sanlian Forging [2] - The company has delivered CNC grinding equipment for lead screws and nuts to several clients [2] Group 2: Industry Context - The CNC grinding equipment is primarily used in high-precision applications for industries like electric vehicles, humanoid robots, industrial mother machines, tools, and industrial automation [2] - Some downstream industries, such as humanoid robots, are still in the early stages and have not yet achieved large-scale production, indicating that industrial growth will take time [2] - The company will focus on tracking the technological development routes of downstream customers and end-users, making product R&D in related fields a key direction for future development [2]

Core Viewpoint - The company is expected to achieve a significant profit increase of approximately 48% year-on-year, reaching around RMB 502 million for the six months ending September 30, 2025, outperforming the industry average growth rate and positioning itself as a leader in the machine tool industry recovery [1]. Group 1: Growth Drivers - Demand-side resonance is evident, with China's automotive manufacturing fixed asset investment growth accelerating to 20.2% from the previous year, benefiting the company as its largest downstream sector is automotive parts [1]. - Supply-side optimization is being implemented through lean management practices, enhancing the competitiveness of lathes via improvements in production processes and supply chain management [1]. - The company has launched new products such as external thread grinding machines and high-speed precision CNC lathes, expanding its solutions in the automotive electric power steering system (EPS) [1]. Group 2: New Growth Opportunities - The liquid cooling connector market is projected to grow from RMB 2.52 billion in 2022 to RMB 5.01 billion by 2024, with a compound annual growth rate of approximately 41.0%, providing a new growth curve for the company [2]. - The company is collaborating with leading liquid cooling equipment firms to offer solutions using high-precision CNC lathes and precision turning machines, which can achieve micron-level processing accuracy [2]. - Revenue contributions from the liquid cooling business are expected to materialize by 2026, marking it as the second growth curve after automotive parts [2]. Group 3: Share Buyback and Market Confidence - In September 2025, the company repurchased 2.052 million shares for a total of RMB 62.11 million, with an average repurchase price between HKD 27 and 33, reflecting management's confidence in the company's future performance and recognition of its core technological strengths [2]. Group 4: Profit Forecast and Valuation - The company maintains its revenue forecasts for 2026 and 2027 while raising net profit estimates by 3.8% and 3.9% to RMB 1.03 billion and RMB 1.21 billion, respectively [2]. - The current price corresponds to a 10x and 9x P/E for 2026 and 2027, with a target price of HKD 38.6, indicating a potential upside of 25.8% from the current price [2].

Summary of Huachen Equipment Conference Call Industry and Company Overview - Huachen Equipment is a leading private enterprise in China's precision grinding machine sector, focusing on internal and external thread grinding machines [2][6] - The company has formed a joint venture with Changchun Institute of Optics to develop ultra-precision optical component grinding machines, crucial for the localization of lithography machines [2][8] Core Insights and Arguments - Huachen Equipment has secured significant orders, including a 100-unit order from Fuliwang, indicating strong market recognition of its products in the humanoid robot screw rod grinding machine sector [2][7] - The company reported a net profit margin of approximately 25%-26% and a gross profit margin of about 34% for 2023, reflecting high product capability and market acceptance [2][9] - The CNC roller grinding machine market is valued at around 2 billion yuan, characterized as stable and not a growth sector, with Huachen ranked first domestically and third globally [5][12] Future Growth Potential - Huachen Equipment plans to continue expanding in humanoid robot roller screw rods, internal thread grinding machines, and ultra-precision optical components, aiming for greater growth opportunities [2][9] - The company recently launched the Ayawaya MU-level high-end composite grinding center, marking its first import substitution product in the high-precision grinding machine field [10] - The humanoid robot screw rod market is projected to reach 60 billion yuan in China by 2035, with significant growth potential driven by advancements in robotics [13] Additional Important Insights - The company’s sand wheel business has potential, but strict procurement management from state-owned enterprises has limited its market penetration [14] - The ultra-precision curved grinding machine is essential for high-precision optical components, with significant implications for the lithography machine industry in China [15][16] - Profit forecasts indicate that Huachen Equipment's profits could exceed 100 million yuan in 2025, supported by the delivery of Fuliwang orders and upcoming batch orders in humanoid robots and semiconductor equipment [5][17]

Summary of Grinding Machine Industry Conference Call Industry Overview - The global grinding machine market is approximately 6 billion RMB, with China accounting for 20% or about 1.2 billion RMB [1][4] - Domestic grinding machines hold a 52% market share in China, but there is a significant net import gap of 590 million USD, indicating reliance on imports for high-end markets [1][4] - China's grinding machine exports account for about 26%, which is significantly lower than Germany (80%) and Japan (56%), highlighting the need for improvement in global competitiveness, especially in high-precision grinding machines [1][6] Market Structure and Dynamics - The grinding machine industry can be classified by processing method and precision. Basic models, including external, internal, and surface grinders, contribute 70% of sales value [2] - The market concentration for the top five companies (CR5) in the grinding machine sector is only 30%, indicating a highly fragmented market, except for surface grinders, which have a higher concentration of 20%-30% [12] - The demand for thread grinding machines may see a potential elasticity gain of 50% when humanoid robots reach mass production of 1 million units [2][17] Key Components and Technology Barriers - The main costs in grinding machines are structural components, CNC drive systems, and spindles, with spindle costs being the highest and presenting the most significant technical barriers [1][8] - The slow progress in the localization of CNC systems in the grinding machine industry is primarily due to reliance on foreign brands like Siemens, Fanuc, and Mitsubishi [10] - Key components such as ball screws, worktables, and linear guides are mostly sourced externally, which impacts the consistency and yield rates of the machines [11] Company Highlights - **Qinchuan Machine Tool**: Focuses on rolling functional components and grinding machine integration, with several subsidiaries and a strong position in various machine tool sectors [18] - **Rifa Precision**: Transitioned from bearing grinding to thread grinding, achieving a revenue of 530 million RMB in 2023 with a net profit margin of 13% [19] - **Huachen Equipment**: Specializes in CNC roller grinding machines, with a revenue of 380 million RMB in 2024 and a gross margin of 28.4% [20][21] - **Tsinshang Machine Tool**: Established in 2013, it has been actively participating in the market with significant investments in new technologies [22] Future Trends and Capital Operations - The capital operation in the grinding machine industry has been slow, but there is a shift as downstream customers begin to acquire companies to integrate components and equipment [13] - The industry is moving towards high-end equipment manufacturing, with significant attention from the capital market on companies' developments in this area [27] Conclusion - The grinding machine industry in China is characterized by a significant reliance on imports for high-end products, a fragmented market structure, and ongoing challenges in technology localization. However, key players are making strides in innovation and market positioning, indicating potential growth opportunities in the future.