Investment Rating - The investment rating for the company is "Buy" and is maintained [9]. Core Views - The company achieved a revenue of 6.88 billion yuan in Q2 2025, representing a year-on-year increase of 0.75%, while the net profit attributable to shareholders was 0.64 billion yuan, down 21.86% year-on-year [2][6]. - The company continues to strengthen its advantages in traditional sectors, with a steady increase in market share, while accelerating its layout in precision fields to seize opportunities in embodied intelligence and AI [2][11]. - Despite short-term weak demand and price competition affecting operations, the long-term outlook remains positive due to the company's established platform in general, specialized, and precision fields, solidifying its growth in the reducer sector [11]. Summary by Sections Financial Performance - In H1 2025, the company reported a revenue of 12.90 billion yuan, a year-on-year increase of 1.71%, and a net profit of 1.07 billion yuan, down 26.97% year-on-year [6]. - The company's revenue for Q2 2025 was 6.88 billion yuan, with a net profit of 0.64 billion yuan, reflecting a decline in profitability [6]. Market Position - The company has maintained its leading position in the domestic general reducer market, with a 5% year-on-year growth in its industrial transmission reducer business in H1 2025 [11]. - Key products such as modular reducers and high-power reducers saw sales growth of approximately 15% and 13% respectively, while traditional industrial cycloidal pinwheel reducers experienced an 8% decline in sales [11]. Strategic Initiatives - The company is actively expanding its precision field layout, focusing on harmonic reducers and precision reducers, and has initiated collaborations with major manufacturers in robotics [11]. - In July 2025, the company co-founded a technology company to deepen cooperation in the field of robotic joint modules [11]. - The company has increased its R&D investment, completing approximately 3,650 customized product designs in H1 2025 [11]. Future Outlook - The company is expected to achieve net profits of 2.80 billion yuan, 3.26 billion yuan, and 3.82 billion yuan for the years 2025 to 2027, with corresponding price-to-earnings ratios of 40x, 34x, and 29x [11].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The report highlights the potential for recovery in the industrial reducer downstream market and the promising layout of precision reducers [1] - The company is expected to benefit from industry consolidation, which may drive market share concentration and enhance its diversified product matrix [1] - The company has adjusted its net profit forecasts for 2025-2026, now estimating net profits of 282 million and 327 million respectively, with an introduction of a 2027 forecast of 379 million [1][2] Financial Performance - In H1 2025, the company achieved revenue of 1.29 billion, a year-on-year increase of 1.71%, while net profit was 107 million, a decrease of 26.97% [3] - The company’s gross margin for H1 2025 was 20.46%, down 3.07 percentage points year-on-year, with a net profit margin of 8.43% [3] - The company’s total revenue is projected to grow from 2.59 billion in 2024 to 3.15 billion in 2027, with corresponding net profits increasing from 294 million to 379 million [2][4] Market Position and Strategy - The company maintains a competitive advantage in market share despite a weak recovery in overall industry demand, with a 5% increase in total shipments of industrial reducers [3] - The company is actively expanding its overseas market presence, particularly in Southeast Asia, India, and Russia, while also exploring opportunities in South America and Europe [3] - The precision reducer business is gaining traction, with significant growth in product sales and collaborations with other firms to enhance product offerings [3] Valuation Metrics - The estimated EPS for 2025, 2026, and 2027 are 0.43, 0.50, and 0.58 respectively, with corresponding P/E ratios of 39X, 34X, and 29X [1][2]