Group 1 - The company, Hongfa Technology (600885.SH), has the capability to provide a rich product portfolio and component solutions for industrial robots, including switchgear, power relays, and terminal blocks for motion control [1] - The company’s subsidiary, Xiamen Hongfa Industrial Robot Co., Ltd., is recognized as a "little giant" enterprise in China's specialized and innovative sector and is included in the 2025 Fujian Province Digital Economy Core Industry Innovation "Gazelle" list [1] - The company possesses advanced production lines for high-end coils and has research and production capabilities for four-axis and six-axis industrial robots [1] Group 2 - The company is actively monitoring market opportunities related to relays, which play crucial roles in automatic regulation, safety protection, and circuit conversion in robotics [1]

Core Viewpoint - The company, Hongfa Technology (600885.SH), is actively involved in providing a comprehensive range of products and component solutions for industrial robots, highlighting its capabilities in various layers of robotics technology [1] Group 1: Product Offerings - The company offers a variety of products for the motion control layer of industrial robots, including circuit breakers, contactors, power relays, and terminal blocks [1] - In terms of safety monitoring for robots, the company provides high-quality industrial relay products [1] - For the servo drive layer, the company’s products include industrial relays, sockets, relay modules, and splitters [1] Group 2: Company Achievements - Hongfa Technology's subsidiary, Xiamen Hongfa Industrial Robot Co., Ltd., is recognized as a "little giant" enterprise in China, focusing on specialized and innovative sectors [1] - The company has been included in the 2025 Fujian Province Digital Economy Core Industry Innovation List as a "gazelle" enterprise [1] - The company possesses advanced production capabilities for high-end coil production lines and the research and development of four-axis and six-axis industrial robots [1] Group 3: Market Focus - The company is actively monitoring market opportunities related to humanoid robots, with ongoing rapid development and iteration of its technology [1] - Relays play a crucial role in circuits for automatic regulation, safety protection, and circuit conversion, indicating the company's focus on enhancing its product applications in these areas [1]

Core Viewpoint - The report by China Galaxy Securities on Hongfa Technology indicates a positive outlook for the company's performance, driven by improving demand across various sectors, leading to stable growth in revenue and profits. The company is rated as a "buy" for the first time. Financial Performance - In the first half of 2025, the company achieved revenue of 8.35 billion yuan, a year-on-year increase of 15.4%, and a net profit attributable to shareholders of 960 million yuan, up 14.2% year-on-year. The net profit excluding non-recurring items was 930 million yuan, reflecting a 17.9% increase year-on-year. The gross margin was 34.2%, down 0.54 percentage points year-on-year, while the net margin remained stable at 15.3% [2]. - In the second quarter of 2025, the company reported revenue of 4.36 billion yuan, with year-on-year and quarter-on-quarter increases of 15.5% and 9.6%, respectively. The net profit attributable to shareholders was 550 million yuan, showing a year-on-year increase of 13.3% and a quarter-on-quarter increase of 34.5%. The gross margin improved to 34.7%, remaining stable year-on-year and increasing by 0.9 percentage points quarter-on-quarter [2]. Market Demand and Growth Drivers - The overall demand in downstream sectors is improving, leading to a return to revenue growth for the company. In the consumer electronics sector, products like power relays and signal relays are benefiting from consumption promotion policies, resulting in rapid growth. The industrial equipment sector is experiencing a recovery in demand as major clients deplete their inventories, with expectations for continued recovery in the second half of the year [3]. - In the electric power sector, the demand for power relays is stable year-on-year, although it is expected to decline in the second half of 2025 due to a cyclical drop in smart meter installations in North America. The automotive sector is seeing rapid growth in low-voltage automotive relays, driven by domestic market expansion and increased market share of domestic brands [3]. Strategic Initiatives - The "75+ strategy" is being steadily advanced, with new growth areas being cultivated. In the first half of 2025, the low-voltage electrical market faced slight declines due to a downturn in the domestic construction distribution market and tariff impacts on overseas shipments. However, film capacitors grew by 31%, current sensors increased by 36%, and the ceramic DC fast fuse HPE509 received UL certification, with efforts to onboard benchmark clients and new customers [3]. Investment Recommendations - As a leading global player in the relay industry, the company has significant strategic advantages, with promising growth in high-voltage DC relays and strong cash flow from power relays. The company is also actively exploring new product categories and markets, indicating potential for future growth. Revenue projections for 2025-2027 are 16.2 billion, 18.4 billion, and 19.9 billion yuan, with net profits of 1.8 billion, 2.1 billion, and 2.7 billion yuan, respectively. The expected EPS for these years is 1.3, 1.4, and 1.8 yuan per share, corresponding to PE ratios of 19x, 16x, and 13x [4].

上海高毅资产管理合伙企业（有限合伙）是国内投研实力较强、管理规模较大、激励制度领先的平台型 私募基金管理公司，专注于资本市场，致力于为优秀的投资经理配备一流的研究支持、渠道资源、品牌 背书、资本对接和运营维护，打造以人为本的企业文化和扁平化的组织架构，让优秀的投资经理专注于 投资，全力以赴地为投资者创造更佳的收益。高毅资产旗下汇聚了多位长期业绩优秀、市场经验丰富的 明星投资经理。目前投研团队超过30人，投资经理包括千亿级基金公司投资总监、股票型基金8年业绩 冠军、偏股混合型基金6年业绩亚军、公募基金十周年金牛奖特别奖得主、公募基金五年期金牛奖得 主、公募基金三年期金牛奖得主、私募基金三年期金牛奖得主、私募基金一年期金牛奖得主等，研究员 绝大多数来自于嘉实、易方达、南方、博时、鹏华、招商等一线基金公司，整体投研实力在业内处于领 先地位。由邱国鹭先生担任董事长，邓晓峰先生担任首席投资官，卓利伟先生担任首席研究官，孙庆瑞 女士、冯柳先生、王世宏先生担任董事总经理。高毅资产已经在中国证券投资基金业协会备案，注册地 在上海，团队分布在深圳、上海和北京。 1）宏发股份 （上海高毅资产管理合伙企业(有限合伙)参与公司分析师 ...

Group 1 - The core viewpoint of the news highlights that Chengquan Capital conducted research on Hongfa Technology, indicating strong growth in multiple business areas and a significant increase in per capita revenue [1] - Hongfa Technology achieved a per capita revenue of 654,000 yuan, representing a year-on-year growth of 8.9% [1] - The gross profit margin is positively influenced by the growth rate of business scale, with continuous improvement in per capita efficiency [1] Group 2 - The company has established a strong market position with its high-quality automotive relay products and has received recognition for its high-capacity control boxes [1] - The penetration rate of electric vehicles in Europe is increasing, which is expected to benefit the company, alongside a strengthened market presence in Europe [1] - The industrial relay segment has shown good recovery growth, with a favorable competitive landscape in the industry [1] Group 3 - The initial customer for the high-capacity control box was Toyota, and the company is actively expanding its customer base to leading domestic automotive manufacturers and battery factories, as well as exploring overseas markets [1] - Production bases in Indonesia and Germany have been put into operation, supported by a core management team with rich experience [1] - The relay business continues to consolidate its leading advantage, with new product categories expected to enter a rapid development phase [1] Group 4 - The order intake and backlog maintain a favorable outlook, with a stable global economic environment likely to sustain good market conditions [1]

Group 1 - The core viewpoint of the news is that Hongfa Technology has achieved high-quality growth in the first half of 2025, with significant growth across multiple business areas and an increase in per capita revenue to 654,000 yuan, representing an 8.9% year-on-year growth [1] - The gross profit margin is significantly influenced by the growth rate of business scale, with continuous improvement in per capita efficiency driving the gradual increase in gross profit margin [1] - The company has solidified its market position with high-quality automotive relay products and has received recognition for its high-capacity control boxes, benefiting from the increasing penetration of electric vehicles in Europe [1] Group 2 - The industrial relay segment has shown a good recovery in growth, with a favorable competitive landscape in the industry due to the diversified downstream application areas [1] - The initial customer for high-capacity control boxes was Toyota, and the company is actively expanding its customer base to leading domestic automotive manufacturers and battery factories, as well as exploring overseas markets [1] - The company has put into operation production bases in Indonesia and Germany, supported by a core management team with rich experience, and continues to consolidate its leading position in the relay business [1] Group 3 - The order intake and backlog maintain a favorable outlook, with a stable global economic environment expected to sustain good market conditions [1]

Macro Strategy - The meeting of the Political Bureau on July 30 acknowledged the economic growth of 5.3% in the first half of the year, laying a good foundation for achieving the annual growth target of around 5% [1][8] - The meeting emphasized the need for macro policies to continue to strengthen and improve efficiency, particularly if there are significant fluctuations in consumption, exports, or the real estate sector in the second half of the year [1][8] - Key policy goals include stabilizing employment, enterprises, markets, and expectations, while enhancing the flexibility and predictability of policies [1][8] Fixed Income - The issuance of secondary capital bonds totaled 109.9 billion yuan during the week of July 21-25, with a total trading volume of approximately 288.1 billion yuan, an increase of 45.4 billion yuan from the previous week [4][15] - The issuance of green bonds during the same period reached approximately 36 billion yuan, a rise of 27.4 billion yuan compared to the previous week, with a total trading volume of 61 billion yuan [4][16] - The market for convertible bonds is expected to see increased volatility, with high-priced bonds exhibiting high odds but low win rates, while low-priced bonds are showing increased marginal value [3][14] Company Analysis - Hongfa Co., Ltd. reported a revenue of 8.347 billion yuan for the first half of 2025, a year-on-year increase of 15.43%, and a net profit of 964 million yuan, up 14.19% [6][7] - Laopu Gold's adjusted net profit for the first half of 2025 is expected to increase by 282% to 292%, benefiting from the expansion of high-end channels domestically and internationally [6][7]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's performance in the first half of 2025 met expectations, with significant growth in high-voltage direct current and industrial control sectors [8] - Revenue for the first half of 2025 reached 8.347 billion yuan, a year-on-year increase of 15.43%, while net profit attributable to shareholders was 0.964 billion yuan, up 14.19% year-on-year [8] - The company is expected to maintain a revenue growth rate of over 40% in the high-voltage direct current relay segment due to increased sales from domestic and international clients [8] - The industrial relay segment is also anticipated to see growth as overseas clients begin to replenish inventory, particularly in Europe [8] - The company is experiencing strong demand in the new energy, automotive, and signal relay markets, with expectations of continued growth in these areas [8] - The company's strategic focus on high-quality development and diversification is expected to drive long-term growth [8] - The financial outlook remains positive, with projected net profits of 1.985 billion yuan, 2.316 billion yuan, and 2.689 billion yuan for 2025, 2026, and 2027 respectively, reflecting year-on-year growth rates of 21.72%, 16.67%, and 16.12% [8] Financial Summary - Total revenue is projected to reach 16.679 billion yuan in 2025, with a year-on-year growth of 18.27% [1] - The latest diluted EPS is expected to be 1.36 yuan per share in 2025, with a corresponding P/E ratio of 17.36 [1] - The company's gross margin is expected to remain stable around 36.27% in 2025, with a net profit margin of 11.90% [9]

Summary of the Conference Call for Hongfa Technology Co., Ltd. Company Overview - **Company**: Hongfa Technology Co., Ltd. - **Industry**: Relay and electrical components manufacturing Key Points and Arguments Business Performance - Overall business growth for the first half of 2025 was approximately 1% [2] - Significant growth in the new energy vehicle sector, with high-voltage direct current relay shipments reaching 2.6 billion, a year-on-year increase of over 40% [2][5] - High-voltage control box shipments grew nearly 200%, driven by competitive advantages and new model adoptions [2][3] - Home appliance business achieved revenue of 1.6 billion, a year-on-year increase of 5.8% despite fierce competition [4] Market Dynamics - European market for high-voltage direct current relays showed rapid growth, with increasing revenue contribution due to accelerated electrification [2][13] - Industrial relay market experienced a recovery with a year-on-year shipment increase of 26.9%, driven by demand from new energy-related industrial clients [2][15] - Low-voltage switch products saw slight growth, with component sales up about 10%, but complete equipment sales declined by approximately 20% due to real estate sector impacts [4][6] Future Outlook - Company remains optimistic about future growth, particularly in the new energy vehicle sector, with plans to expand high-voltage common rail modules [7] - High-voltage control box business expected to reach a scale of 800 to 1,000 million in the next one to two years [12] - Continued focus on optimizing business segments to adapt to global market changes and enhance operational efficiency [7] Regional Performance - Overseas markets, especially Europe and the U.S., showed significant demand increases for industrial relays [16] - The company is expanding its overseas production capacity, with ongoing projects in Indonesia and Germany [20] Product Development - New products such as capacitors, fuses, and current sensors have shown promising market performance, particularly in the automotive sector [8] - Connector business faced fluctuations but entered new markets like energy storage and satellite communication [9] Financial Metrics - Gross margin maintained between 35% and 40%, with expectations of stable profitability in the second half of the year [10] - The company anticipates overcoming rising labor and material costs with a target of around 10% growth [10] Challenges and Risks - The company faced challenges in the low-voltage switch product segment due to real estate market impacts [4][19] - The North American market showed pressure in the current sensor and electric meter segments, although growth in charging equipment and data centers was noted [19][29] Strategic Initiatives - Plans to enhance automation and cultivate cross-national production management talent to support long-term growth [21] - Expansion of production facilities in Indonesia and Germany to bolster global competitiveness [20][22] Conclusion - Hongfa Technology Co., Ltd. is positioned for continued growth in the new energy vehicle and industrial relay markets, with strategic initiatives aimed at enhancing operational efficiency and expanding market presence. The company remains vigilant about market challenges while leveraging its competitive advantages in product offerings.

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's Q1 2025 performance met market expectations, with revenue of 39.83 billion yuan, a year-on-year increase of 15.35%, and a net profit of 4.11 billion yuan, up 15.47% year-on-year [8] - The company benefits from the growth in high-voltage direct current and automotive products, with expected growth rates of over 30% and 15% respectively for 2025 [8] - The "75+" strategy is entering a new phase, diversifying growth drivers through new product categories and markets, with a projected business scale of 500 million yuan [8] - The company is projected to achieve net profits of 1.985 billion yuan in 2025, representing a year-on-year growth of 21.72% [8] Financial Projections - Total revenue is forecasted to reach 16.679 billion yuan in 2025, with a year-on-year growth of 18.27% [1] - The diluted EPS is expected to be 1.90 yuan per share in 2025, with a corresponding P/E ratio of 17.58 [1] - The company's net profit is projected to grow to 2.316 billion yuan by 2026, with a growth rate of 16.67% [1][9]