Investment Rating - The investment rating for the company is "Buy" and is maintained [7]. Core Insights - The company achieved a revenue of 697 million yuan in Q3 2025, representing a year-on-year increase of 5.79%. The net profit attributable to shareholders was 79 million yuan, up 26.10% year-on-year, while the net profit excluding non-recurring items was 62 million yuan, an increase of 14.57% year-on-year. This marks the first positive growth in performance in seven quarters [4][10]. - The company is strengthening its advantages in traditional sectors while accelerating its layout in precision fields, seizing opportunities in embodied intelligence and AI. The improvement in profitability has been continuous since the beginning of the year [10][11]. - The company has established a preliminary platform in general, specialized, and precision fields, solidifying its long-term growth in the reducer sector [10]. Summary by Sections Financial Performance - For the first three quarters of 2025, the company reported a total revenue of 1.987 billion yuan, a year-on-year increase of 3.10%. The net profit attributable to shareholders was 185 million yuan, down 11.13% year-on-year, while the net profit excluding non-recurring items was 155 million yuan, down 12.06% year-on-year [4][10]. - In Q3 2025, the company’s revenue was 697 million yuan, with a net profit of 79 million yuan and a net profit excluding non-recurring items of 62 million yuan [4][10]. Market Position and Product Development - The company has seen a recovery in orders, with significant growth in sales of modular reducers, high-power reducers, and Jeno reducers benefiting from the lithium battery sector. Although sales of traditional industrial cycloidal pinwheel reducers have declined, their gross margin and average price remain stable [10]. - The product matrix continues to expand, with new products expected to contribute positively. The company has developed customized products and specialized reducers for various applications, including high-end vertical lathes and large rotary drive systems [10][11]. Strategic Initiatives - The company is accelerating its layout in the precision field and is actively engaging with partners in the robotics and automation sectors. It has established a joint venture to explore opportunities in robotic joint modules [10]. - The company completed its first AI vertical application test in the first half of 2025, aiming to integrate proprietary data to build a private model [10]. Future Outlook - The company is expected to achieve net profits attributable to shareholders of 282 million, 335 million, and 395 million yuan for the years 2025 to 2027, corresponding to price-to-earnings ratios of 37x, 32x, and 27x respectively [10].

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]