Core Viewpoint - The company reported a mixed performance in 1H25, with revenue growth but a decline in 2Q25, while maintaining a positive outlook for future growth driven by international sales and AI product launches [1][2][3]. Financial Performance - In 1H25, the company achieved revenue of 3.373 billion yuan, a year-on-year increase of 4.27%, and a net profit attributable to shareholders of 477 million yuan, up 14.57% year-on-year [1]. - In 2Q25, revenue was 1.58 billion yuan, a year-on-year decrease of 1.61% and a quarter-on-quarter decline of 11.88%. The net profit for the quarter was 232 million yuan, reflecting a year-on-year increase of 1.28% but a quarter-on-quarter decrease of 5.69% [1]. Operational Analysis - The domestic market's low demand negatively impacted 2Q25 performance, with the company's domestic sales down 10.86% year-on-year to 1.581 billion yuan, although this was significantly better than the industry average, which saw a decline of approximately 30-35% [2]. - The company is not directly affected by U.S. tariffs, which primarily introduce short-term uncertainties rather than a loss of demand, suggesting a potential recovery in domestic sales in 3Q25 [2]. International Sales and Product Development - The company experienced a strong growth in international sales, achieving 1.785 billion yuan in revenue, a year-on-year increase of 22.82%. The higher gross margin from international sales positively impacted overall performance [3]. - The company plans to launch its high-end AI sewing machine in the second half of 2025, which has already been tested by several major clients. This product is expected to enhance the company's market share and strengthen its international expansion strategy [3]. - The company is actively integrating AI and humanoid robotics into its sewing machinery, with products like the "Jack No. 1" humanoid robot and unmanned template machines showing promising development. This integration aims to automate the entire garment manufacturing process, addressing industry pain points and enhancing product value [3]. Profit Forecast and Valuation - The company is projected to achieve net profits of 964 million yuan, 1.139 billion yuan, and 1.343 billion yuan for the years 2025 to 2027, corresponding to PE ratios of 24X, 21X, and 18X respectively. The positive outlook is based on the company's international expansion and robotics initiatives [4].

Investment Rating - The report maintains a positive investment rating for the industry, particularly focusing on companies leading in the unmanned textile sector, such as Jack Co., Ltd [5]. Core Insights - The report highlights the feasibility of unmanned textile and apparel industries due to labor shortages and high labor costs in traditional textile manufacturing. In 2023, direct labor costs accounted for over 5% of the cost structure in China's textile industry, making it the second-largest cost component [1][10]. - The report emphasizes that the sewing process, which constitutes about 90% of the workforce in textile manufacturing, is suitable for automation. Jack Co., Ltd has already begun developing high-end AI sewing machines and humanoid robots, with plans to launch these products by 2025 and 2026 respectively [1][36]. - The potential market for humanoid robots in the textile sector is projected to grow significantly, with estimates of 600,000 units by 2028, 1.1 million by 2030, and 2.6 million by 2035. The market size is expected to reach 894 billion yuan by 2040 [2][54]. Summary by Sections 1. Unmanned Textile and Apparel - The textile industry faces significant challenges, including labor shortages and rising costs, which have led to a shift towards automation and robotics [10][11]. - The traditional textile manufacturing process is divided into three main stages: cutting, sewing, and finishing, with sewing being the most labor-intensive [17][27]. 2. Humanoid Robot Estimation in Textile Sector - The report outlines the assumptions and calculations for the humanoid robot market, estimating that the number of easily replaceable sewing workers is around 37.5 million, with a projected sales penetration rate for robots increasing from 0.1% in 2028 to 16% by 2040 [47][50]. - The estimated market size for humanoid robots in the textile sector is projected to be 894 billion yuan by 2040, with significant cost savings from reduced labor expenses [53][54]. 3. Embodied Intelligence Implementation - The report discusses the necessity of embodied intelligence systems to overcome current automation limitations in the textile industry, emphasizing the need for advanced perception and adaptability in robotic systems [46][55]. - Companies like Jack Co., Ltd are actively integrating AI and robotics to enhance automation in textile manufacturing, with significant advancements expected in the coming years [36][44].

Core Insights - Jack Company celebrated its 30th anniversary and launched the world's first AI sewing machine at a global technology conference in Taizhou, Zhejiang [1][2] - The company aims to build a world-class talent system and integrate industry chain resources to create the largest rapid flexible garment manufacturing platform [1] - The company is committed to investing in green energy, humanoid robots, and AI automation to support the transformation of the garment industry and achieve its "trillion Jack" goal [1] Company Developments - The company has produced its 30 millionth smart sewing machine, marking a significant milestone in its production capabilities [1] - The newly launched AI sewing machine incorporates the first deep artificial intelligence model in the industry, enhancing the learning capabilities of sewing equipment [2] - Jack Company is accelerating the industrial application of AI technology in garment manufacturing, with a focus on high-end products such as AI sewing machines, AI smart cutting equipment, humanoid robots, and unmanned template machines [2] Industry Challenges - The global garment manufacturing industry faces challenges such as industrial transfer, quality upgrades, and low willingness of young workers to engage in the sector [1][2] - The integration of motor control technology with AI and software is essential for supporting small-batch, quick-response, and customized production in the industry [2]

Investment Rating - The investment rating for the company is "Buy" with a target price of RMB 43.60 [8][9]. Core Views - The report indicates that the impact of tariffs on the sewing machine industry is manageable in the short term, while in the medium to long term, it may drive a shift in global apparel manufacturing, boosting demand for new sewing machines [1][2]. - The company is focusing on promoting AI technology in apparel manufacturing, introducing new products such as AI sewing machines and humanoid robots to help downstream clients reduce costs and improve efficiency [1][4]. - Continuous product innovation is expected to enhance the company's profitability [1]. Summary by Sections Tariff Impact - In the short term, uncertainty in U.S. tariff policies may lead some downstream clients to adopt a wait-and-see approach regarding expansion. However, in the medium to long term, this uncertainty is likely to accelerate the decentralization of the global apparel supply chain, prompting manufacturers to shift to countries with lower tariff risks, thereby increasing demand for new machines and providing opportunities for leading companies to enhance market share [2]. Industry Growth - In April, the industrial sewing machine export value reached USD 148 million, a year-on-year increase of 23%. Notably, demand from low-tariff risk regions like Egypt, Kenya, and Argentina saw significant growth, with year-on-year increases of 111%, 254%, and 842%, respectively [3]. Labor and AI Integration - The apparel manufacturing industry is labor-intensive, with a potential for significant machine replacement. The report highlights that the company has made milestone progress in high-end product development, including prototypes of high-end AI sewing machines and humanoid robots, which are expected to open new growth avenues [4]. Profit Forecast and Valuation - The company’s projected net profits for 2025 to 2027 are RMB 1.16 billion, RMB 1.28 billion, and RMB 1.38 billion, respectively, with corresponding PE ratios of 16, 14, and 13. The target price has been adjusted to RMB 43.60 based on a revised PE of 18 for 2025 [5][7].

Investment Rating - The report maintains a "Buy" rating for the company, considering its overseas expansion prospects and active layout in the robotics sector [5]. Core Viewpoints - The company reported a revenue of 1.793 billion RMB in Q1 2025, representing a year-on-year growth of 10.06%. The net profit attributable to shareholders was 246 million RMB, up 30.76% year-on-year, while the net profit excluding non-recurring items reached 226 million RMB, growing by 37.35% year-on-year [2]. - The significant increase in gross margin to 32.79% in Q1 2025, up 2.73 percentage points year-on-year, and a net profit margin of 14.01%, up 2.15 percentage points year-on-year, indicates a notable improvement in profitability [3]. - The company is actively developing AI applications in garment manufacturing, with successful prototypes of high-end AI sewing machines and humanoid robots, positioning itself advantageously in the industry [4]. Summary by Sections Performance Review - In Q1 2025, the company achieved a revenue of 1.793 billion RMB, a 10.06% increase year-on-year. The net profit attributable to shareholders was 246 million RMB, reflecting a 30.76% increase, while the net profit excluding non-recurring items was 226 million RMB, up 37.35% year-on-year [2]. Operational Analysis - The gross margin improved to 32.79%, a rise of 2.73 percentage points year-on-year, and the net profit margin reached 14.01%, an increase of 2.15 percentage points year-on-year. This improvement in profitability is attributed to product structure optimization and increased overseas market presence, with export gross margins at 37.27%, up 3.88 percentage points year-on-year [3]. Robotics Business Outlook - The company is focusing on the integration of AI and robotics in garment manufacturing, with successful prototypes of high-end AI sewing machines and humanoid robots. This strategic move is expected to enhance product value and address industry challenges, thereby improving operational efficiency for clients [4]. Profit Forecast and Valuation - The company is projected to achieve net profits of 964 million RMB, 1.139 billion RMB, and 1.343 billion RMB for the years 2025, 2026, and 2027, respectively, with corresponding PE ratios of 16X, 13X, and 11X [5].

Core Insights - Jack Co., Ltd. achieved a record high in performance for 2024, with total revenue of 6.094 billion yuan, a year-on-year increase of 15.11%, and a net profit attributable to shareholders of 812 million yuan, up 50.86% [1] - The company successfully navigated global economic pressures through a focus on product strategy, global expansion, and innovation [1] Strategic Execution - The company executed four key strategic initiatives, leading to significant growth in core business areas [4] - The "Focus on Best-Selling Products" strategy enhanced market share for flagship products like "Fast Response King" and "Over-Thread King" [4] - Jack Co. signed contracts with 10 world-class benchmark clients, expanding its large customer base from domestic to international markets [4] - The product line was streamlined to 1,400 SKUs, improving resource allocation efficiency [4] - Quality enhancement initiatives in core product lines led to increased customer satisfaction and NPS scores [4] Global Expansion - Overseas business became a core growth driver, with the company implementing a "Marketing Iron Triangle" model in key international markets [5] - Despite not meeting overseas revenue targets, the company achieved a 37.27% gross margin on overseas products, an increase of 3.88 percentage points year-on-year [5] - The smart sewing industry for shirts and jeans generated sales of 182 million yuan, reflecting a year-on-year growth of 25.12% [5] Innovation and R&D - Jack Co. invested 488 million yuan in R&D, representing over 8% of sales revenue [6] - The company won a first-class award for technological progress from the China National Light Industry Council for its collaborative project with Zhejiang University [6] - A total of 445 patents were filed, including 155 invention patents, and the company contributed to the revision of 23 national and industry standards [6] - Milestone advancements were made in high-end AI sewing machine development, with prototypes like "Jack No. 1" humanoid robot and unmanned template machine being developed [6]