Investment Highlights - The company is a leading player in the automotive micro-motor sector with a global market presence for over 60 years, focusing on micro-motors and controllers [1] - Revenue breakdown shows automotive and industrial segments contributing approximately 85% and 15% respectively, with automotive being the main growth driver [1] - The global automotive micro-motor market is projected to reach 119.6 billion yuan in 2025, reflecting a year-on-year growth of 6.7% [1] Expansion into New Fields - The company is increasing its focus on humanoid robots and liquid cooling technologies, aiming to create new growth points [2] - In the robotics sector, the company leverages its traditional motor business advantages and has established a joint venture with Shanghai Electric to enhance its business channel capabilities [2] - The liquid cooling segment has introduced CDU pumps and server liquid cooling pumps, showcasing significant performance advantages and potential for acquiring more international client orders [2] Financial Projections and Valuation - Earnings per share (EPS) are projected to be $0.28 and $0.30 for FY26 and FY27 respectively, with a compound annual growth rate (CAGR) of 5.0% from FY25 to FY27 [2] - The current stock price corresponds to FY26 and FY27 price-to-earnings (P/E) ratios of 14.4x and 13.3x, with a target price of 43.6 HKD indicating a potential upside of 40.2% [2]

Summary of the Conference Call for Feilong Co., Ltd. Company Overview - Feilong Co., Ltd. has shown steady growth in its main business, with a significant compound profit growth rate over the past three years, expecting a profit of approximately 400 million RMB this year, with a current market capitalization of over 8 billion RMB, reflecting the value of its main business [2][4] Key Points - **Market Position in Liquid Cooling Pumps**: Feilong Co. holds a monopoly in the server liquid cooling pump sector, being the only company in China capable of mass production of liquid cooling pumps. The company is benefiting from the domestic server liquid cooling market led by S clients, with expected domestic business profits reaching tens of millions of RMB this year and a potential growth of over 50% next year [2][4] - **Overseas Orders**: The company has achieved breakthroughs in overseas server liquid cooling pump orders through leading Taiwanese integrators, with expectations of large volume orders in the next 1-3 months, significantly enhancing the profit elasticity for the next year [2][4] - **Potential in PC Liquid Cooling**: Feilong Co. has potential in the personal computer (PC) liquid cooling sector. With the increasing demand for AI and high computing power, related products are expected to emerge this year. Even a 10% penetration rate could lead to a market scale in the tens of millions [2][4] - **Robotics Business Development**: The company is strategically positioned in the robotics sector, maintaining close relationships with automotive companies such as Xiaomi, Xiaopeng, and Chery. This could lead to advancements in humanoid robotics, providing new growth points and valuation increases for the company [2][4][5] - **Positive Mid-Year Report**: The mid-year report showed good performance, with smooth progress in overseas liquid cooling pumps, potential PC liquid cooling solutions, and developments in the robotics business. These factors are expected to continuously drive the stock price upward [2][5] Additional Insights - **Valuation**: Feilong Co. is currently undervalued, presenting investment opportunities worth monitoring and allocation, both in the short and long term [3][5] - **Catalysts for Growth**: Key catalysts for the third quarter of 2025 include the company's main business segments, which can maintain a compound profit growth rate of 15% to 20% annually, alongside the anticipated growth in liquid cooling pumps and robotics [4][5]

Investment Rating - The investment rating for the company is "Buy" (maintained) [7] Core Views - The company is a leader in automotive water pumps, with IDC liquid cooling and humanoid robot businesses expected to drive a second growth curve, leveraging technology reuse and customer collaboration to potentially exceed performance expectations [1] Financial Projections - Revenue projections for 2025-2027 are estimated at 56 billion, 68 billion, and 80 billion RMB, with year-on-year growth rates of 19%, 21%, and 18% respectively, resulting in a CAGR of 19% [5] - Net profit attributable to the parent company is projected to be 4.4 billion, 5.4 billion, and 6.5 billion RMB for the same period, with growth rates of 34%, 21%, and 22%, leading to a CAGR of 25% [5] - The corresponding P/E ratios are expected to be 19X, 16X, and 13X [5] Market Position and Comparisons - The average P/E ratio for comparable companies such as Yinlun, Shuguang, and Shenling is 35X for 2026E, while the company's current P/E is only 16X, indicating significant upside potential [3] - The company has a 25% market share in the domestic automotive water pump market and a 20% share in the turbocharger casing market, establishing it as a leader in these segments [10] Growth Catalysts - Future catalysts include orders for liquid cooling pumps, robot orders, and quarterly earnings growth [4] - The liquid cooling server market is expected to grow at a CAGR of 46.8% from 2024 to 2029, with the company positioned to capture a share of this emerging market [10] - The company has entered the humanoid robot sector, with potential for growth similar to that of a comparable company, Sanhua Intelligent Control [10]