Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of RMB 21.12 [1][5]. Core Insights - The company reported Q3 revenue of RMB 792 million, a year-over-year increase of 17.86% and a quarter-over-quarter increase of 11.63%. However, the net profit attributable to shareholders decreased by 7.95% year-over-year to RMB 76.25 million [1]. - For the first three quarters of 2025, the company achieved a revenue of RMB 2.07 billion, up 12.88% year-over-year, but the net profit decreased by 9.36% year-over-year to RMB 206 million [1]. - The decline in profit is attributed to increased fixed costs from the fourth phase of production and market competition compressing profit margins [1]. Financial Performance - The company's gross margin for Q1-Q3 2025 was 20.67%, down 4.79 percentage points year-over-year, while the net margin was 9.97%, down 2.44 percentage points year-over-year [2]. - In Q3, the gross margin was 21.35%, a decrease of 4.39 percentage points year-over-year but an increase of 1.77 percentage points quarter-over-quarter [2]. - The company has optimized its expense ratio, achieving a total expense ratio of 11.06%, down 2.28 percentage points year-over-year [2]. Product Development - The company is expanding its product line, focusing on high-end equipment and core components, with over 20 new high-end models under development [3]. - Key developments include precision milling and boring machines, vertical and horizontal turning-milling composite processing centers, and specialized machines for the semiconductor industry [3]. Market Strategy - The company aims to address after-sales pain points in the industry by establishing a customized rapid response service system in the domestic market [4]. - A dedicated team of 101 after-sales service personnel has been established, accounting for 6.58% of the total workforce, to enhance customer experience through tailored solutions [4]. Earnings Forecast and Valuation - The forecast for net profit attributable to shareholders for 2025-2027 is RMB 364 million, RMB 441 million, and RMB 500 million, respectively, with corresponding EPS of RMB 0.80, RMB 0.96, and RMB 1.09 [5]. - The company is valued at a PE ratio of 22 times for 2026, leading to a target price of RMB 21.12, reflecting a previous estimate of RMB 20.00 [5].

Core Viewpoint - The company, Nuwei CNC (688697), is actively developing a range of high-end CNC machine tools and is focusing on expanding its product line to meet the demands of emerging industries such as electric vehicles and humanoid robots [2][4][5]. Group 1: Product Development - The company is committed to a comprehensive product development strategy, focusing on the balanced growth of various product series to mitigate industry volatility risks [2]. - In 2025, the company plans to enrich its product line with over 20 high-end equipment models, including precision milling and boring machines, vertical and horizontal turning-milling composite processing centers, and specialized machines for the semiconductor industry [2]. - Key technological advancements include the successful development of core functional components such as a 45° non-orthogonal five-axis head and a high-torque milling and boring head [2]. Group 2: Mergers and Acquisitions - The company will continue to focus on its core business of CNC machine tools while monitoring opportunities for investment and collaboration with high-quality external machine tool enterprises or core component manufacturers [3]. Group 3: Market Strategy - The company aims to adapt to the evolving demands of industries like electric vehicles and humanoid robots by enhancing product offerings that are high-end, intelligent, customized, and environmentally friendly [4]. - The shift in the machine tool industry is moving from discrete manufacturing technologies to system integration and intelligent manufacturing, prompting the company to deepen its market-oriented approach and accelerate digital transformation [4]. Group 4: Financial Performance - For the first half of 2025, the company reported a main revenue of 1.278 billion yuan, a year-on-year increase of 9.99%, while the net profit attributable to shareholders decreased by 10.17% to 130 million yuan [7]. - The second quarter of 2025 saw a single-quarter main revenue of 709 million yuan, reflecting a year-on-year increase of 15.53%, but the net profit for the quarter decreased by 8.67% [7]. Group 5: Analyst Ratings - In the last 90 days, three institutions have provided ratings for the stock, with two giving a "buy" rating and one an "increase" rating, and the average target price set at 20.00 yuan [8].