Investment Rating - The report initiates coverage with a "Buy" rating and sets a target price of 155.6 RMB based on a 100x PE valuation [4]. Core Insights - The company has over 20 years of experience in the micro-drive sector, establishing a leading technology and experience platform, focusing on components with dimensions less than 1mm [2]. - The integrated micro-drive system market is expected to reach 204.9 billion RMB by 2029, with a CAGR of 13.3%, and a domestic CAGR of 17.3% [2]. - The automotive electronics segment is a significant revenue driver, contributing 62.9% of total revenue in the first three quarters of 2025 [3]. - The company is expanding its product offerings in the robotics sector, particularly in dexterous hands, which have a high value proportion [3]. Summary by Sections Company Overview - The company has been deeply involved in the micro-drive system industry since its establishment in 2001, initially supplying precision components to major clients like Panasonic and Nikon [14]. - The company has a concentrated and stable shareholding structure, with the actual controller holding 18.18% directly and controlling entities holding a combined 45.7% [18]. - The business is segmented into three main areas: micro-drive systems, precision parts, and precision molds, with micro-drive systems being the primary revenue contributor [21][22]. Market Potential - The integrated micro-drive and drive system market has high technical barriers and broad downstream applications, with significant growth potential in smart automotive and robotics sectors [2][39]. - The global market for integrated micro-drive systems is projected to grow from 782 billion RMB in 2020 to 2049 billion RMB by 2029, with a CAGR of 13.3% [48]. - The company ranks fourth globally in the integrated micro-drive system market, with a 1.4% market share, and is the leading player in China with a 3.9% market share [59]. Competitive Advantages - The company has established a vertically integrated manufacturing system that covers the entire value chain, enhancing its cost and technical barriers [61]. - It has mastered key manufacturing processes such as injection molding, powder metallurgy, and metal injection molding, allowing for high-volume production of complex metal components [63]. - The company has developed a comprehensive product matrix that caters to various high-precision industries, including automotive electronics, smart medical devices, and robotics [22][66]. Financial Projections - Revenue is projected to reach 18.8 billion RMB in 2025, with a year-on-year growth of 23%, and net profit is expected to be 2.77 billion RMB, also reflecting a 23% increase [4]. - The company has maintained a stable gross margin of around 30% over the past five years, with revenue growth driven primarily by the automotive and advanced manufacturing sectors [28].

Investment Rating - The investment rating for the company is "Accumulate" (maintained) [2] Core Views - The report highlights the long-term potential of the micro-drive market driven by AI innovations in terminal products. The company is expected to benefit from the growing demand for AI-enabled consumer technology [7] - The company has made significant advancements in XR core pupil distance adjustment modules, which are expected to enhance user experience and cater to diverse consumer needs [7] - The projected net profit for the company from 2025 to 2027 is estimated at 270 million, 329 million, and 419 million RMB, respectively, with corresponding EPS of 1.12, 1.37, and 1.74 RMB [7] Financial Performance Summary - Revenue projections for the company are as follows: - 2023A: 1,206 million RMB - 2024A: 1,525 million RMB - 2025E: 1,849 million RMB - 2026E: 2,232 million RMB - 2027E: 2,859 million RMB - The revenue growth rates are projected at 4.6%, 26.4%, 21.3%, 20.7%, and 28.1% for the respective years [6][8] - The net profit is expected to grow at rates of 19.6%, 25.1%, 19.8%, 21.9%, and 27.3% from 2023 to 2027 [6][8] - The company's PE ratio is projected to decrease from 125.3 in 2023 to 68.3 in 2027, indicating improving valuation metrics over time [6][8] Market Performance - The company's stock has shown significant performance compared to the market, with a 270% increase over the last 12 months, outperforming the Shanghai Composite Index and the CSI 300 Index [4]