Core Viewpoint - Qingdao Zhenghe Industrial Co., Ltd. plans to issue shares to specific investors to raise up to 818 million yuan for business expansion and working capital, aligning with national agricultural modernization strategies and enhancing its competitive edge in the agricultural machinery sector [1][11][30]. Group 1: Background and Purpose of the Issuance - The issuance aims to support the development of chain transmission systems, which are crucial in various sectors including automotive and agricultural machinery, thereby enhancing the manufacturing capabilities of the country [2][3]. - The Chinese agricultural sector is transitioning towards modernization, with a focus on mechanization as a key strategy for ensuring food security and promoting economic growth [3][4]. - The market for agricultural machinery in China is projected to grow from approximately 82.2 billion yuan in 2024 to 146.7 billion yuan by 2030, with a compound annual growth rate of about 10.1% [4][5]. Group 2: Use of Proceeds - The funds raised will be allocated to projects including the expansion of agricultural machinery components, development of garden tool chains, and integrated R&D for micro-chain systems, which are in line with the company's strategic direction [1][11][30]. - The company aims to enhance its production capacity and product quality in the agricultural machinery sector, where it has maintained a leading market share for nine consecutive years [9][30]. Group 3: Market Opportunities - The global market for smart agricultural machinery is expected to grow significantly, from 11.8 billion yuan in 2024 to 103.9 billion yuan by 2030, reflecting a compound annual growth rate of approximately 43.6% [5]. - The demand for garden tools is increasing due to rising living standards and urbanization, with an estimated 250 million gardens globally requiring regular maintenance [6][30]. Group 4: Competitive Advantage - The company has established a strong competitive position in the agricultural machinery components market, leveraging its expertise in chain transmission technology to expand into new product areas [8][9]. - The company is well-positioned to capitalize on the growing demand for high-quality agricultural machinery and components, supported by favorable national policies and increasing export opportunities [7][30].

Group 1 - The company Qingdao CHOHO Industrial Co., Ltd. plans to issue A-shares to specific investors in 2025, aiming to raise a total of up to 818 million RMB [27][30] - The issuance is intended to support the company's expansion in the agricultural machinery and garden tools sectors, which are expected to benefit from national policies promoting agricultural modernization [11][18] - The company has established a strong competitive advantage in the agricultural chain system market, maintaining the highest market share for nine consecutive years [18] Group 2 - The funds raised will be allocated to various projects, including the expansion of agricultural machinery components and the development of garden tool systems [27][18] - The issuance will not change the company's control structure, as the major shareholders will retain their controlling stakes post-issuance [28][29] - The company is positioned to leverage the growing demand for agricultural machinery and garden tools, driven by increasing mechanization and urbanization trends [14][15] Group 3 - The agricultural machinery market in China is projected to grow from approximately 82.2 billion RMB in 2024 to 146.7 billion RMB by 2030, with a compound annual growth rate of about 10.1% [14] - The global smart agricultural machinery market is expected to experience rapid growth, with projections indicating an increase from 11.8 billion RMB in 2024 to 103.9 billion RMB by 2030, reflecting a compound annual growth rate of 43.6% [14] - The company aims to enhance its production capacity and product quality in response to the increasing market demand for high-end agricultural machinery and components [18][20]

Investment Rating - The industry investment rating is "Positive" [2] Core Views - The report emphasizes the focus on technology growth directions and the recovery opportunities in undervalued sectors, particularly in machinery and robotics [2][15] - The report highlights the strong performance of excavator sales and the steady growth of forklift sales, indicating a positive trend in the machinery sector [12][14] Summary by Sections Company Performance - **Jiaocheng Ultrasonic**: Achieved revenue of 148 million yuan in Q1 2025, a year-on-year increase of 22.35%, and a net profit of 23.63 million yuan, up 2152.47%. The company is expected to benefit from the recovery in the lithium battery industry and growth in semiconductor sectors [3][15] - **Zhenghe Industrial**: Reported revenue of 395 million yuan in Q1 2025, a 6.32% increase, with a net profit of 53.84 million yuan, up 100.09%. The company is developing micro-chain systems for robotics, which may benefit from the mass production of humanoid robots [4][15] - **Lvtian Machinery**: Focused on general power machinery and energy storage products, with revenue growth rates of 47.9%, 72.5%, and 50.1% in Q3 2024, Q4 2024, and Q1 2025 respectively. The company expects a net profit growth of 50%-70% in H1 2025 [5][15] Market Trends - In July 2025, excavator sales reached 17,138 units, a 25.2% year-on-year increase, with domestic sales up 17.2% and exports up 31.9%. This growth is attributed to infrastructure investment and equipment replacement policies [13][58] - Forklift sales in July 2025 totaled 118,605 units, a 14.4% increase year-on-year, with both domestic and export sales showing strong growth [14][41] Robotics and Technology - The report notes the increasing demand for humanoid robots and AI-related equipment, with significant events such as the World Humanoid Robot Games showcasing advancements in this field [12][56] - The domestic industrial robot market is expected to grow significantly, driven by labor cost increases and government policies promoting automation [53][56] Policy Support - The report outlines various government policies aimed at supporting the machinery and robotics sectors, including initiatives for equipment upgrades and technological innovation [39][56]

Core Viewpoint - The company is a leading player in the domestic chain transmission industry, focusing on the research, manufacturing, and sales of various chain transmission systems, with a strong market share in the motorcycle and agricultural machinery sectors [1][3]. Group 1: Market Position and Performance - The company has a leading market share in the motorcycle chain system and agricultural machinery chain system, ranking first according to the China Machinery General Parts Industry Association from 2016 to 2024 [1]. - In Q1 2025, the company's revenue and net profit attributable to shareholders were 3.95 billion and 0.54 billion respectively, showing a year-on-year increase of 6.32% and 100.09% [2]. - For the year 2024, the company's revenue and net profit attributable to shareholders were 18.35 billion and 1.31 billion respectively, with year-on-year growth of 5.94% and 12.91% [1]. Group 2: Business Segments - The company operates in three main business segments: vehicle chain systems, agricultural machinery chain systems, and industrial equipment chain systems, with revenues of 10.65 billion, 3.27 billion, and 2.88 billion respectively in 2024 [1]. - The revenue growth for these segments in 2024 was 4.80% for vehicle chains, 6.45% for agricultural chains, and 4.34% for industrial chains [1]. Group 3: Future Prospects and Innovations - The company is actively developing a micro chain system project for the robotics industry, focusing on transmission technology for humanoid robot dexterous hands, which is currently in the trial verification stage [2]. - A strategic cooperation agreement was signed with Zhuoyide Robotics in July 2025 to collaborate on product research and development, training scenarios, and practical training in factories [2]. - The company is expected to benefit from downstream demand, with projected revenues of 20.88 billion, 23.97 billion, and 26.81 billion from 2025 to 2027, reflecting year-on-year growth rates of 13.8%, 14.8%, and 11.8% respectively [3].

Investment Rating - The industry investment rating is "Positive" [2] Core Viewpoints - The recent trade agreement between the US and Vietnam, which imposes a 20% tariff on Vietnamese goods and a 40% tariff on goods transshipped through Vietnam, is expected to improve export chain sentiment [12][6] - The manufacturing PMI in China showed a slight recovery in June 2025, indicating improved new orders and production indices, which may contribute to a positive outlook for the industry [12][24] Company Summaries 1) Jiao Cheng Ultrasonic - The company focuses on ultrasonic equipment and solutions, achieving a revenue of 148 million yuan in Q1 2025, a year-on-year increase of 22.35%. The net profit attributable to shareholders reached 23.63 million yuan, up 2152.47% [3][13] - The business recovery in the new energy sector, particularly in lithium battery expansion, is expected to bring performance elasticity [13] 2) Zhenghe Industrial - Engaged in the research, manufacturing, and sales of various chain transmission systems, the company reported a revenue of 395 million yuan in Q1 2025, a 6.32% year-on-year increase, with a net profit of 53.84 million yuan, up 100.09% [4][14] - The company is developing a micro-chain system project, focusing on robotic dexterous hand transmission technology, which may benefit from the mass production of humanoid robots [14] 3) Lvtian Machinery - The main products include general power machinery and high-pressure cleaning machines, with energy storage products entering mass production. Revenue growth rates for Q3 2024, Q4 2024, and Q1 2025 are projected at 47.9%, 72.5%, and 50.1%, respectively [5][15] - The company is expected to experience a performance turning point, indicating a positive outlook for valuation recovery [15] Industry Overview - The mechanical index (CITIC) increased by 0.41% last week, while the overall market indices also showed positive growth [16][19] - The manufacturing sector's fixed asset investment in China grew by 8.5% year-on-year from January to May 2025, indicating a recovery trend [24]

Investment Rating - The industry investment rating is "Positive" [2] Core Viewpoints - Manufacturing investment has slightly declined, but there are opportunities to capture from the bottom up [2] - The manufacturing PMI for May 2025 is 49.5%, showing a month-on-month increase of 0.5 percentage points, indicating a slight recovery in manufacturing activity [13][27] - Fixed asset investment in manufacturing from January to May 2025 has grown by 8.5% year-on-year, but this is a decrease of 0.3 percentage points compared to the previous four months [13][27] Company Summaries 1) Jiao Cheng Ultrasonic - Focuses on ultrasonic equipment and solutions, achieving revenue of 148 million yuan in Q1 2025, a year-on-year increase of 22.35% - Net profit attributable to shareholders reached 23.63 million yuan, up 2152.47% year-on-year, with non-recurring net profit at 19.77 million yuan, a growth of 1068.17% [3][14] 2) Zhenghe Industrial - Engaged in the R&D, manufacturing, and sales of various chain drive systems, with Q1 2025 revenue of 395 million yuan, a year-on-year increase of 6.32% - Net profit attributable to shareholders was 53.84 million yuan, up 100.09% year-on-year, and non-recurring net profit was 30.26 million yuan, a growth of 16.45% [4][15] 3) Lvtian Machinery - Main products include general power machinery and high-pressure cleaning machines, with revenue growth rates of 47.9%, 72.5%, and 50.1% for Q3 2024, Q4 2024, and Q1 2025 respectively - Net profit growth rates for the same periods were 24.1%, 55.9%, and 56.3%, indicating a performance turning point [5][16] 4) Sande Technology - Achieved revenue of 108 million yuan in Q1 2025, a year-on-year increase of 18.35% - Net profit attributable to shareholders was 28.07 million yuan, up 45.38% year-on-year, with non-recurring net profit at 27.35 million yuan, a growth of 51.23% [6][17] Industry Trends - The manufacturing sector is experiencing a slight investment decline, but there are positive indicators in specific segments such as process industries and individual stocks with strong performance [7][14] - The demand for industrial robots is increasing, with a production growth of 35.5% year-on-year in May 2025, reflecting a shift towards automation in manufacturing [49][51] - The excavator sales in May 2025 reached 18,202 units, a year-on-year increase of 2.1%, indicating resilience in the construction machinery sector despite some internal sales pressure [58]

Economic Indicators - The manufacturing PMI in May 2025 increased to 49.5%, up 0.5 percentage points from the previous month[13] - The production index rose by 0.9 percentage points to 50.7%, while the new orders index increased by 0.6 percentage points to 49.8%[13] - Fixed asset investment in manufacturing grew by 8.8% year-on-year from January to April 2025[26] Machinery Sector Performance - Excavator sales in April 2025 reached 22,142 units, a year-on-year increase of 17.6%, with domestic sales up 16.4% and exports up 19.3%[62] - Loader sales in April 2025 totaled 11,653 units, growing 19.2% year-on-year, with domestic sales increasing by 35.45%[71] - The industrial robot production in April 2025 was 71,547 units, reflecting a significant year-on-year growth of 51.5%[48] Company Highlights - Jiao Cheng Ultrasonic reported Q1 2025 revenue of 148 million yuan, a 22.35% increase year-on-year, and net profit of 23.63 million yuan, up 2152.47%[3] - Zhenghe Industrial achieved Q1 2025 revenue of 395 million yuan, a 6.32% increase year-on-year, with net profit rising by 100.09%[4] - Lvtian Machinery's revenue growth rates for Q3 2024, Q4 2024, and Q1 2025 were 47.9%, 72.5%, and 50.1% respectively, indicating a strong performance turnaround[5] Risks and Recommendations - Potential risks include demand recovery falling short of expectations and fluctuations in raw material prices[78] - Recommendations include focusing on companies with strong Q1 performance such as Longxin General, Jack Shares, and Huichuan Technology[13]