Investment Rating - The report maintains a "Recommended" rating for the company, indicating a potential upside of over 15% relative to the benchmark index [4][6]. Core Views - The company is experiencing short-term pressure on profitability, but its EGR (Exhaust Gas Recirculation) business is growing rapidly, driven by strong demand from leading domestic car manufacturers and a breakthrough in heavy-duty truck EGR systems [2][4]. - The company is enhancing its smart manufacturing capabilities through accelerated production line upgrades, which significantly increase product value and core competitiveness [3]. - The dual-path approach of "core components + complete machine R&D" is being implemented, with a focus on both building complete robots and achieving breakthroughs in key components like harmonic reducers and joint modules [3][4]. Financial Performance Summary - For the first half of 2025, the company reported revenue of 1.224 billion yuan, a year-on-year increase of 15.44%, and a net profit attributable to shareholders of 105 million yuan, up 1.38% year-on-year [1]. - In Q2 2025, revenue reached 618 million yuan, reflecting a year-on-year growth of 25.03%, while net profit decreased by 9.04% year-on-year to 46 million yuan [1][2]. - The company's gross margin for Q2 2025 was 18.01%, down 1.46 percentage points year-on-year, primarily due to changes in accounting standards and adjustments in sales expenses [2]. Revenue and Profit Forecast - The company is projected to achieve revenues of 2.898 billion yuan in 2025, 3.648 billion yuan in 2026, and 4.523 billion yuan in 2027, with corresponding net profits of 253 million yuan, 339 million yuan, and 478 million yuan respectively [5][10]. - The earnings per share (EPS) are expected to be 1.11 yuan in 2025, 1.49 yuan in 2026, and 2.10 yuan in 2027, with price-to-earnings (PE) ratios of 39, 29, and 21 respectively [4][5].

Summary of Longsheng Technology Conference Call Company Overview - Longsheng Technology has achieved a compound annual growth rate (CAGR) of 46.8% in revenue from 2018 to 2023, with projected revenue of nearly 2.4 billion yuan in 2024, representing a year-on-year growth of 31% [2][8] - The company’s net profit attributable to shareholders is expected to reach 224 million yuan in 2024, a year-on-year increase of 53% [2] Business Expansion and Product Development - Longsheng Technology has expanded its business by integrating subsidiaries and establishing new companies, focusing on precision stamping and injection molding components to enhance product value [2][3] - The company has a leading position in the EGR (Exhaust Gas Recirculation) sector, holding a 40% market share in the light-duty diesel engine market and a 22% share in the gasoline engine market [2][6] - Major clients include Cummins, QuanChai, and Jiangling Motors, with expectations for the passenger car EGR market to reach 4 billion yuan and the commercial vehicle market to reach 1.5 billion yuan by 2026 [2][6] Market Position and Financial Performance - The revenue from the core business of EGR systems has significantly contributed to the overall financial performance, with total revenue increasing from 580 million yuan in 2020 to 1.83 billion yuan in 2023 [3][8] - The market for motor cores, a key component in electric vehicle drive motors, is projected to reach 10.3 billion yuan by 2026, with Longsheng supplying major clients like Tesla, Geely, and BYD [2][7] Shareholding Structure and Incentives - The controlling shareholder holds nearly 30% of the company, with clearly defined roles among subsidiaries focusing on precision components, new energy components, and aerospace precision manufacturing [4] - The company has successfully completed its stock incentive targets for the first two years and is expected to meet the target for the current year, which supports performance growth [4][5] Future Growth Potential - Longsheng Technology is expected to generate revenues of 3.2 billion yuan and 4 billion yuan in 2025 and 2026, respectively, with net profits projected to be slightly over 300 million yuan and 370 million yuan [4][16] - The company is also exploring opportunities in the aerospace sector, collaborating with institutions like Northwestern Polytechnical University to develop components for military drones and commercial aircraft [4][11][12] Investment Recommendations - The company is recommended as a strong investment opportunity, particularly in the robotics sector, with a suggested price-to-earnings (PE) ratio of 40 times for 2025 [4][16][17] - The ongoing development in the robotics field and the company's ability to adapt to market changes are seen as key factors for future valuation increases [17]