Summary of Conference Call on China Industrials Industry Overview - **Sector**: China Industrials - **Outlook**: Bullish on China Industrials driven by AI theme tailwinds, high-end equipment localization, and overseas expansion [1][6] Key Insights Automation and General Machinery - **Growth Forecast**: Expected sequential growth recovery for the automation market in 2026-27 at +3-4% year-on-year [2] - **Drivers**: 1. Replacement demand due to rapid technology iteration 2. New capex demand from AI applications (e.g., intelligent robots, PCB equipment, AI wearables) 3. Enhanced competitiveness of advanced equipment manufacturers globally - **Preferred Stocks**: Inovance for localization story; Geekplus for AMR/robotics solutions in warehouses [2] Intelligent/Humanoid Robots - **Adoption Trend**: Gradual ramp-up in adoption expected, benefiting suppliers and integrators [3] - **Preferred Stocks**: Leaderdrive, Hengli, Inovance, Shuanghuan for mass production advantages despite humanoid products still in development [3] Heavy Industry 1. **Construction Machinery**: Entering an improvement cycle with domestic recovery and overseas demand; preferred stocks include Sany Heavy and Jiangsu Hengli [4] 2. **Heavy-Duty Truck Sales**: Expected ~10% year-on-year decline in 2026 to ~1 million units, impacted by domestic market conditions (-15% year-on-year) and NEV purchase tax hike [4] 3. **Railway Equipment**: Anticipated slowdown in MU tenders to <200 sets, leading to slower net profit growth for CRRC and Times Electric [4] New Energy Equipment - **Demand Forecast**: Lithium-ion battery (LiB) equipment demand projected to increase by 24% in 2026 and 21% in 2027, reaching historical cyclical highs [5] - **Preferred Stock**: Wuxi Lead - **Outlook for Solar Equipment**: Negative outlook for 2026 due to lack of solar capacity turnaround; non-solar order growth and potential new capacity from space solar already priced in [5] Stock Ratings and Price Targets - **Overweight Stocks**: Geekplus, Sany Heavy, Leaderdrive, Han's Laser, Inovance, Hengli, Wuxi Lead, Envicool, among others [11] - **Price Target Changes**: - Times Electric: Target reduced from HKD 44.0 to 41.1 (-5%) - CRRC-H: Target reduced from HKD 6.4 to 6.1 (-17%) - Leaderdrive: Target increased from CNY 153.0 to 216.4 (+24%) [10] Additional Insights - **Market Cap and Trading Volume**: Various companies listed with significant market caps and average daily trading volumes, indicating active trading interest [11] - **Analyst Ratings**: Majority of stocks rated as Buy/Overweight, indicating positive sentiment among analysts [10][11] Conclusion - The China Industrials sector is poised for growth, particularly in automation, heavy machinery, and new energy equipment, with specific companies highlighted as key investment opportunities. The overall sentiment remains optimistic, supported by technological advancements and market recovery trends.

Summary of Leader Harmonious Drive Systems 3Q25 Earnings Briefing Company Overview - **Company**: Leader Harmonious Drive Systems - **Industry**: Industrial Robotics and Automation - **Date of Briefing**: November 3, 2025 Key Points Market Position and Growth - Leaderdrive is gaining market share despite a decline in industry profitability, with large orders from two of the global big four industrial robot makers [2] - The company claims a significant share in the humanoid robotics market and anticipates continued fast growth into 2026, driven by demand from leading humanoid integrators [2][4] - Humanoid products currently account for 15-20% of production, with expectations for further increases in 2026 [9] Product Development and Innovation - Leaderdrive has developed self-machining tools that allow for P0 precision level screws, with ongoing optimization for miniature harmonic reducers [3] - Management believes harmonic reducers are the best solution for humanoids due to their size, precision, and output, with no significant client demand for alternative solutions [4] - The company is confident in the performance of miniature harmonic reducers for dexterous hands, despite their high cost [4] Financial Performance - The company reported margin expansion in 3Q25, supported by scale, improved product structure, and new applications with higher prices [9] - Revenue projections for the fiscal years ending in 2024, 2025, 2026, and 2027 are Rmb387 million, Rmb535 million, Rmb691 million, and Rmb861 million respectively [8] - EBITDA is expected to grow from Rmb113 million in 2024 to Rmb242 million in 2027 [8] Capacity and Production - Harmonic reducer annual capacity is projected to ramp up to 1 million units by the end of 2025 [9] - Traditional applications are expected to grow by 10-20% in 2026, with opportunities for market share gains [9] Valuation and Risks - The base case valuation uses a DCF model for humanoid reducer and planetary roller screw segments, estimating a segment value of Rmb114 per share [10] - Risks to upside include stronger-than-expected robot demand and faster humanoid robot adoption, while risks to downside include slower-than-expected humanoid development [12] Stock Performance - As of November 3, 2025, the stock price was Rmb159.50, with a price target of Rmb153.00, indicating a potential downside of 4% [8] Additional Insights - The company is viewed as a leading producer of harmonic reducers in China, with ongoing development in humanoid hardware solutions [4] - Management expects price and margin to gradually decline and then stabilize as production volumes increase [9]