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]