2Q25 In-Line; Exploring Liquid Cooling Potential China (PRC) | Autos & Auto Parts Tuopu reported 2Q25 results with revenue of RMB7.2bn, up 10% YoY, and earnings of RMB729mn, down 10% YoY. 2Q25 GPM came in at 19.3%, down 0.6/1.1ppt QoQ/YoY, duemainly to pricing pressure from OEMs and rising depreciation cost. We joined Tuopu's post-result group call, where mgmt shared their thoughts on liquid cooling business and humanoid robot development. The company aims to achieve 20% YoY revenue growth next year. Detail ...

Summary of Ningbo Tuopu Group Co Ltd (601689 CH) Equity Research Report Company Overview - **Company**: Ningbo Tuopu Group Co Ltd - **Industry**: Auto Components - **Position**: Leading auto and EV parts supplier in China, expanding from noise, vibration, and harshness (NVH) to a comprehensive range of components including air suspension systems and humanoid robot actuators [2][20] Core Insights - **Growth Forecast**: Earnings are expected to grow at a 30% CAGR from 2024 to 2026, driven by: - Expansion of the EV customer base, including domestic clients like Seres, Li Auto, and Xiaomi, which are gaining market share [3][34] - Increasing content value per vehicle due to a platform-based business model [3][45] - **Market Performance**: Tuopu's shares have increased by 22% year-to-date, outperforming the CSI300 index, attributed to its focus on autonomous driving and robotics [4][66] - **Valuation**: Initiated with a Buy rating and a target price of RMB79.00, indicating a potential upside of approximately 32% from the current share price [5][66] Financial Highlights - **Revenue Growth**: Projected revenue growth from RMB19.7 billion in 2023 to RMB42.8 billion by 2026, with significant contributions from key customers [12][51] - **Earnings Estimates**: EPS expected to rise from RMB1.95 in 2023 to RMB2.98 in 2026, with a notable decline in 2024 due to Tesla's product cycle [8][66] - **Key Ratios**: - PE ratio expected to decrease from 30.7x in 2023 to 20.1x in 2026 [14][71] - ROE projected to remain stable around 19% [13][14] Customer Base and Market Dynamics - **Major Customers**: Tesla is the largest customer, contributing over 30% of revenue in 2024, followed by local brands like Seres, Li Auto, and Xiaomi [21][34] - **Customer Expansion**: Tuopu plans to acquire Wuhu Changpeng to deepen collaboration with Chery and LeapMotor, enhancing its local brand customer base [36][34] Competitive Advantages - **Diversified Product Portfolio**: Transition from NVH components to high-value segments like thermal management and air suspension systems [20][45] - **Platform-Based Business Model**: Enables cross-selling opportunities and increases unit content value per vehicle, enhancing customer relationships [47][49] Risks and Challenges - **Volume Growth Risks**: Potential slower-than-expected volume growth for auto and robot components, particularly if Tesla's product cycle does not accelerate [5][66] - **Operational Risks**: Possible operational issues at overseas plants and intensifying competition could impact margins [5][66] Future Outlook - **Humanoid Robot Market**: Tuopu is positioned to benefit from the humanoid robot market, although revenue contributions are expected to be limited in the near term [55][57] - **Investment in Robotics**: Plans to invest RMB5 billion in a new facility for robotic components, indicating a long-term growth strategy [56][66] Conclusion - **Investment Thesis**: Tuopu is well-positioned to capitalize on the growing demand for EV components and robotics, supported by a diversified customer base and a strong platform-based business model. The company is expected to deliver robust earnings growth, making it a compelling investment opportunity [66][67]