Xiaomo: Reiterates Sanhua Intelligent Control's (02050) “Gain” Rating Target Price Reduction to HK$38

The Zhitong Finance App learned that J.P. Morgan Chase released a research report saying that it updated the Sanhua Intelligent Control (02050) model forecast, believing that the market is overly pessimistic about the visibility of its new business and the increase in production capacity. The bank pointed out that the demand for liquid cooling and cooling driven by global warming and artificial intelligence, and the robotics business is shifting from technical verification to commercialization, will be the company's structural growth engine for the next few years, reaffirming its “increase” rating for H shares and A shares. The target price for H shares was lowered from HK$42 to HK$38, and the target price for Sanhua Intelligent Control (002050.SZ) A shares was lowered from RMB 60 to RMB 51.

The report mentioned that Sanhua Intelligent Control's management positioned the robot as the third growth curve. Currently, US customers are promoting faster delivery, production capacity construction has begun, and positive feedback from core customers has been received. The liquid cooling business also accelerated. In the first half of this year, data center liquid cooling revenue increased by more than 50% year-on-year, with sales of about 1 billion yuan, accounting for about 10% of the refrigeration components business segment's revenue, and batch delivery to cloud service providers in North America, mainland China, and first-line customers in Taiwan. The product portfolio covers valves, pumps, sensors and cold plates, etc. Some products have a value of 50,000 to 100,000 yuan per unit.

The bank predicts that Sanhua Intelligent Control's profit will record a 25% increase next year, and the compound annual profit growth rate between 2026 and 28 is expected to be about 20%. In terms of the core automobile business, revenue for the first half of this year was 6.5 billion yuan, up 10% year-on-year, covering about 70% of the market's new energy models, and the segment's net profit margin remained around 14%. The revenue from the home appliance and refrigeration business in the first half of the year was RMB 10.5 billion, up 0.5% year on year, and the gross margin remained around 28%. Management stressed that overseas sales already account for more than 40% of total revenue, and that commodity price fluctuations are addressed through copper price linkage pricing and material substitution.