Xingye Securities: Initiates "Accumulate" Rating for Zhao Wei Electromechanical; Core Business Profit Growth

Industrial Securities releases research report stating that it has initiated coverage and assigned an “Overweight” rating to Zhaowei Electromechanical (02692). The company is a leading global supplier of micro transmission and drive systems, deeply integrated with transmission, micro-motors, and electronic control systems, building a competitive moat through technology, talent, customers, and certifications. Opportunities in the automotive electronics and intelligent industry, combined with the company’s advantages in micro transmission and drive technology and customer resources, are driving performance in the smart vehicle sector. Meanwhile, the company is also developing dexterous robotic hands and joint modules, which feature high precision, long lifespan, and multiple degrees of freedom, expanding long-term growth potential. The bank forecasts the company’s net profit attributable to shareholders for 2025-2027 to be 271 million, 369 million, and 522 million RMB respectively, with year-over-year growth of +20.4%, +36.0%, and +41.7%. As of the close on March 11, 2026, the company’s Hong Kong stock price corresponds to P/E ratios of 64.8x, 50.3x, and 37.4x for 2025-2027.

Key points from Industrial Securities are as follows:

Global Top Micro Transmission and Drive System Supplier

Zhaowei Electromechanical was founded in Shenzhen in 2001 and listed on the Shenzhen Stock Exchange in December 2020. After its Hong Kong listing in March 2026, it became an A+H share company, raising HKD 1.828 billion through an IPO to support its internationalization strategy. The company started with precision gear manufacturing and now focuses on micro transmission and drive systems as its core business, along with precision components, molds, and other products. According to Frost & Sullivan data cited in the company’s prospectus, with 2024 sales revenue, it is China’s largest and the world’s fourth-largest provider of integrated micro transmission and drive systems, holding market shares of 3.9% and 1.4%, respectively.

Sustained Competitive Advantages and Performance Growth

The company specializes in micro transmission and drive systems, integrating transmission, micro-motors, and electronic control systems to build a competitive moat through technology, talent, customers, and certifications. Its products can achieve drive control within tiny volumes, meeting strict requirements for precision, miniaturization, and intelligence. By the end of Q3 2025, it held 405 related patents, ranking first in China’s integrated micro transmission and drive system industry. Its products are widely used in smart vehicles, consumer electronics, medical technology, advanced industrial manufacturing, and humanoid robots. In the smart vehicle sector, the company has launched multiple products in intelligent cockpits, chassis domains, and body electronics, collaborating with Bosch, BYD, Li Auto, and Changan, benefiting from opportunities in automotive electronics and smart industry, with performance steadily improving. In Q1-Q3 2025, revenue increased by 18.7% year-over-year to 1.255 billion RMB, and net profit attributable to shareholders increased by 14.4% to 182 million RMB, with gross margin at 32.7% and net profit margin at 14.5%.

Expanding into Humanoid Robot Dexterous Hands

According to Frost & Sullivan data cited in the company’s prospectus, driven by growth in humanoid robot shipments and increased penetration of dexterous hands, the global sales revenue of dexterous hands is expected to reach 22.3 billion RMB by 2029, representing a compound annual growth rate of 106.0% from 2024’s 600 million RMB, indicating significant industry opportunities. Leveraging its vertical integration in electronic control, motors, and transmission, Zhaowei Electromechanical is developing dexterous hands and joint modules. In December 2024, it launched its self-developed dexterous hand, and in July 2025, it released two differentiated upgraded products, DM17 and LM06. DM17 adopts a full direct-drive scheme with 17 degrees of active freedom, capable of executing complex fine movements through multi-joint, multi-level force-position coordination with compliant control. LM06 uses a linkage scheme with 6 degrees of freedom and a 20kg gripping load, suitable for high-intensity tasks. In Q1-Q3 2025, the company’s humanoid robot solution revenue was 15.53 million RMB, up 281.0% year-over-year. With ongoing technological iterations, customer certifications, and commercialization, future dexterous hand revenue is expected to continue growing significantly, forming a long-term performance highlight.

Risk Factors

Technological risks, order delivery delays, commercialization progress of dexterous hands, intensified market competition, overseas political and policy risks, operational risks, etc.

(Edited by: Guo Jiandong)

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