Dongwu Securities: Assigns a Buy rating to Zhejiang Rongtai

Dongwu Securities Co., Ltd. recently conducted research on Zhejiang Rongtai and issued a research report titled “2025 Annual Report Review: Steady Growth in Core Business, Smooth Progress in Robotics,” giving Zhejiang Rongtai a “Buy” rating.

Zhejiang Rongtai (603119)

Investment Highlights

Performance basically meets market expectations: The company’s 2025 revenue was RMB 1.38 billion, up 21.2%, and its attributable net profit was RMB 280 million, up 20.9%; its non-recurring profit net profit was RMB 250 million, up 18.8%. The gross margin was 34.9%, up 0.3 pct. Among them, 2025 Q4 revenue was RMB 420 million, up 27.7% quarter-on-quarter and 7.4% year-on-year; attributable net profit was RMB 80 million, up 17.9% quarter-on-quarter and down 5.9% year-on-year; non-recurring profit net profit was RMB 70 million, up 12.7% quarter-on-quarter and down 12.5% year-on-year; gross margin was 30.4%, down 3 pct quarter-on-quarter and down 8.1 pct year-on-year.

New energy products grow steadily, and profitability declines slightly due to project recognition timing: By business segment, the company’s mica material revenue was RMB 1.27 billion, up 14%, with a gross margin of 34%, down 0.46 pct. Among this, its new energy business revenue in 2025 was RMB 1.06 billion, up 19%, with a gross margin of 37%, down 3 pct, contributing gross profit of RMB 400 million, accounting for 82%. By region, in 2025 the company’s overall exports were RMB 640 million, up 12%, with a gross margin of 42%, down 0.6 pct. Export revenue accounted for 46.5% of total revenue, down 4 pct. Affected by project recognition timing, the overseas revenue mix and overall gross margin declined. Looking at 2026, we expect that subsequent model programs from automakers such as Stellatis and Toyota will gradually ramp up. We expect 2026 revenue to maintain growth of 20%+. In addition, the company’s two new production bases in Thailand and Mexico are currently being advanced in an orderly manner to serve European and North American customers. Going forward, the company will further expand into non-mica products such as new lightweight safety structural components, contributing additional growth drivers.

Robotics project + customers continue to be fulfilled, and gross margin is impressive: In 2025, the company’s robotics business had consolidated revenue of RMB 90 million, with a gross margin of 47%. Among them, KGG’s full-year revenue was RMB 120 million, and net profit was RMB 13 million. The company’s Thai factory has commenced production. In July 2026, weekly output is expected to be 1,500–2,000 sets, and by year-end weekly output will increase to 3,000–4,000 sets, meeting overseas large-customer order needs. The company has also achieved breakthroughs in areas such as large lead screws and micro gearings, and it has established a joint venture with WEI CHUANG in Thailand to develop mechatronics integrated components, further expanding its product matrix. The company’s robotics business strategy is clear, projects continue to be delivered, and expansion of both domestic and international customers has been proceeding smoothly. The Thai factory can contribute shipments in 2026, and the U.S. factory is expected to go into production in 2027. The company’s subsequent earnings upside is expected to be significant.

Capital expenditures grow rapidly, and operating cash flow is healthy: In 2025, the company’s period expenses were RMB 180 million, up 54%, with an expense ratio of 12.8%, up 2.7 pct. Among them, Q4 period expenses were RMB 60 million, up 100.3% quarter-on-quarter and 15.2% year-on-year, with an expense ratio of 13.9%, up 5.1/0.9 pct quarter-on-quarter/year-on-year. In 2025, net operating cash flow was RMB 280 million, up 33.2%; in Q4, net operating cash flow was RMB 110 million, up 112.7% quarter-on-quarter and 113.2% year-on-year. In 2025, capital expenditures were RMB 240 million, up 129.8%; in Q4, capital expenditures were RMB 80 million, up 198.1% quarter-on-quarter and 444% year-on-year. As of year-end 2025, inventories were RMB 380 million, up 50.7% from the beginning of the year.

Earnings forecast and investment rating: Considering that the project recognition timing affects the overseas revenue mix and overall gross margin, we expect the company’s attributable net profit for 2026–2027 to be RMB 370/550 million (previous forecast: RMB 460/710 million). We also forecast 2028 attributable net profit of RMB 900 million, up 31%/51%/63% year-over-year, corresponding to PE of 72/48/29x. Considering that the robotics and new energy products are expected to achieve stable ramp-up in the long term, we maintain the “Buy” rating.

Risk warning: Demand from downstream markets may fall short of expectations, and industry competition may intensify.

The latest earnings forecast breakdown is as follows:

In the last 90 days, a total of 6 institutions have issued ratings for this stock: 4 “Buy” ratings and 2 “Add” ratings. The average institutional target price within the past 90 days was 103.18.

The above content has been compiled by Securities Star based on publicly available information and generated by an AI algorithm (Filing No. 310104345710301240019). It does not constitute investment advice.