Sanhua Intelligent Controls Annual Report Insights: New Energy Vehicle Thermal Management Business Shows First Decline, Robotics Business "No Progress"

Question AI · How does zero progress in the robot business affect the stock price?

Recently, Sanhua Intelligent Controls (002050.SZ) released its 2025 annual report, achieving operating revenue of 31.01B yuan, up 10.97%; and attributable net profit of 4.06B yuan, up 31.10%. However, behind what appears to be a steady performance, subtle changes in the business mix and the slow推进 of strategic emerging businesses have already begun to show.

Although the company still delivered double-digit growth in revenue and net profit for the full year, the production and sales of its new-energy vehicle thermal management products saw a decline for the first time in 2025. Meanwhile, the biomimetic robot electro-mechanical actuator business—something the market had high hopes for—remained in the annual report with the same phrasing used six months earlier: “conducting technical improvements on multiple key model products, working with customers on key product R&D, prototyping, iteration, and sample delivery,” and has yet to translate into meaningful orders.

In the face of the robot business that has failed to materialize for a long time, the market has begun to question Sanhua Intelligent Controls’ growth prospects, and capital has become increasingly cautious. As of March 24, both Sanhua Intelligent Controls’ A and H shares were down more than 20% year-to-date, with the H shares hitting a new stage low since September 8 of last year.

New-energy vehicle thermal management: both production and sales decline

From the perspective of business segments, Sanhua Intelligent Controls’ “two-engine” business structure has diverged. The company’s main business is divided into two segments: refrigeration electrical components and automotive thermal management systems. Products include electronic expansion valves, solenoid valves, and integrated components for new-energy vehicle thermal management, among others, with a high degree of globalization across both products and capacity.

Against this backdrop, Sanhua Intelligent Controls’ refrigeration and air-conditioning electrical component business achieved operating revenue of 2.03B yuan, up 20.25 billion yuan or 12.22%; gross margin was 28.77%, up 1.42 percentage points year over year, demonstrating the resilience of its traditional business.

The company’s automotive components segment achieved operating revenue of 1.04B yuan, up 10.41 billion yuan, with the year-over-year growth rate slowing to 9.14%, below the company’s overall revenue growth rate. Gross margin rose 1.15 percentage points to 28.70%.

Although both major business segments delivered positive revenue growth, in the context of slowing global penetration of new-energy vehicles, related businesses of Sanhua Intelligent Controls have also suffered some impact.

In 2025, Sanhua Intelligent Controls’ new-energy vehicle thermal management products saw both production and sales decline. Sales were 63.7527 million units, down 8.30% year over year; production decreased 8.74% year over year to 63.8889 million units. Based on a capacity of 91.2699 million units, capacity utilization was only about 70%.

This marks the first time in recent years that this business segment has recorded a year-over-year decline in both production and sales. By contrast, the production and sales of Sanhua Intelligent Controls’ traditional thermal management products for gasoline-powered vehicles have both increased year over year.

Regarding the slowdown in growth for its automotive components business, the annual report explains that in 2025 the global new-energy vehicle industry entered a stage of structural adjustment. Although China’s new-energy vehicle sales still grew 28.2% year over year, the electrification transition schedules differ across markets, and intensified competition brings short-term challenges for structural optimization.

2026 outlook: growth challenges for both main businesses

Looking ahead to 2026, Sanhua Intelligent Controls faces a subtly changing external environment, and its refrigeration and auto parts two main businesses may encounter challenges.

For the refrigeration business, industry sentiment has shown clear signs of cooling. According to AVC data, in February 2026 the air-conditioning industry’s production plans show a double-digit year-over-year decline. In China, planned production volume fell 13.8% year over year, while export volume fell 12.7% year over year. This trend is mainly driven by two factors: first, government subsidy policies have been gradually tightened; after the drawdown of stimulus policies such as “trade-in for new replacements,” support for end demand weakened. Second, upstream raw material costs have continued to rise. With copper prices—one of the core raw materials—remaining high, it directly squeezes profit margins of refrigeration control components. Under the dual pressure of weak demand and rigid costs, the refrigeration business’ growth momentum faces a test.

The automotive components business is also difficult to look optimistic. As the new-energy vehicle industry shifts from policy-driven to market-driven, government subsidy policies have clearly changed—moving from previously relatively favorable purchase subsidies and full exemption of vehicle purchase tax to partial tax incentives, stricter qualification reviews, and targeted “trade-in for new replacements” programs.

This means that policy tailwinds that drove rapid growth in new-energy vehicle sales in recent years are fading. The industry’s overall growth slowdown is set in stone, and upstream component companies will face more intense price competition. As a leading supplier in the new-energy vehicle thermal management sector, Sanhua Intelligent Controls has technical advantages and customer foundations. However, under the downstream automakers’ pressure to cut costs, the trend of slowing growth in its auto components business is highly likely to continue into 2026.

Robot business: upside imagination not realized, expectations priced into the stock

Over the past year, the robotics industry has attracted attention from global capital. Domestically, Sanhua Intelligent Controls’ biomimetic robot electro-mechanical actuator business has been a focal point for the market, and it was also one of the key reasons the market previously assigned a higher valuation to Sanhua Intelligent Controls. According to data in Sanhua Intelligent Controls’ Hong Kong IPO prospectus, the global market size for biomimetic robot electro-mechanical actuators is expected to reach a compound annual growth rate of as high as 114.7% from 2024 to 2029, opening up enormous room for imagination for the company.

Looking back at Sanhua Intelligent Controls’ A-share stock performance, its cumulative gain for all of 2025 reached 138.5%, significantly outperforming the broader market. In early 2026, Sanhua Intelligent Controls’ share price continued its upward trend. On January 19, it hit a historical high of 60.77 yuan.

However, the annual report shows that the company’s robot business disclosures—“focusing on technical improvements across multiple key model products, and collaborating with customers on key product R&D, prototyping, iteration, and sample delivery”—are highly consistent with its 2025 interim report. This implies that over more than half a year, the business has not achieved the critical leap from “samples” to “mass production.”

Given that, in the short term, there are limited catalysts for an upward scale shift in robot mass production, the expectation that things would land has not materialized for a long time, and Sanhua Intelligent Controls’ valuation growth logic is facing a challenge. As of the close on March 24, Sanhua Intelligent Controls’ A-share price fell 1% to 42.57 yuan, down for four consecutive trading days. Year-to-date, it is down 22.87%. Meanwhile, its H shares even dipped to a new low since August 18, 2025 (27.68 HKD) intraday on the 24th, closing at 28.86 HKD. Year-to-date, they are down 24.69%, reflecting the market’s cautious view of the sustainability and scale of the contributions from Sanhua Intelligent Controls’ Optimus humanoid robot business.

For the capital markets, the expectation shift in the robotics sector—from “listening to a story” to “watching for orders”—directly led to related stocks losing momentum and pulling back after reaching historical highs. Investors are evidently no longer satisfied with “supporting R&D” and “receiving customer evaluations,” and are instead waiting for tangible bulk orders, site-specific notifications, and capacity plans related to mass production.

When the robot business, which had been supporting an uplift in valuation, has failed to form incremental revenue on the income statement for a long time, and Sanhua Intelligent Controls’ existing “core baseline” of automotive components has also seen its first production and sales decline, the valuation gains accumulated earlier based on long-term imaginative upside have lost a solid foundation.

Similarly, earlier in recent days, China International Capital Corporation published a research report. Although it maintained a “outperform the industry” rating, it reduced its target price by 20% to 40 HKD due to a downward shift in the valuation center, reflecting the market’s cautious attitude toward near-term uncertainty.

“The contradiction in the market’s pricing of Sanhua Intelligent Controls lies in its core-baseline business versus its robot business. The two traditional businesses have relatively strong certainty. Combined with the company’s operating and management capabilities as a leader, even if new-energy vehicle growth slows, incremental gains brought by smart driving and electrification could offset the slowdown in vehicle sales.” A person from a private fund told a reporter: “The growth prospects of the robot business were the main logic supporting the stock’s rise earlier, and at the stage of rapid development of robotics, the market paid a premium. But judging from the contribution level of the robot business and its growth trajectory, the valuation is still too high. If the premium can’t be realized for a long time due to fundamentals, the market will naturally switch back to traditional-business valuation logic.”

The fund source also said that Tesla claims it alone has the integration capability of the hardware, software, artificial intelligence, and automated production needed to build humanoid robots. This may indicate that its strategic intent is to internalize design and system integration rather than structurally ceding these profit-pool structures to tier-one suppliers.

(This article comes from Yicai)