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CHINASOFT INT'L(354)
Analysis¡G
In 2025, China Software deeply advanced its ¡§One Body, Two Wings¡¨ strategic layout, with AI as the core and Physical AI and Digital AI as the two wings. The company focused on two major core growth engines ¡X AI HarmonyOS and the AI Intelligent Business Operating System ¡X and built full-stack product and service capabilities spanning intelligent perception in the physical world to intelligent enterprise operations. For the year ended December 31, 2025, revenue from full-stack, full-scenario AI products and services reached RMB 2 billion, representing a year-on-year increase of 109.2%. This marks the company¡¦s successful transition into a new role as an architect and integrator of enterprise Agentic AI, laying a solid foundation for the development of new quality productive forces and long-term high-quality growth.
As the Physical AI component of the ¡§One Body, Two Wings¡¨ strategy, the AI HarmonyOS business is positioned as the foundation for bringing enterprise AI into the physical world, aiming to provide high-quality data support for AI platforms. Leveraging the dual advantages of Kaihong OS and the Meta platform, the company adheres to a hardware-software integrated development strategy and has deeply participated in the large-scale implementation of Harmony cities. Through the establishment of a City Partnership mechanism, the company has created a new paradigm for smart city construction in core cities such as Xi¡¦an, Shenzhen, and Beijing, building a closed-loop ecosystem covering technology adaptation, product certification, and market application. In key scenarios including transportation, public security, and housing and urban-rural development, the company has launched industry-specific systems such as Road Harmony (Lu Hong) and Construction Harmony (Jian Hong), along with multiple intelligent sensing terminals, achieving unified device access and cross-domain collaboration. Notably in Xi¡¦an, the adaptation center led by the company has become a national benchmark, attracting a large number of ecosystem partners and forming a significant industrial cluster effect. This fully demonstrates the company¡¦s leading position in the OpenHarmony ecosystem.
At the other end of the ¡§Two Wings,¡¨ the AI-native Enterprise Intelligent Operating System serves as a key entry point into central state-owned enterprises, shouldering the strategic mission of securing the entrance to enterprise Agentic AI. After five years of continuous investment, the company successfully launched the allmeta Enterprise Intelligent Business Operating System, achieving a paradigm shift from traditional recording systems to an Intelligent Business Operating System (EOS). Designed with AI as the core principle, allmeta deeply integrates cognitive frameworks with execution neural networks to realize the digital twin of physical world business operations. Through a three-layer product architecture ¡X ¡§Data Foundation, Cognitive Hub, and Execution Network¡¨ ¡X it constructs actionable business entities, significantly reducing the latency from insight to action and empowering enterprises with self-evolving capabilities.
In the face of industry transformation, the company has fully embraced AI Coding and intelligent development tools, promoted the transformation of its workforce structure toward AI talent, and built large-scale, standardized ¡§Digital OpenClaw Factory.¡¨ In terms of ecosystem development, on the southbound (device) side, the company has engaged in deep cooperation with domestic chip manufacturers such as Loongson and ESWIN Computing to build a dual open-source, self-controlled ecosystem of ¡§OpenHarmony + Domestic Chips,¡¨ becoming the core connector for southbound device access to HarmonyOS. On the northbound ecosystem, the company focuses on the large-scale implementation of HarmonyOS native applications and meta-services, successfully supporting the completion of HarmonyOS adaptation and development for over 1,200 applications, and independently developed the Hongyun Virtual Machine to solve the compatibility challenges of Windows applications.(I do not hold the above stock.)
Strategy¡G
Buy-in Price: $3.95, Target Price: $4.30-4.50, Cut Loss Price: $3.75
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NHU(002001)
Analysis¡G
NHU is a leading domestic fine chemical enterprise, focusing on four core businesses: nutritional supplements, flavors and fragrances, high-performance new materials, and active pharmaceutical ingredients. It is a major global producer of vitamins and methionine, with overseas revenue accounting for over 58%. The core business of nutritional supplements includes a variety of products such as vitamin E, vitamin A, and methionine, primarily used in feed additives, food additives, and nutritional health products. The flavors and fragrances segment covers a range of products like linalool and citral, widely applied in personal care and food industries. The new materials sector specializes in high-performance polymers such as PPS, PPA, and HDI, with downstream applications in automotive, electronics, and new energy sectors.The company's operating revenue in 2025 was 22.251 billion yuan, an increase of 2.97% yoy; the net profit attributable to the parent company was 6.764 billion yuan, up 15.26% yoy. In Q1 2026, operating revenue reached 6.295 billion yuan, rising 15.72% yoy, while the net profit attributable to the parent company was 1.827 billion yuan, down 2.80% yoy. The primary reasons were: in January and February, the market prices of the company's main products¡Xvitamin E and methionine¡Xdeclined yoy, but methionine prices rebounded in March. Since March, the domestic price of solid methionine has been 44 yuan/kg, up 26.4 yuan/kg from the beginning of the year, marking a 150% increase. Meanwhile, the company's methionine production capacity remained fully operational, and new capacity continued to ramp up, poised to significantly benefit from the rising prices of core products. Additionally, the Tianjin nylon project is set for completion in 2027, forming a complete ¡§hexamethylenedinitrile¡Bhexamethylenediamine¡Bnylon 66¡¨ production chain, which will drive the structural upgrade toward high-margin products.
Strategy¡G
Buy-in Price: RMB29.47, Target Price: RMB34.00, Cut Loss Price: RMB27.00
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Sanhua (002050.CH) - Dual-Engine Momentum Conversion
Company ProfileSanhua is the world's largest manufacturer of HVACR controls and components, focusing on heat management business with heat pump technology as the core. It operates the domestic and commercial air conditioning business as well as automotive heat management fields, establishing a leading position in the industry. The products of the Company such as electronic expansion valves of air conditioning, four-way reversing valves, solenoid valves, micro-channel heat exchangers, automotive electronic expansion valves, new energy vehicle heat management integrated components and omega pumps have the highest market share across the world. The market proportion of service valves, thermostatic expansion valves for vehicles and receivers rank top among the world. Investment SummaryCore Business Maintained High Growth, Profitability Improved
FY2025 full-year results: The Company reported revenue of RMB31,012 million (RMB, the same below), up 10.97% yoy; net profit attributable to the parent company of RMB4,063 million, up 31.10% yoy; and gross margin of 28.8%, up 1.4 ppts yoy. The Company adopted a raw material price linkage mechanism and hedging measures to reduce costs and enhance efficiency, while continuously optimising its product mix and benefiting from economies of scale, driving an improvement in profitability. In terms of business structure, revenue from refrigeration and air-conditioning electrical appliance components amounted to RMB18,585 million (accounting for 59.93%), up 12.22% yoy; revenue from automotive components amounted to RMB12,427 million (accounting for 40.07%), up 9.14% yoy. FY2026 Q1 results: Revenue amounted to RMB7,774 million, up slightly by 1.36% yoy; net profit attributable to the parent company was RMB928 million, up 2.68% yoy; and net profit excluding non-recurring items was RMB986 million, up 15.52% yoy. Gross margin was 27.8%, up 1.0 ppt yoy. Although growth was moderate, after adding back foreign exchange losses of RMB140-150 million and securities investment losses of RMB100 million, adjusted net profit grew by more than 30% yoy, with net profit margin rising to 14.6%. This reflects that despite the challenge of rising raw material costs caused by the situation in the Middle East in Q1, the Company still achieved solid results growth. Refrigeration Business Foundation Remained Solid, Liquid Cooling and Energy Storage Demand Was StrongIn 2025, revenue from the refrigeration components business grew against the trend, despite a 1.2% decline in total domestic air-conditioner industry sales volume. This was mainly attributable to the steady increase in market share and product mix optimisation. The segment's gross margin was 28.8%, up 1.42 ppts yoy. Notably, the Company's annual sales from liquid cooling and energy storage businesses reached RMB2 billion, among which revenue from data centre liquid cooling doubled. In 2026 Q1, despite a 3% yoy decline in domestic air-conditioner sales volume, the Company achieved steady revenue growth by expanding its data centre liquid cooling business and new application scenarios for energy storage thermal management. Based on strong demand, the Company maintained its full-year guidance of high growth of 50%-100% for data centre and energy storage-related businesses. Refined Operations in Automotive Components BusinessIn 2025, the gross margin of the automotive components business segment increased by 1.15 ppts to 28.8%, reflecting the strategic results of the Company's shift from scale expansion to refined operations. In 2026 Q1, although NEV sales volume declined by 3.7% yoy, the Company's core customer Tesla recorded a 13% yoy increase in global production in Q1, the proportion of domestic emerging automaker customers increased, and exports of domestic brands grew rapidly, jointly driving the Company's automotive components business growth to outperform the industry average. Moreover, the Company's automotive thermal management business is transforming and upgrading from component supply to system integration, which helps increase the value of products per vehicle, product value-added and overall competitiveness. Cost Reduction and Efficiency Enhancement Delivered Significant ResultsIn 2025 H2, the Company adjusted its strategy and refocused on operational improvements. Through measures such as digital transformation and upgrades, the introduction of AI and digital employee tools, and the optimisation of operational efficiency at overseas bases, the Company improved its operational efficiency. In 2025 and 2026 Q1, the period expense ratios (sales + administration expense ratios) decreased by 0.65 ppts and 0.88 ppts yoy to 13.01% and 11.69%, respectively, with economies of scale continuing to emerge. Liquid Cooling Contributes Short-Term Certain Incremental Growth, While Robotics Opens Up a Hundred-Billion-Level Growth SpaceThe Company has entered the liquid cooling and energy storage sectors as a thermal management component supplier, with core products covering valves, pumps, heat exchangers and sensors. The common architecture of thermal management technology across the three major scenarios of automobiles, robotics and AI servers gives the Company the ability to reuse its technology for "one core and three applications". Its R&D investment efficiency is significantly higher than that of single-track companies, with a high self-production rate, more mature products and a clear platform-based expansion path. It has currently reached cooperation with several leading thermal management integrators. Among them, Tesla's HW4.0 valve island product has secured a nomination and entered the batch delivery stage, while AI server liquid cooling has reached cooperation with leading domestic cloud vendors, entered the prototype testing stage, and is expected to achieve small-scale mass production within the year. Short-term growth certainty in the liquid cooling segment is promising. In the robotics field, the Company has entered the biomimetic robot market as an electromechanical actuator supplier, actively cooperating with customers in product R&D, trial production and iteration, while stepping up joint development efforts. At the same time, it is strengthening its technology reserves and capacity layout in parallel, and has launched the construction of a RMB3.8 billion robotics production base, laying the foundation for future profit growth. Investment ThesisSanhua Intelligent Controls is a leader in refrigeration components. As global NEV penetration remains on an upward trend, the Company's technical barriers and customer advantages remain solid, and its market share is expected to continue increasing. Its automotive components business is expected to maintain a double-digit CAGR over the next three years, while the liquid cooling and energy storage businesses have relatively high certainty of sustaining high growth. In the long term, the potential space in the robotics track is expected to reshape the Company's valuation logic. As for valuation, we expected the Company's 2026/2027/2028 earnings per share to 1.11/1.30/1.55 yuan, a yoy increase of 15.2%/16.7%/19.8%. And we accordingly gave the target price to RMB53.4, respectively 48/41.2/34.4x P/E for 2026/2027/2028. "Accumulate" rating. (Closing price as at 29 May) RiskProgress of new production line is below expectations
Electric vehicle sales fall short of expectations
Macroeconomic downturn affects product demand
Sharply rising raw material prices or sharply falling product prices Financials
(Closing price as at 29 May 2026) Download PDF Version
| Recommendation on 2-6-2026 | | Recommendation | Accumulate (Maintain) | | Price on Recommendation Date | $ 46.340 | | Suggested purchase price | N/A | | Target Price | $ 53.400 |
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