Hengli Reports 4Q25 Earnings Decline Amid Margin Pressures
Hengli's net profit for 4Q25 fell 10% YoY to RMB647 million, missing estimates due to declining gross margins and finance expenses. Despite this, the company anticipates growth in downstream segments and humanoid robotics, prompting a slight upward revision in earnings forecasts for 2026 and 2027.
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In 4Q25, Hengli's net profit decreased to RMB647 million, 10% below both internal and consensus estimates, primarily due to a gross margin drop of 6.11 percentage points to 40.6%. The company's 2025 revenue reached RMB10.9 billion, a 17% increase YoY, with hydraulic systems, components, and pumps showing significant growth.
However, net profit for 2025 increased only by 9% to RMB2.73 billion, impacted by a reduction in finance income stemming from foreign exchange losses. Hengli's earnings forecasts for 2026 and 2027 have been revised upward by 1% and 4%, respectively, with a target price adjusted to RMB109. Risks include potential demand slowdowns for hydraulic components and challenges in new business development.
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