25 Aug 2026 CMB International Global Markets | Equity Research | Company Update

Jiangsu Hengli (601100 CH)

Key takeaways from post-results call

We have several positive takeaways from the post-results call: (1) Loss in Mexico operation reduced in 2Q26 (vs 1Q26), and we now forecast the fullyear loss to be ~RMB100mn (i.e. RMB20mn loss in 2H26E); (2) Precision industry (excluding ball screw) is expected to turn profitable in 2027E; (3) Demand for hydraulic components for excavators is strong, with potentially more order intakes for medium size cylinders for excavators from the major US construction machinery customer in 4Q26E; (4) Ball screws for humanoid robots capacity is on track to reach 100k units in the near term, and is expected to reach 1mn units in 3-5 years, according to the company. We trim our 2026E earnings forecast by 3%, as we incorporated FX loss in 1H26 and slightly lower margin assumptions. We maintain our positive stance on Hengli and roll over our TP to RMB132, based on 42x 2027E P/E (previously 48x 2026E P/E). Our target multiple is based on 1SD above the historical average to reflect both the upcycle of hydraulic business and the growth potential of precision industry business. Hengli remains a key pick in our universe.

 Loss in Mexico operation to be further narrowed. Mexico plant is engaged in hydraulic components business at the moment. Based on our understanding, the loss in Mexico plant narrowed to RMB20mn in 2Q26 from RMB60mn in 1Q26. We understand that the annual depreciation expense is ~RMB100mn while the annual operating expense is ~RMB40-50mn. Looking forward, we now assume only RMB20m loss in 2H26E. We forecast the full-year loss to be ~RMB100mn.

 Ball screws for humanoid robots. Two production lines in China are in operation at present. Hengli expects higher output in 4Q26E, while the growth in 1Q27E will depend on the production schedule of the major US humanoid robots manufacturer. Hengli’s ball screw capacity is expected to reach 100k units in the near term, and is planned to increase to 1mn units in 3-5 years.

 Precision industry segment (excluding ball screw) to potentially turn profitable in 2027E. The downstream applications include semiconductor and machine tools. For machine tools, Hengli will focus more on high-end customers (higher margin). For semiconductor, Hengli will focus on import substitution. In terms of capacity, the annual production value is expected to reach RMB2bn. We expect the segment revenue to double and turn profitable in 2027E.

Earnings Summary

(YE 31 Dec) FY24A FY25A FY26E FY27E FY28E Revenue (RMB mn) 9,390 10,941 13,600 16,409 19,169

YoY growth (%) 4.5 16.5 24.3 20.6 16.8 Adjusted net profit (RMB mn) 2,508.7 2,734.0 3,382.7 4,208.8 4,938.2 EPS (Reported) (RMB) 1.87 2.04 2.52 3.14 3.68

YoY growth (%) 0.4 9.0 23.7 24.4 17.2 Consensus EPS (RMB) na na 2.56 3.15 3.75 P/E (x) 56.2 51.5 41.7 33.5 28.6 P/B (x) 8.9 8.2 7.2 6.3 5.6 Yield (%) 0.7 0.8 1.0 1.3 1.5 Net gearing (%) (49.8) (51.1) (43.4) (49.0) (49.9) Source: Company data, Bloomberg, CMBIGM estimates

Jiangsu Hengli (601100 CH) Key takeaways from post-results call

Target Price RMB132.00

(Previous TP RMB125.00)

Up/Downside 25.6% Current Price RMB105.11

China Capital Goods Wayne FUNG, CFA

(852) 3900 0826 waynefung@cmbi.com.hk

Jake Zhang

(852) 3900 0849 jakezhang@cmbi.com.hk

Stock Data

Mkt Cap (RMB mn) 140,933.6 Avg 3 mths t/o (RMB mn) 995.0 52w High/Low (RMB) 123.74/83.80 Total Issued Shares (mn) 1340.8

Source: FactSet

Shareholding Structure

WANG's family 64.3%

Source: SSE

Share Performance

Absolute Relative 1-mth -1.6% -0.9% 3-mth -10.2% -5.8% 6-mth -7.8% -6.0%

Source: FactSet

12-mth Price Performance

Source: FactSet

Related reports:

Jiangsu Hengli - Net profit -3% YoY in 2Q26 but largely due to FX loss; strong revenue growth and EBIT – 25 Aug 2026 (link)

Jiangsu Hengli - 2Q26 preview: Revenue on track but profit hurt by FX; No impact from US foreign robots ban – 29 Jul 2026 (link)

Capital Goods – Strong growth of crane exports in Jun; AWP continues to see surprise – 16 Jul 2026 (link)

Jiangsu Hengli – Takeaways from plant visit: More positive than we thought – 5 Jun 2026 (link)

PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR OR http://www.cmbi.com.hk

1

Figure 1: Change in key assumptions on Hengli

Old New Change (RMB mn) 2026E 2027E 2028E 2026E 2027E 2028E 2026E 2027E 2028E

Revenue

Hydraulic cyclinder 6,112 6,781 7,453 6,569 7,745 8,520 7.5% 14.2% 14.3% Hydraulic pump and valve 5,404 6,300 7,192 5,404 6,300 7,192 0.0% 0.0% 0.0% Hydraulic system 463 532 585 463 546 600 0.0% 2.6% 2.6% Component 1,070 1,604 2,326 1,070 1,711 2,738 0.0% 6.7% 17.7% Revenue (hydraulic business) 13,049 15,218 17,556 13,506 16,303 19,050 3.5% 7.1% 8.5% Other business 95 106 119 95 106 119 0.0% 0.0% 0.0% Total revenue 13,144 15,324 17,675 13,600 16,409 19,169 3.5% 7.1% 8.5%

Gross margin (hydraulic business) 42.1% 42.0% 42.2% 40.9% 41.0% 41.2% -1.1 -0.9 -1.0

• Other business 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 0.0 0.0 0.0 Blended gross margin 42.4% 42.4% 42.5% 41.3% 41.4% 41.5% -1.1 -1.0 -1.0

Change (ppt)

S&D expense ratio -2.3% -2.3% -2.3% -2.3% -2.3% -2.3% 0.0 0.0 0.0 Admin expense and R&D ratio -12.3% -12.2% -12.2% -12.1% -11.9% -11.9% 0.2 0.3 0.3 Net finance income/(expense) RMB mn 43 202 245 -45 95 116 -206.1% -52.8% -52.5%

Net profit 3,491 4,194 4,883 3,383 4,209 4,938 -3.1% 0.4% 1.1%

(RMB mn) 2023 2024 2025 2026E 2027E 2028E

Revenue

Hydraulic cyclinder 4,693 4,761 5,254 6,569 7,745 8,520 Hydraulic pump and valve 3,268 3,583 4,326 5,404 6,300 7,192 Hydraulic system 292 296 385 463 546 600 Component 672 684 891 1,070 1,711 2,738 Revenue (hydraulic business) 8,926 9,325 10,856 13,506 16,303 19,050 Other business 59 65 85 95 106 119 Total revenue 8,985 9,390 10,941 13,600 16,409 19,169

Revenue growth

Hydraulic cyclinder 2.4% 1.4% 10.4% 25.0% 17.9% 10.0% Hydraulic pump and valve 18.6% 9.6% 20.7% 24.9% 16.6% 14.2% Hydraulic system 15.1% 1.6% 30.0% 20.0% 18.0% 10.0% Component 17.1% 1.8% 30.3% 20.0% 60.0% 60.0% Revenue (hydraulic business) 9.3% 4.5% 16.4% 24.4% 20.7% 16.9%

• Other business 96.0% 10.2% 29.9% 12.0% 12.0% 12.0% Total revenue 9.6% 4.5% 16.5% 24.3% 20.6% 16.8%

Source: Company data, CMBIGM

Figure 2: Key assumptions on Hengli

Gross margin

Hydraulic cyclinder 41.2% 42.6% 39.7% 38.9% 40.0% 40.8% Hydraulic pump and valve 47.6% 47.9% 48.8% 49.0% 49.0% 49.0% Hydraulic system 38.7% 38.1% 34.4% 34.5% 34.8% 35.0% Component 15.9% 14.5% 15.3% 15.8% 18.5% 23.0% Gross margin (hydraulic business) 41.6% 42.5% 41.1% 40.9% 41.0% 41.2% Other business 91.1% 93.9% 96.9% 95.0% 95.0% 95.0% Blended gross margin 41.9% 42.8% 41.6% 41.3% 41.4% 41.5%

Source: Company data, CMBIGM estimates

Figure 3: Hengli’s P/E band

RMB

61x

160

140

49x

120

37x

100

80

25x

60

13x

40

20

0

May-12

May-15

May-19

May-22

May-25

Aug-12

Aug-15

Aug-18

Aug-22

Aug-25

Sept-13

Sept-16

Sept-19

Sept-23

Mar-13

Mar-17

Mar-20

Mar-23

Mar-26

Jan-21

Feb-12

Feb-16

Feb-19

Feb-22

Feb-25

Jun-13

Jan-15

Jun-16

Jan-18

Jun-20

Jun-23

Jan-24

Jun-26

Oct-20

Apr-14

Apr-18

Apr-21

Apr-24

Jul-14

Jul-17

Jul-21

Jul-24

Oct-11

Oct-14

Oct-17

Oct-24

Nov-12

Dec-13

Nov-15

Dec-16

Nov-18

Dec-19

Nov-21

Dec-22

Nov-25

Source: Bloomberg, company data, CMBIGM estimates

Figure 4: Hengli’s P/B band

RMB

13.5x

160

10.5x

140

120

7.5x

100

80

4.5x

60

40

1.5x

20

0

May-12

May-15

May-19

May-22

May-25

Aug-12

Aug-15

Aug-18

Aug-22

Aug-25

Sept-13

Sept-16

Sept-19

Sept-23

Mar-13

Mar-17

Mar-20

Mar-23

Mar-26

Jan-21

Feb-12

Feb-16

Feb-19

Feb-22

Feb-25

Jun-13

Jan-15

Jun-16

Jan-18

Jun-20

Jun-23

Jan-24

Jun-26

Oct-20

Apr-14

Apr-18

Apr-21

Apr-24

Jul-14

Jul-17

Jul-21

Jul-24

Oct-11

Oct-14

Oct-17

Oct-24

Nov-12

Dec-13

Nov-15

Dec-16

Nov-18

Dec-19

Nov-21

Dec-22

Nov-25

Source: Bloomberg, company data, CMBIGM estimates

Risk factors: (1) Slowdown of demand for hydraulic components; (2) slower-thanexpected new business development.

Financial Summary

INCOME STATEMENT 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Revenue 8,985 9,390 10,941 13,600 16,409 19,169 Cost of goods sold (5,220) (5,368) (6,392) (7,980) (9,616) (11,215) Gross profit 3,765 4,021 4,549 5,620 6,793 7,954 Selling expense (186) (217) (254) (313) (377) (441) Admin expense (404) (592) (649) (789) (935) (1,093) R&D expense (694) (728) (705) (857) (1,017) (1,188) Others (150) (156) (248) (258) (312) (364) Operating profit 2,330 2,328 2,692 3,403 4,151 4,868 Share of (losses)/profits of associates/JV 0 0 0 0 0 0

EBITDA 2,744 2,758 3,228 3,998 4,800 5,572 Depreciation 413 430 536 595 649 704 Interest income 382 146 (2) (43) 97 118 Interest expense (13) (14) (4) (2) (2) (2) Net Interest income/(expense) 369 131 (6) (45) 95 116 Other income/expense 131 341 346 408 492 575 Pre-tax profit 2,830 2,800 3,032 3,766 4,738 5,560 Income tax (326) (288) (292) (377) (521) (612) Minority interest (5) (4) (6) (7) (8) (10) Adjusted net profit 2,499 2,509 2,734 3,383 4,209 4,938

BALANCE SHEET 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Current assets 12,994 13,830 15,224 17,151 20,387 23,619 Cash & equivalents 8,124 7,883 8,871 8,507 10,954 12,697 Account receivables 2,767 2,756 3,269 4,928 5,232 6,322 Inventories 1,692 1,765 2,154 2,787 3,273 3,671 Prepayment 156 157 252 252 252 252 Other current assets 255 1,270 677 677 677 677 Non-current assets 4,901 5,808 6,447 6,757 6,913 7,014 PP&E 2,851 3,889 4,998 5,321 5,490 5,605 Deferred income tax 58 139 276 276 276 276 Investment in JVs & assos 0 0 0 0 0 0 Intangibles 467 439 451 437 424 410 Goodwill 0 0 0 0 0 0 Financial assets at FVTPL 0 0 0 0 0 0 Other non-current assets 1,526 1,342 723 723 723 723 Total assets 17,896 19,639 21,671 23,909 27,300 30,633

Current liabilities 3,099 3,379 3,821 3,822 4,450 4,646 Short-term borrowings 203 19 17 17 17 17 Account payables 1,297 1,136 1,792 1,793 2,422 2,617 Tax payable 154 160 231 231 231 231 Other current liabilities 1,445 2,064 1,780 1,780 1,780 1,780 Non-current liabilities 353 431 512 512 512 512 Long-term borrowings 0 0 20 20 20 20 Deferred income 175 212 253 253 253 253 Other non-current liabilities 179 219 239 239 239 239 Total liabilities 3,453 3,810 4,333 4,334 4,963 5,158

Total shareholders equity 14,391 15,775 17,280 19,509 22,264 25,392 Minority interest 52 54 58 65 73 83 Total equity and liabilities 17,896 19,639 21,671 23,909 27,300 30,633

CASH FLOW 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Operating Profit before taxation 2,830 2,800 3,032 3,766 4,738 5,560 Depreciation & amortization 413 430 536 595 649 704 Tax paid (326) (288) (292) (377) (521) (612) Change in working capital (225) (195) (1,256) (2,290) (161) (1,294) Others (15) (269) (209) 2 2 2 Net cash from operations 2,677 2,479 1,811 1,696 4,708 4,360

Investing Capital expenditure (1,309) (1,072) (908) (900) (800) (800) Acquisition of subsidiaries/ investments 0 0 0 0 0 0 Others (1,742) (2,028) 51 (5) (5) (5) Net cash from investing (3,051) (3,100) (857) (905) (805) (805)

Financing Dividend paid (831) (939) (939) (1,153) (1,455) (1,810) Net borrowings (126) (185) 43 0 0 0 Proceeds from share issues 0 0 0 0 0 0 Others 77 336 32 (2) (2) (2) Net cash from financing (880) (788) (864) (1,155) (1,456) (1,812)

Net change in cash Cash at the beginning of the year 6,886 8,124 7,883 8,871 8,507 10,954 Exchange difference 2,492 1,167 899 0 0 0 Cash at the end of the year 8,124 7,883 8,871 8,507 10,954 12,697

GROWTH 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Revenue 9.6% 4.5% 16.5% 24.3% 20.6% 16.8% Gross profit 13.3% 6.8% 13.1% 23.5% 20.9% 17.1% Operating profit 7.9% (0.1%) 15.6% 26.4% 22.0% 17.3% EBITDA 7.5% 0.5% 17.0% 23.9% 20.1% 16.1% Adj. net profit 6.7% 0.4% 9.0% 23.7% 24.4% 17.3%

PROFITABILITY 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Gross profit margin 41.9% 42.8% 41.6% 41.3% 41.4% 41.5% Operating margin 25.9% 24.8% 24.6% 25.0% 25.3% 25.4% EBITDA margin 30.5% 29.4% 29.5% 29.4% 29.3% 29.1% Adj. net profit margin 27.8% 26.7% 25.0% 24.9% 25.6% 25.8%

GEARING/LIQUIDITY/ACTIVITIES 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Net debt to equity (x) (0.6) (0.5) (0.5) (0.4) (0.5) (0.5) Current ratio (x) 4.2 4.1 4.0 4.5 4.6 5.1 Receivable turnover days 116.8 107.4 100.5 110.0 113.0 110.0 Inventory turnover days 120.9 117.5 111.9 113.0 115.0 113.0 Payable turnover days 91.6 82.7 83.6 82.0 80.0 82.0

VALUATION 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

P/E 56.4 56.2 51.5 41.7 33.5 28.6 P/B 9.8 8.9 8.2 7.2 6.3 5.6 Div yield (%) 0.7 0.7 0.8 1.0 1.3 1.5

Source: Company data, CMBIGM estimates. Note: The calculation of net cash includes financial assets.

Disclosures & Disclaimers

Analyst Certification

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CMBIGM Ratings

BUY : Stock with potential return of over 15% over next 12 months HOLD : Stock with potential return of +15% to -10% over next 12 months SELL : Stock with potential loss of over 10% over next 12 months NOT RATED : Stock is not rated by CMBIGM

OUTPERFORM : Industry expected to outperform the relevant broad market benchmark over next 12 months MARKET-PERFORM : Industry expected to perform in-line with the relevant broad market benchmark over next 12 months UNDERPERFORM : Industry expected to underperform the relevant broad market benchmark over next 12 months

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