27 Oct 2026 CMB International Global Markets | Equity Research | Company Update

Jiangsu Hengli (601100 CH) 3Q26 EBIT +25% YoY largely inline; Precision industries to beat

Jiangsu Hengli (601100 CH)

3Q26 EBIT +25% YoY largely in-line; Precision full-year guidance industries to beat full-year guidance

Hengli’s 3Q26 EBIT growth of 25% YoY reflected a slight acceleration from the 22% growth in 2Q26. Affected by the reduction of other gains, net profit in 3Q26 grew 9% YoY to RMB717mn. The results are broadly in line with our expectation. In the post-results call, management revealed that (1) precision industries segment (ball screws & linear guideways) achieved RMB250mn revenue in 3Q26, which will likely exceed previous guidance for the full year (~RMB400mn). The segment is expected to turn profitable in 2027E; (2) Mexico production base is expected to achieve RMB500mn revenue in 2027E; (3) Regarding US AD/CVD on foreign hydraulic cylinders, Hengli’s Mexico production base currently satisfies 60-70% of US customers’ demand. The proportion will increase to 100% in 2027E. Hengli continues to believe that such duties will increase the cost of competitors as well, and therefore see the impact as neutral to slightly positive. We maintain our positive stance on Hengli with unchanged TP of RMB132 (based on 42x 2027E 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.

 Key highlights in 3Q26 results: Revenue in 3Q26 grew 30% YoY to RMB3.4bn. Gross margin contracted 2ppts YoY to 40.2%. Selling & distribution expense ratio slightly increased 0.2ppts YoY to 2.5%, due to (1) 74% YoY increase in exhibition expense and the distribution of one-off bonus for sales team. Administrative expense ratio expanded 0.3ppts YoY to 6.4%, due to (1) increase in depreciation, (2) increase in workforce, and (3) increase in tax consultant expense. In 9M26, net profit increased 3% YoY to RMB2.15bn, accounting for 65% of our full-year forecast (run rate in 9M25: 76%).

 Risk factors: (1) Slowdown of demand for hydraulic components; (2)

slower-than-expected new business development.

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 3,320.5 4,215.1 4,935.8 EPS (Reported) (RMB) 1.87 2.04 2.48 3.14 3.68

YoY growth (%) 0.4 9.0 21.5 26.9 17.0 Consensus EPS (RMB) na na 2.46 3.17 3.82 P/E (x) 46.3 42.5 35.0 27.5 23.5 P/B (x) 7.4 6.7 6.0 5.2 4.6 Yield (%) 0.8 1.0 1.2 1.6 1.8 Net gearing (%) (49.8) (51.1) (47.0) (46.0) (50.5) Source: Company data, Bloomberg, CMBIGM estimates

Target Price RMB132.00 Up/Downside 52.4% Current Price RMB86.60

China Capital Goods Wayne FUNG, CFA

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

Stock Data

Mkt Cap (RMB mn) 116,115.0 Avg 3 mths t/o (RMB mn) 711.6 52w High/Low (RMB) 123.74/78.13 Total Issued Shares (mn) 1340.8

Source: FactSet

Shareholding Structure

WANG's family 64.3%

Source: SSE

Share Performance

Absolute Relative 1-mth -6.2% 1.5% 3-mth -18.9% -8.2% 6-mth -10.6% 3.9%

Source: FactSet

12-mth Price Performance

Source: FactSet

Related reports: Jiangsu Hengli – Key takeaways from post-results call – 25 Aug 2026 (link)

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)

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: Quarterly results highlights

(RMB mn) 1Q25 1Q26 Change YoY 2Q25 2Q26 Change YoY 3Q25 3Q26 Change YoY Total revenue 2,422 3,210 32.5% 2,749 3,623 31.8% 2,619 3,400 29.8% Cost of sales -1,468 -1,972 34.3% -1,539 -2,178 41.5% -1,514 -2,033 34.3% Gross profit 954 1,238 29.7% 1,210 1,445 19.5% 1,104 1,367 23.7% Other income -27 -28 4.7% -26 -32 24.7% -24 -30 25.8% S&D expenses -58 -69 19.0% -46 -77 68.5% -60 -85 42.2% Administrative expenses -137 -166 21.4% -159 -172 8.0% -161 -218 35.4%

• R&D expense -149 -183 23.0% -208 -178 -14.6% -194 -185 -4.6% Asset impairment -4 -16 266.9% -19 -68 255.0% -4 -21 455.4% EBIT 579 775 33.9% 753 919 22.1% 662 828 25.0% Net finance income/(cost) 199 -162 n/a 69 -32 n/a -68 12 n/a Other gains/(loss) -59 124 n/a 65 -28 n/a 135 -61 n/a Profit of JV & associates 1 0 n/a -1 -0 n/a 1 1 -6.0% Pretax profit 720 737 2.5% 886 858 -3.1% 731 781 6.9% Income tax -100 -84 -16.6% -73 -73 -0.2% -72 -63 -12.2% After tax profit 619 654 5.5% 813 785 -3.4% 659 718 9.0% MI -1 -1 -5.3% -2 -1 -22.6% -1 -1 -29.6% Net profit 618 653 5.6% 811 784 -3.4% 658 717 9.1%

Key ratios ppt ppt ppt Gross margin 39.4% 38.6% -0.8 44.0% 39.9% -4.1 42.2% 40.2% -2.0

• S&D expense ratio 2.4% 2.2% -0.2 1.7% 2.1% 0.5 2.3% 2.5% 0.2 Adminstrative exp ratio 5.6% 5.2% -0.5 5.8% 4.7% -1.0 6.1% 6.4% 0.3

• R&D exp ratio 6.1% 5.7% -0.4 7.6% 4.9% -2.7 7.4% 5.4% -2.0 Effective tax rate 14.0% 11.4% -2.6 8.2% 8.5% 0.2 9.8% 8.1% -1.8

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

Revenue

Hydraulic cyclinder 6,569 7,745 8,520 6,569 7,745 8,520 0.0% 0.0% 0.0% Hydraulic pump and valve 5,404 6,300 7,192 5,404 6,300 7,192 0.0% 0.0% 0.0% Hydraulic system 463 546 600 463 546 600 0.0% 0.0% 0.0% Component 1,070 1,711 2,738 1,070 1,711 2,738 0.0% 0.0% 0.0% Revenue (hydraulic business) 13,506 16,303 19,050 13,506 16,303 19,050 0.0% 0.0% 0.0% Other business 95 106 119 95 106 119 0.0% 0.0% 0.0% Total revenue 13,600 16,409 19,169 13,600 16,409 19,169 0.0% 0.0% 0.0%

Gross margin (hydraulic business) 40.9% 41.0% 41.2% 40.2% 40.9% 41.2% -0.7 -0.2 0.0 Other business 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 0.0 0.0 0.0 Blended gross margin 41.3% 41.4% 41.5% 40.6% 41.2% 41.5% -0.7 -0.2 0.0

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 -12.1% -11.9% -11.9% -11.0% -11.7% -11.9% 1.1 0.2 0.0

Source: Company data, CMBIGM

Figure 2: Change in key assumptions on Hengli

Net finance income/(expense) RMB mn -45 95 116 -164 95 114 262.6% -0.1% -2.3%

Net profit 3,383 4,209 4,938 3,321 4,215 4,936 -1.8% 0.1% 0.0%

Source: Company data, CMBIGM estimates

Figure 3: Key assumptions on Hengli

(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%

Gross margin

Hydraulic cyclinder 41.2% 42.6% 39.7% 38.4% 40.0% 40.8% Hydraulic pump and valve 47.6% 47.9% 48.8% 48.0% 49.0% 49.0% Hydraulic system 38.7% 38.1% 34.4% 34.0% 34.8% 35.0% Component 15.9% 14.5% 15.3% 14.8% 17.0% 23.0% Gross margin (hydraulic business) 41.6% 42.5% 41.1% 40.2% 40.9% 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% 40.6% 41.2% 41.5%

Source: Company data, CMBIGM estimates

Figure 4: Hengli’s P/E band

RMB

61x

160

49x

140

120

37x

100

80

25x

60

13x

40

20

0

Sept-13

Sept-16

Sept-19

Sept-23

Sept-26

Jun-13

Jun-16

Jan-18

Jun-20

Jan-21

Jun-23

Jan-24

Jan-15

Jun-26

Aug-12

Aug-15

Aug-18

Aug-22

Aug-25

Mar-13

Mar-17

Mar-20

Mar-23

Mar-26

Feb-12

Feb-16

Feb-19

Feb-22

Feb-25

Oct-20

Apr-14

Apr-18

Apr-21

Apr-24

May-12

May-15

May-19

May-22

May-25

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 5: 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

Sept-26

Mar-13

Mar-17

Mar-20

Mar-23

Mar-26

Feb-12

Jan-15

Jun-26

Feb-16

Feb-19

Feb-22

Feb-25

Jun-13

Jun-16

Jan-18

Jun-20

Jan-21

Jun-23

Jan-24

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

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) (8,080) (9,642) (11,215) Gross profit 3,765 4,021 4,549 5,520 6,767 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) (707) (985) (1,188) Others (150) (156) (248) (258) (312) (364) Operating profit 2,330 2,328 2,692 3,453 4,158 4,868 Share of (losses)/profits of associates/JV 0 0 0 0 0 0

EBITDA 2,744 2,758 3,228 4,048 4,821 5,586 Depreciation 413 430 536 595 663 718 Interest income 382 146 (2) (162) 97 116 Interest expense (13) (14) (4) (2) (2) (2) Net Interest income/(expense) 369 131 (6) (164) 95 114 Other income/expense 131 341 346 408 492 575 Pre-tax profit 2,830 2,800 3,032 3,697 4,746 5,557 Income tax (326) (288) (292) (370) (522) (611) Minority interest (5) (4) (6) (7) (8) (10) Adjusted net profit 2,499 2,509 2,734 3,321 4,215 4,936

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

YE 31 Dec (RMB mn) Current assets 12,994 13,830 15,224 17,134 20,137 23,446 Cash & equivalents 8,124 7,883 8,871 9,173 10,274 12,848 Account receivables 2,767 2,756 3,269 4,183 5,707 5,952 Inventories 1,692 1,765 2,154 2,849 3,227 3,717 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 7,099 7,187 PP&E 2,851 3,889 4,998 5,321 5,677 5,778 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 23,891 27,237 30,633

Current liabilities 3,099 3,379 3,821 3,867 4,417 4,679 Short-term borrowings 203 19 17 17 17 17 Account payables 1,297 1,136 1,792 1,838 2,388 2,651 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 4,379 4,929 5,192

Total shareholders equity 14,391 15,775 17,280 19,447 22,234 25,358 Minority interest 52 54 58 65 73 83 Total equity and liabilities 17,896 19,639 21,671 23,891 27,237 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 3,697 4,746 5,557 Depreciation & amortization 413 430 536 595 663 718 Tax paid (326) (288) (292) (370) (522) (611) Change in working capital (225) (195) (1,256) (1,562) (1,353) (472) Others (15) (269) (209) 2 2 2 Net cash from operations 2,677 2,479 1,811 2,362 3,536 5,193

Investing Capital expenditure (1,309) (1,072) (908) (900) (1,000) (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) (1,005) (805)

Financing Dividend paid (831) (939) (939) (1,153) (1,428) (1,812) 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) (1,430) (1,814)

Net change in cash Cash at the beginning of the year 6,886 8,124 7,883 8,871 9,173 10,274 Exchange difference 2,492 1,167 899 0 0 0 Cash at the end of the year 8,124 7,883 8,871 9,173 10,274 12,848

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% 21.4% 22.6% 17.5% Operating profit 7.9% (0.1%) 15.6% 28.3% 20.4% 17.1% EBITDA 7.5% 0.5% 17.0% 25.4% 19.1% 15.9% Adj. net profit 6.7% 0.4% 9.0% 21.5% 26.9% 17.1%

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

YE 31 Dec

Gross profit margin 41.9% 42.8% 41.6% 40.6% 41.2% 41.5% Operating margin 25.9% 24.8% 24.6% 25.4% 25.3% 25.4% EBITDA margin 30.5% 29.4% 29.5% 29.8% 29.4% 29.1% Adj. net profit margin 27.8% 26.7% 25.0% 24.4% 25.7% 25.7%

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

YE 31 Dec

Net debt to equity (x) (0.6) (0.5) (0.5) (0.5) (0.5) (0.5) Current ratio (x) 4.2 4.1 4.0 4.4 4.6 5.0 Receivable turnover days 116.8 107.4 100.5 100.0 110.0 111.0 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 46.5 46.3 42.5 35.0 27.5 23.5 P/B 8.1 7.4 6.7 6.0 5.2 4.6 Div yield (%) 0.8 0.8 1.0 1.2 1.6 1.8

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

Disclosures & Disclaimers

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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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