Bernstein: Zhejiang Shuanghuan Driveline — attractive entry point despite near-term pressure
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Bernstein maintains an Outperform rating on Zhejiang Shuanghuan Driveline (002472.CH), setting an unchanged DCF-based target price of 60.00 RMB. The stock currently trades at 36.63 RMB, offering approximately 64% upside potential.
Shuanghuan reported fiscal year 2025 results aligned with expectations, achieving 4% year-over-year revenue growth (or 12% excluding steel wholesaling) and 23% net profit growth. However, first-quarter 2026 momentum slowed, with revenue and net profit rising just 2% and 3% respectively, dragged down by sluggish automotive demand. Despite these short-term headwinds, management reiterated confidence in achieving the 1.5 billion RMB net profit target outlined in the 2026 incentive plan.
The company's competitive moat remains intact across multiple segments. Shuanghuan is actively gaining market share in industrial robot RV reducers, taking ground from global leader Nabtesco, while expanding its scale in non-metallic gears and intelligent actuators. A key catalyst is the validation of its reducer products in Honor's humanoid robots, which recently set records in a Chinese half-marathon, proving reliability under extreme conditions. Furthermore, Shuanghuan plans to extend its robotics footprint into consumer applications like lawn-mowing and pool-cleaning robots. These long-term quality indicators present a compelling entry point for investors despite the near-term cyclical pressures in the automotive sector.