Laying a strong foundation is essential for constructing towering skyscrapers!

The manufacturing industry, known for its complex and extensive supply chain, relies heavily on precision components, which serve as the core foundation of product performanceEnhancing the quality of these components directly influences the capabilities and reliability of the final products.

In the burgeoning world of electric vehicles (EVs), the role of the motor core—specifically the motor iron core—has assumed gigantic proportionsAs a pivotal component, the motor core not only accounts for 30% of the overall motor cost but also plays a vital role in reducing electromagnetic losses and enhancing motor efficiency.

As sales of electric vehicles continue to rise exponentially, paired with the growing popularity of dual-motor models, estimates predict that from 2020 to 2025, the domestic market for motors used in new energy vehicles will surge from approximately 7.46 billion yuan to a staggering 37.90 billion yuanThis will subsequently propel a rapid increase in demand for motor iron cores.

Currently, several manufacturers of motor iron cores have emerged in the domestic market, including notable names such as Zhenyu Technology, Xinzhi Group, Longsheng Technology, and Tongda PowerAmong these, Zhenyu Technology has distinguished itself as the fastest-growing company within this sphere.

According to forecasts for 2024, Zhenyu Technology anticipates a net profit of 220 to 280 million yuan for the year, a staggering year-on-year growth of 414% to 555%. This profit increase significantly outpaces those of its competitors such as Longsheng Technology and Xinzhi Group.

The ability of Zhenyu Technology to excel is fundamentally anchored in two key advantages: technological superiority and efficient production capabilities.

1. Mastering Cutting-edge Technology and Establishing Strong Technical Barriers

In the quest for higher performance in electric vehicles, motor speeds have seen significant benchmarks, but traditional manufacturing processes face constraints

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This has paved the way for innovative bonding techniques to emerge.

Utilizing adhesive bonding methods effectively increases the fastening strength of the iron cores, reduces energy wastage, and enhances overall electric motor efficiencyHowever, due to the complexity involved, this technology has predominantly been monopolized by overseas manufacturersCurrently, only Zhenyu Technology and Longsheng Technology in China have managed to obtain the necessary technology licenses and possess production capabilities, with Zhenyu Technology's adhesive motor core penetration nearing 10%.

Consequently, within the domestic sphere, Zhenyu Technology has successfully established a significant technological barrier, allowing for better alignment with the latest customer requirements.

At present, the company supplies substantial quantities of motor core products to industry giants such as BYD, Xiaomi, Hongmeng Zhixing, and Li Auto.

2. Investing in Upstream Tool Production to Support Core Manufacturing

The advancement and upgrading of motor core products are inherently linked to improvements in tooling processes.

Unlike competitors such as Longsheng Technology, Zhenyu Technology boasts the capability to produce mid-to-high-end motor core molds with precision levels that meet international standards—clearly superior to industry benchmarks.

By strategically investing in mold manufacturing, Zhenyu Technology ensures it can better control the accuracy and stability critical to iron core production while also facilitating quick iterations and upgrades of core products.

3. Establishing Automated Production Lines to Enhance Efficiency

In the first three quarters of 2024, Zhenyu Technology experienced a decrease in the unit price of its motor core products due to reduced raw material costs

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Although shipment volumes rose by over 30% year-on-year, revenues dipped nearly 10% compared to the previous year.

To mitigate any adverse effects on profitability, the company has ramped up its investment in automated production linesThis effort has resulted in a reduction of over 1,000 employees, a 30% decrease in labor costs, and a decline of more than 20% in manufacturing expenses—thus boosting overall profit margins.

As of the first three quarters of 2024, Zhenyu Technology reported a gross profit margin of 13.16%, reflecting a year-on-year increase of 1.08 percentage points, trailing only Longsheng Technology within the sector.

With a robust technological and production foundation, Zhenyu Technology now possesses the capability to extend its business ventures into advanced fields like low-altitude vehicles and humanoid robotics.

Leveraging its expertise in automotive motor core production, the company has already ventured into producing low-altitude vehicle drive motor cores, partnering with XPeng Flying Cars, which are currently in the prototype sampling phase.

In the humanoid robotics sphere, Zhenyu Technology has rapidly established itself as an emerging standout, utilizing its precision component technologyIn October 2024, the company announced plans to form a wholly owned subsidiary dedicated to entering the humanoid robotics market.

Despite being a newcomer, progress on Zhenyu Technology’s product developments has been swift.

In 2024, the company built a semi-automated production line for planetary roller screws, achieving a daily capacity of 50 sets, with plans for a second semi-automated production line set to commence in the first quarter of 2025. Its planetary roller screw products have already entered the sampling and small-batch testing phases with various robotics manufacturers.

It is worth noting that many domestic planetary roller screw manufacturers remain in the sampling stage, with only Beite Technology, Best, and Shuanglin shares showing solid production readiness

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Thus, Zhenyu Technology, as a newcomer, holds promising potential within the industry.

Moreover, looking at the evolving industry itself, as demand for humanoid robots expands, the market size for planetary roller screws is expected to reach 13.61 billion yuan, with the industry projected to experience a compound annual growth rate of 10% from 2023 to 2035, allowing Zhenyu Technology to benefit from this growth trajectory.

Additionally, there exists substantial room for domestic substitutes in the planetary roller screw marketIn 2023, local manufacturers captured just 20% of the market shareAs technology develops, this percentage is anticipated to grow.

However, for Zhenyu Technology to make significant headway in the planetary roller screw landscape, substantial financial support would be essential.

Take Tesla’s humanoid robot, Optimus, as an example; once mass-produced, the cost per humanoid robot could reach approximately 140,000 yuanOf this, the planetary roller screw’s value share is about 15%, translating to 21,000 yuan per unit—substantially higher than other components.

This places significant pressure on Zhenyu Technology concerning production costs.

In 2023, Zhenyu Technology recorded a negative net cash flow of -1.009 billion yuan, with cash payments for acquiring fixed assets, intangible assets, and other long-term assets amounting to 704 million yuanThis calls for considerable investment into production line development.

Nonetheless, the company’s operational cash flow net amount could scarcely support ongoing investment activitiesFor 2023, Zhenyu Technology reported a negative cash flow from operating activities of -558 million yuan, highlighting issues regarding profit conversion.

Since 2022, the company's accounts receivable and bills have grown at a pace significantly exceeding that of revenue growth, with a net receivables ratio below 100%, indicating a need for enhanced profit conversion capabilities.

If the company can bolster its receivables management and enhance its revenue-generating capacity, it could pave the way for increased financial backing for its humanoid robotics initiatives.

In conclusion, through its technological and industrial chain advantages, Zhenyu Technology has rapidly developed its motor core products in the electric vehicle sector

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