The stock price of ZHAOWEI, which has fallen after going public, has seen a decline in both revenue and profit in the latest quarter, and its growth momentum is facing challenges.
<h4>Key Points:</h4>
<ul>
<li>The company's revenue and profit both fell in the first quarter, with profit down over 25% year-on-year.</li>
<li>Benefiting from its H-share listing, the company's cash surged to HKD 950 million.</li>
</ul>
Li Shida
Getting robots to walk, run, and fight is much simpler than making them profitable. Over the past two years, the capital market has continuously poured money into robots, but the expected monetization has yet to be realized, becoming a major test for many robot concept stocks after their successful listings.
Shenzhen ZHAOWEI Electromechanical Co., Ltd. (2692.HK; 003021.SZ), a supplier of components that enable precise movements in robots through micro-drives and precision drive systems, may have a deep understanding of such market changes. After its listing in Hong Kong on March 9 this year, the company's stock price has been on a downward trend, falling about 15% from its issue price in less than a month.
ZHAOWEI does not manufacture robots themselves but provides the micro-drive systems that make devices &#34;move.&#34; Its core products include micro gearboxes, micro motors, and integrated drive modules that convert electrical energy into precise rotational and pushing movements, applicable in automotive electronics, consumer devices, and industrial automation. With the rise of robot applications, related technologies have also begun to extend into areas such as robotic fingers and micro joints, giving it a certain imaginative space for robotics.
However, this imagination has yet to be reflected in its performance. The latest quarterly results show that the company's revenue and profit both declined in the first quarter of 2026. Revenue fell 2.7% year-on-year to HKD 357 million; net profit plummeted 25.2% to approximately HKD 40.95 million; net profit after deducting non-recurring gains and losses was HKD 32.14 million, a decline of 31.89%. Despite only a slight decline in revenue, the significant drop in profit indicates that profitability is under pressure.
The pressure mainly comes from the expense side, with the company's R&amp;D expenditure rising to approximately HKD 42.8 million, an increase of about 7.9% year-on-year, and sales and management expenses also rising simultaneously. For a manufacturing company still expanding into new application scenarios, upfront investment is not surprising, but with revenue not growing in tandem, profits are naturally squeezed. From the profit structure perspective, the situation is even more delicate. In the first quarter, investment income reached HKD 15.24 million, a year-on-year increase of 277%, indicating that the profits during this period did not come entirely from core business but were influenced by fluctuations in financial assets.
Benefiting from raising over HKD 1.8 billion through its listing in Hong Kong, the company's cash reserves increased significantly from HKD 217 million at the end of last year to HKD 950 million, with total assets rising to HKD 5.883 billion and the debt-to-asset ratio remaining low, significantly improving its financial structure. Since the fundraising was completed during the quarter, the impact of the related funds on business expansion remains to be observed.
It is worth noting that the company experienced a large-scale capital allocation during the listing season, with net cash outflow from investment activities reaching HKD 870 million, reflecting that some funds have shifted towards investment purposes. According to the company's disclosure, about 65% of the raised funds will be used for technology R&amp;D and capacity expansion, indicating that it will still focus on its main business in the long term, but the related investments have yet to be reflected in the short term
<h4>Growth Yet to Be Realized</h4>
From a development perspective, the company originally focused on precision transmission components. In recent years, with the rise of high-end applications such as robotics, it has gradually extended into related scenarios and promoted the upgrade of products from single components to integrated modules to enhance added value and customer stickiness. However, this shift is more about application extension, and the core business is still in the investment and introduction stage, lacking clear support in terms of revenue and profit.
The company's position leans towards the backend of the industrial chain, with its demand depending on whether terminal equipment is deployed on a large scale, rather than directly benefiting from the investment boom in robotics. Before the complete products are mass-produced, orders for related components are difficult to ramp up quickly; at the same time, the unit price of micro-drive products is relatively low, and profitability relies more on scale rather than premium pricing. In the absence of an order explosion, rising expenses without the formation of scale effects naturally put pressure on profits.
Against this backdrop, the market's pricing of the company has begun to show differentiation. Zhongdali De (002896.SZ), which is relatively close to its business, currently has a price-to-earnings ratio of about 212 times in the A-share market, far exceeding ZHAOWEI's A-share price-to-earnings ratio of about 87 times and approximately 49.7 times in the Hong Kong stock market. Although ZHAOWEI's valuation is lower than the former, it is still significantly higher than traditional precision manufacturing enterprises.
For ZHAOWEI, its valuation has partially reflected the expectations of the robotics industry chain, but its performance has yet to show corresponding growth elasticity, placing it in a relatively awkward position. It has neither proven that demand is on the way like high-valuation targets nor returned to the valuation logic of traditional manufacturing enterprises.
This is not an isolated issue for a single company; the robotics industry chain is still in its early stages, and the market has yet to clearly discern which segments will achieve an explosion first. ZHAOWEI's current business structure, which still primarily focuses on precision manufacturing, is evidently difficult to support the valuation premium brought by the robotics concept on its own. In the absence of order and revenue validation, the market's tolerance for the concept naturally declines, especially since the company's current valuation is not cheap, prompting investors to reassess the gap between expectations and reality

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ZHAOWEI's stock price has fallen after going public, with the latest quarterly revenue and net profit both declining. Revenue decreased by 2.7% year-on-year to 357 million yuan, while net profit plummeted by 25.2% to approximately 40.95 million yuan. Despite the increase in research and management expenses, the company is still expanding into new application scenarios, facing growth challenges. Investment income surged by 277% to 15.24 million yuan, indicating that profits do not solely come from core business

Performance fails to meet expectations, ZHAOWEI faces growth challenges