Veteran in Electric Motors Pursues New Energy BROAD-OCEAN MOTOR Knock on the Door of Hong Kong Stock Market

From garage door remote controls to electric vehicle motors, BROAD-OCEAN MOTOR, which has doubled its net profit in three years, has also arrived at the Hong Kong stock market. Key Points: Ranked second in the global HVAC motor market share, and holds the first position in both the Chinese and North American markets. The company's A-share stock price has surged 143% in the past year, with a market value approaching 28.5 billion yuan. Li Shida Have you ever thought that the remote control for your garage door, the powertrain for your electric vehicle, and the compressor for your air conditioner might all be produced by the same company? This company is not a household name international brand, but a motor manufacturer from Zhongshan, Guangdong, China—Zhongshan Broad-Ocean Motor Co., Ltd. (002249.SZ). Having been listed on the Shenzhen Stock Exchange for over 15 years, BROAD-OCEAN MOTOR has submitted a listing application to the Hong Kong Stock Exchange, preparing to enter the Hong Kong capital market. Founded in 2000, BROAD-OCEAN MOTOR started with traditional motor business but has now expanded into HVAC, automotive electric drive systems, and even fuel cells, covering various aspects of daily life. According to Frost & Sullivan data, in terms of revenue, the company has become the second-largest third-party HVAC electric drive solution provider globally by 2024, and ranks first in both the Chinese and North American markets. Two-Pronged Approach The company can be divided into two main business segments: one is the manufacturing of motors for building and home appliances, with a revenue of 7.08 billion yuan in 2024, accounting for 58.4%. Among these, HVAC motors contribute over 55%, with products including large central air conditioning compressors, garage door openers, and ventilation system fans. The other segment is the automotive powertrain and components business, with a revenue of 5.02 billion yuan in 2024, accounting for 41.5%. Within this, traditional starters and generators account for 25.8%, while new energy vehicle powertrains and components account for 15.7%. BROAD-OCEAN MOTOR's development reflects a "two-pronged approach," with stable demand for HVAC motors, which belong to essential consumption and infrastructure markets, providing stable cash flow; on the other hand, the automotive electric drive business is deeply linked to new energy vehicles, bringing growth stories to the company. From the financial data, BROAD-OCEAN MOTOR's revenue performance has been relatively stable, while profits have surged in recent years. From 2022 to 2024, the company's revenue increased from 10.93 billion yuan to 12.11 billion yuan, with a compound annual growth rate of only about 5%. However, during the same period, net profit soared from 427 million yuan to 888 million yuan, with a compound growth rate of 44%. In the first half of 2025, net profit increased by another 34.6% year-on-year, reaching 602 million yuan. This reflects an improvement in its profitability, with gross margin rising from 19.3% in 2022 to 22.2% in 2024, and net profit margin jumping from 3.9% to 7.5%, showcasing the results of cost control and product mix optimization. Additionally, overseas revenue, which has consistently maintained around 45%, generally has a higher gross margin than the Chinese market Advanced Global Layout Compared to many Chinese manufacturers that are still limited to the domestic market, BROAD-OCEAN MOTOR's global layout is relatively "advanced." By 2025, the company will have 15 production bases worldwide, located in the United States, Mexico, the United Kingdom, Thailand, Vietnam, Morocco, and other places, and has established R&D centers in Detroit and Chicago in the United States, as well as in London, UK. In 2015, the company acquired the century-old American commercial vehicle parts company Petrel and established a joint venture "Tata Petrel" with India's Tata Motors (TATAMOTORS.BO; TTM.US), enhancing its voice in the international commercial vehicle parts sector. This not only allows for nearby service to international automotive and HVAC customers but also provides supply chain resilience amid rising geopolitical tensions and trade barriers. However, the company's business is not without shortcomings. One issue is the slow revenue growth, with an average increase of only about 5% over the past three years, which appears conservative compared to the double-digit growth often seen in the new energy vehicle parts industry, indicating insufficient scale expansion speed. The second issue is that traditional starters and generators still account for 25.8% of the company's product structure, and this related business belongs to the gradually phasing-out sunset industry, while the proportion of new energy vehicle powertrains is only 15.7%, still in the catch-up phase. The company's R&D investment is also relatively insufficient, with a projected R&D expense ratio of about 4.3% in 2024, lower than Nidec (6594.T) at 6%, which may limit long-term competitiveness. In fact, BROAD-OCEAN MOTOR has performed well in the A-share market, with its stock price soaring about 143% over the past year. On the first trading day after submitting its application to the Hong Kong Stock Exchange, the stock price reached 11.69 yuan, setting a new 52-week high. Currently, the A-share market capitalization is approximately 28.5 billion yuan, with a price-to-earnings ratio of about 27.2 times, which is far lower than Wolong Electric Drive (600580.SH) at 85 times, but higher than Nidec's 18.7 times