Hao Mai's Three Core Businesses Show Steady Growth; Initiate Coverage with Buy Rating

Overview

This report represents Nomura Securities’ initial coverage of Hao Mai (002595.SZ). The report highlights that the company has successfully leveraged its precision manufacturing capabilities in tire molds to expand into two high-growth segments—large mechanical components and CNC machine tools—creating a synergistic growth model driven by three core businesses. Against the backdrop of rising global demand for gas turbines and wind power equipment, as well as accelerated domestic self-reliance in Chinese manufacturing, the company demonstrates sustainable medium- to long-term earnings potential. Therefore, Nomura initiates coverage with a 'Buy' rating.

Core views

Hao Mai’s core operations are divided into three segments: tire molds, large mechanical components, and CNC machine tools. The tire molds segment maintains its global leadership position but faces relatively stable growth due to slowing replacement cycles in the global tire industry and standardization trends in EV tires, with a projected 2026–2028 revenue CAGR of 15%. The large mechanical components segment is the standout performer, benefiting from AI-driven data center construction boosting gas turbine demand and increasing wind power installations. Coupled with casting capacity expansion to 300,000 tons, this segment is expected to achieve an 18% revenue CAGR from 2026–2028. The CNC machine tools segment is in a rapid breakthrough phase, achieving dual progress in both products and customers by leveraging existing tire mold client relationships, further supported by domestic substitution policies, leading to a projected 30% revenue CAGR—the highest among the three—from 2026–2028. Overall, net profit forecasts for 2026–2028 are CNY2.922bn, CNY3.585bn, and CNY4.419bn, with EPS of CNY2.52, CNY3.09, and CNY3.81, respectively, representing an 8% CAGR. Despite steady earnings growth, the company trades at a discount due to slower growth relative to the peer average (29%). Applying a 27x 2026E P/E multiple—below the peer average of 43x—yields a target price of CNY68.04.

Analysis framework

This report employs a typical segment-driven analysis combined with comparable company valuation methodology. First, revenue and profits are broken down by the three business segments to assess each segment’s lifecycle stage, downstream demand trends, competitive barriers, and capacity expansion pace, forming differentiated growth assumptions. Second, for valuation, domestic peers in casting and CNC machine tools (e.g., Edi Precision, Haitian Precision, Kede CNC) are selected as comparables. Based on peer P/E levels and adjusted for Hao Mai’s specific growth outlook, a reasonable discount is applied, reflecting the core view of 'steady growth but not high elasticity.' The analytical framework is clear: starting from the logic of manufacturing capability extension, validating the feasibility of new business execution, quantifying through financial modeling, and finally anchoring a reasonable valuation range.

Methodology notes

• Valuation MethodPE/PEG valuation

  Using 2026E P/E as the primary valuation anchor

  The report applies a 27x 2026E P/E multiple, below the peer average of 43x, reflecting a cautious view on the company’s earnings growth (8%) lagging behind peers (29%). This is the most common and intuitive relative valuation method in A-share manufacturing research, facilitating cross-company comparisons for investors.

• Industry/Market Analysis FrameworkSupply-demand framework

  Focuses on supply-demand dynamics in downstream applications of large components

  The report emphasizes rising global demand for gas turbines and wind power equipment as the key driver for the large components segment—illustrating a classic bottom-up supply-demand analysis: rather than general industry sentiment, it pinpoints specific sources of incremental demand.

• Company Fundamentals & Financial FrameworkFree cash flow analysis

  Examines alignment between operating cash flow and capital expenditures

  The appendix provides detailed free cash flow (FCF) forecasts from 2024–2028, showing temporary FCF pressure in 2025 due to peak capex, followed by a strong rebound from 2026 onward (CNY1.821bn → CNY2.850bn), confirming the company has passed its capacity investment phase and entered a cash flow generation stage, providing fundamental support for valuation.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Hao Mai (002595.SZ)

  Primary coverage target; all three businesses show growth potential and mutual reinforcement

  Strengths

  Global leadership in tire molds remains solid; large components benefit from integrated casting + precision machining capabilities; CNC machine tools enjoy clear advantages in customer channel reuse

  Weaknesses

  Tire mold business growth is plateauing; CNC machine tools are still in early stages of domestic substitution and face technological pressure from overseas giants

  Comparison

  Compared to peers, Hao Mai boasts superior gross margins (33.9%–34.9%) and ROE (21%–23%), but its EPS growth (8%) is significantly lower than the peer average (29%)

  Risks

  New EU regulations may increase compliance costs for tire customers, potentially intensifying pricing pressure

Key data

• 2026–2028 Net Profit ForecastsCNY2.922bn / CNY3.585bn / CNY4.419bnYear-over-year growth of 22.1% / 22.6% / 23.1%, respectively
• 2026–2028 EPS ForecastsCNY2.52 / CNY3.09 / CNY3.81CAGR of 8%, below the peer average of 29%
• Target Price and Implied UpsideCNY68.04 (+25.7%)Based on 27x 2026E P/E × 2026E EPS of CNY2.52
• Current Trading Valuation21.5x 2026E P/EBelow target valuation multiple, indicating room for valuation re-rating

Impact & implications

The report argues that Hao Mai has successfully transformed from a single-product tire mold leader into a high-end equipment manufacturer with platform-level manufacturing capabilities. If its large components business continues securing orders from international clients like Siemens, and its CNC machine tools achieve mass adoption in domestic sectors such as new energy and aerospace, the company could break through the traditional valuation ceiling of mold makers and evolve toward a high-end precision manufacturing platform. For investors, this represents not only a single-stock opportunity but also a representative case of China’s manufacturing evolution from 'specialized, refined, distinctive, and innovative' (zhuan-jing-te-xin) to 'multi-front breakthroughs.'

Risks

• Downside risk in tire demand: EV tire standardization may extend replacement cycles, reducing mold consumption
• Slower-than-expected progress in CNC machine tool domestic substitution: critical components (ball screws, CNC systems) remain import-dependent, constraining profitability
• FX volatility risk: rising export exposure makes the company vulnerable to RMB fluctuations, impacting foreign currency pricing and FX gains/losses

What to watch

• New order intake in large mechanical components, especially the ramp-up pace of gas turbine-related orders
• Customer breakthroughs for CNC machine tools in emerging sectors like photovoltaics and lithium batteries
• Gross margin trends in the 2026 interim report, to validate cost control and product mix upgrades