CICC International: Raise Zhejiang Sanhua Intelligent Controls (02050) target price to HK$49, maintain "outperform" rating.

J.P. Morgan International released a research report stating that based on a higher forecasted P/E ratio of 48 times (previously 45 times), the target price of Zhejiang Sanhua Intelligent Controls (002050.SZ) has been raised from 49 RMB to 55 RMB. Accordingly, J.P. Morgan International also raised the target price of H shares (02050) from 46 HKD to 49 HKD; both A shares and H shares are maintained with an "outperform the market" rating. Zhejiang Sanhua Intelligent Controls announced strong third-quarter results for 2025, with revenue, net profit, and core profit increasing by 13%, 44%, and 49% year-on-year, respectively, compared to the growth of 19%, 39%, and 35% in the second quarter of 2025. The gross profit margin remained steady at 27.5%, while the expense ratio decreased by 2.8 percentage points to 12.3% in the third quarter of 2025. J.P. Morgan International stated that during the performance briefing, the management reiterated its profit guidance. J.P. Morgan International expects Sanhua's net profit to grow by approximately 30% in 2025 and by about 20% in 2026. The traditional air conditioning and heating industry is being driven by new demands for liquid cooling and battery energy storage. Continued supply shortages and the company's technological reserves will make Sanhua a passive winner in this segment. J.P. Morgan International stated that the forecasted P/E ratios for Sanhua's A shares and H shares in 2026 are 44 times and 33 times, respectively, relatively high; but it believes that the strong fundamentals, A share repurchase commitments, and the upcoming catalyst of the OptimusV3 scheduled to debut in the first quarter of 2026 will support the stock price in the medium term.