Equity Research: Gaoce Shares (688556.SH)

Date: August 29, 2025
Rating: BUY (Maintained)
Current Price: CNY 11.20
Analyst: Yao Yao (S1130512080001)
Sector: New Energy & Power Equipment / Photovoltaics / Robotics

Executive Summary

Profitability Inflection Point Confirmed; Robotics Emerges as Second Growth Curve

Gaoce Shares (688556.SH) released its interim results for the first half of 2025 (1H25) on August 28, 2025. While top-line revenue and net profit remained under pressure due to the broader photovoltaic (PV) industry downturn, the company demonstrated significant sequential improvement in profitability metrics during the second quarter (2Q25). The core investment thesis rests on two pillars: (1) the stabilization and gradual recovery of the traditional PV business, driven by technological leadership in tungsten wire diamond wires and slicing services; and (2) the successful diversification into the humanoid robotics supply chain, which is beginning to contribute tangible order flow and offers a high-margin second growth curve.

In 1H25, Gaoce reported revenue of CNY 1.451 billion (-45.16% YoY) and a net loss attributable to shareholders of CNY 89 million (-132.47% YoY). However, 2Q25 marked a crucial turning point. Gross margin expanded by 9.22 percentage points (pct) quarter-on-quarter (QoQ) to 16.11%, and net margin improved by 8.93 pct QoQ to -1.88%. The net loss narrowed significantly to CNY 14 million in 2Q25, indicating that the company’s cost reduction initiatives and product mix optimization are yielding results despite challenging market conditions.

Strategically, Gaoce is leveraging its platform technology in precision cutting, grinding, and electroplating to expand beyond solar. The company has made substantial progress in the humanoid robotics sector, with planetary roller screw grinding equipment entering the R&D phase and composite metal tendons for dexterous hands securing small-batch orders from multiple robotics firms. This diversification mitigates the cyclicality of the PV sector and opens up a new total addressable market (TAM).

We maintain our BUY rating. We forecast the company to return to profitability in 2026, with estimated net profits of CNY 207 million in 2026 and CNY 417 million in 2027. At the current price of CNY 11.20, the stock trades at approximately 41x 2026E P/E and 21x 2027E P/E. Given the improving operational leverage, dominant market share in key PV niches, and the optionality provided by the robotics business, we believe the current valuation does not fully reflect the company’s turnaround potential and long-term growth trajectory.

Key Takeaways

1. Financial Performance: Sequential Recovery Amidst Industry Headwinds

The 1H25 financial results reflect the severe contraction in the global PV industry, characterized by overcapacity and plummeting prices for silicon wafers and modules. However, a granular analysis of the quarterly data reveals a distinct trend of operational resilience and margin recovery.

1.1 Revenue and Profit Analysis

• 1H25 Overview:
  • Revenue: CNY 1.451 billion, a decline of 45.16% year-over-year (YoY). This contraction is primarily attributed to the reduced capital expenditure (CapEx) by downstream PV manufacturers and lower pricing for slicing services and consumables.
  • Net Profit: A loss of CNY 89 million, compared to a profit in the same period last year. The YoY decline of 132.47% underscores the magnitude of the industry cycle bottom.
• 2Q25 Sequential Improvement:
  • Revenue: CNY 766 million, representing an 11.66% decline quarter-on-quarter (QoQ) from 1Q25. While still declining, the rate of contraction is stabilizing.
  • Net Profit: A narrowed loss of CNY 14 million in 2Q25, a significant improvement from the deeper losses incurred in 1Q25. This "loss narrowing" trend is a critical leading indicator of operational stabilization.

1.2 Margin Expansion Drivers

The most compelling aspect of the 2Q25 report is the dramatic improvement in profitability margins, decoupling from the revenue decline.

• Gross Margin: Reached 16.11% in 2Q25, an increase of +9.22 pct QoQ.
• Net Margin: Improved to -1.88% in 2Q25, an increase of +8.93 pct QoQ.

Drivers of Margin Recovery:
1. Technological Closed-Loop Advantage: Gaoce’s integrated model of "Equipment + Consumables + Process" allows for superior cost control. By optimizing the interaction between cutting equipment and diamond wires, the company reduces material waste and energy consumption, directly boosting gross margins.
2. Product Mix Shift: The accelerated adoption of tungsten wire diamond wires (which command higher value and better performance than traditional carbon steel wires) has improved the average selling price (ASP) and margin profile of the consumables segment.
3. Operational Efficiency: Strict cost management and enhanced operational efficiency have reduced fixed cost burdens per unit of output.

1.3 Cash Flow and Working Capital Management

Cash flow generation showed marked improvement, reflecting stronger working capital management.

• Operating Cash Flow (OCF): In 2Q25, OCF was negative CNY 31 million. However, this represents a substantial 89.60% improvement QoQ. The trajectory suggests that OCF could turn positive in subsequent quarters as receivables are collected and inventory levels are optimized.
• Receivables Management: The company strengthened its credit management protocols. Notably, the credit impairment loss reversed by CNY 3 million in 2Q25, turning positive compared to 1Q25. This indicates that previous provisions were overly conservative or that collection efforts have been successful, reducing the drag on net income from bad debt expenses.

Source: Company Reports, Guojin Securities Research Institute

2. Core Business Analysis: PV Sector Bottoming Out

Despite the cyclical downturn, Gaoce has maintained its competitive moat and even gained market share in key segments. The PV business is showing signs of bottoming out, supported by technological leadership and strategic customer partnerships.

2.1 PV Equipment: Global Leadership and Overseas Expansion

The PV equipment segment remains a cornerstone of Gaoce’s business, with the company maintaining its position as a global leader in slicing equipment.

• Market Share: Gaoce continues to hold the No. 1 market share in silicon wafer slicing equipment. In 1H25, the company basically covered all overseas orders for silicon wafer segment equipment, demonstrating its dominance in the international market.
• Overseas Delivery: A significant milestone was achieved in 1H25 with the successful delivery of complete overseas production lines. This validates the company’s ability to execute complex projects globally and reduces reliance on the domestic Chinese market, which is currently saturated.
• Strategic Partnerships: The company is actively expanding strategic cooperation with downstream PV clients. By optimizing its customer structure and developing new clients, Gaoce is ensuring a steady pipeline of orders even as overall industry CapEx slows. The focus on high-efficiency, large-size wafer slicing equipment aligns with the industry’s trend towards cost reduction and efficiency enhancement.

2.2 Cutting Consumables: The Tungsten Wire Revolution

The transition from carbon steel wire to tungsten wire for diamond wires is a major structural shift in the PV industry, driven by the need for thinner kerf widths (to reduce silicon material loss) and higher cutting speeds. Gaoce is at the forefront of this transition.

• Sales Volume: In 1H25, the sales volume of diamond wires (including internal use for slicing services) reached approximately 30.3 million kilometers.
• Tungsten Wire Penetration: The proportion of tungsten wire diamond wires accounted for 77.29% of total sales. This high penetration rate highlights Gaoce’s technological readiness and customer acceptance.
• Competitive Advantage: Tungsten wire has higher tensile strength than carbon steel, allowing for finer diameters without breaking. This results in:
  1. Lower Silicon Consumption: Thinner cuts mean more wafers per ingot.
  2. Higher Yield: Reduced breakage rates during cutting.
  3. Premium Pricing: Tungsten wires command a higher ASP, supporting margin resilience.
• Industry Leadership: Gaoce is leading the industry in accelerating this substitution. As competitors struggle to scale tungsten wire production with consistent quality, Gaoce’s established manufacturing capabilities and proprietary plating technology provide a durable competitive advantage.

2.3 Slicing Services: Counter-Cyclical Growth

The slicing service business, where Gaoce processes silicon ingots into wafers for third-party customers, faced headwinds from low industry operating rates. However, the company managed to achieve steady order growth through superior economics.

• Production Volume: Silicon wafer production reached approximately 26 GW in 1H25.
• Market Ranking: This volume propelled Gaoce into the top five silicon wafer producers in the industry, a remarkable achievement for a company that primarily started as an equipment and consumables supplier.
• Market Penetration: The company’s penetration rate in the slicing service market rapidly increased to 8.23%.
• Value Proposition: Despite the industry-wide slump, Gaoce’s orders grew because its slicing services offer:
  1. Higher Output per Ingot: Due to advanced cutting technology.
  2. Lower Cutting Costs: Leveraging the "Equipment + Consumables" synergy.
  3. Superior Quality: Lower total thickness variation (TTV) and breakage rates.
  4. Investment Implication: This demonstrates that even in a commoditized market, technological differentiation can drive market share gains. Gaoce is effectively displacing less efficient slicers, consolidating its position as a low-cost producer.

3. New Growth Engine: Humanoid Robotics Diversification

Perhaps the most significant long-term catalyst for Gaoce Shares is its strategic entry into the humanoid robotics supply chain. This move leverages the company’s core competencies in precision manufacturing to access a high-growth, high-margin adjacent market.

3.1 Technological Synergy

Gaoce’s expertise in precision cutting, precision grinding, and electroplating/chemical treatment is directly transferable to the manufacturing of critical robotics components. Humanoid robots require high-precision actuators, joints, and transmission systems, all of which demand the exact manufacturing tolerances and surface finishes that Gaoce has mastered in the PV and semiconductor industries.

3.2 Product Progress and Commercialization

The company has made tangible progress in three key areas:

1. Planetary Roller Screw Grinding Equipment:

   • Status: R&D is proceeding smoothly.
   • Significance: Planetary roller screws are critical for linear actuators in humanoid robots, providing high load capacity and precision in a compact form factor. The manufacturing of these screws requires ultra-precise grinding equipment, a niche where Gaoce is developing specialized solutions. Success here positions Gaoce as a key equipment supplier to robot manufacturers.

2. Composite Metal Tendons for Dexterous Hands:

   • Status: Entered trial use with multiple robotics enterprises; small-batch orders secured.
   • Significance: Dexterous hands require lightweight, high-strength tendons to mimic human muscle movement. Gaoce’s composite metal tendons offer the necessary strength-to-weight ratio and durability. The conversion from trials to small-batch orders is a critical validation of product viability and customer interest.

3. Reducer Customization:

   • Status: Actively cooperating with clients on custom R&D for reducers used in humanoid robots.
   • Significance: Reducers (harmonic drives or RV reducers) are essential for joint movement. By engaging in custom R&D, Gaoce is embedding itself early in the design phase of next-generation robots, creating high switching costs for customers once production scales.

3.3 Strategic Implications

• Second Growth Curve: The robotics business is expected to open a "second growth curve" for Gaoce. While currently small in revenue contribution, the potential TAM for humanoid robotics components is vast.
• Valuation Re-rating: Success in robotics can lead to a valuation re-rating, as the market may assign a higher multiple to robotics-related earnings compared to traditional PV equipment earnings.
• Risk Diversification: This diversification reduces the company’s exposure to the highly cyclical PV industry, creating a more balanced revenue stream.

4. Earnings Forecast and Valuation

Based on the company’s order book, the trajectory of the PV industry recovery, and the emerging contributions from the robotics segment, we have updated our financial forecasts.

4.1 Financial Projections (2025-2027)

Source: Company Reports, Guojin Securities Research Institute Estimates

Key Assumptions:
* 2025: We expect revenue to decline by 32.46% to CNY 3.02 billion, reflecting the continued impact of low PV CapEx and pricing pressure. The company is projected to remain slightly loss-making (Net Loss: CNY 42 million) as it absorbs fixed costs and invests in R&D for new sectors. However, the loss is minimal compared to the scale of operations, indicating near-breakeven status.
* 2026: We forecast a return to profitability with Net Profit of CNY 207 million. This is driven by:
* Stabilization of PV equipment orders as the industry clears excess capacity.
* Higher margins from the increased mix of tungsten wires.
* Initial revenue contributions from robotics components.
* Operating leverage as revenue grows while fixed costs remain controlled.
* 2027: Net Profit is expected to nearly double to CNY 417 million. By this time, the robotics business should be contributing meaningfully to earnings, and the PV business should be in a healthier competitive landscape with improved pricing power. Gross margin is projected to expand to 25.5%, approaching historical averages, driven by product mix optimization and technological premiums.

4.2 Valuation Analysis

• Current Price: CNY 11.20
• Estimated EPS:
  • 2026E: CNY 0.271
  • 2027E: CNY 0.545
• Implied P/E Ratios:
  • 2026E P/E: ~41x
  • 2027E P/E: ~21x

Valuation Justification:
While a 41x P/E for 2026 may appear elevated compared to traditional manufacturing peers, it is justified by:
1. Turnaround Story: The company is transitioning from a loss-making position to robust profitability. Investors often pay a premium for confirmed inflection points.
2. Growth Premium: The 2027 P/E of 21x is reasonable for a company with dual engines (PV recovery + Robotics growth). The robotics segment, in particular, commands higher multiples in the market.
3. Market Position: Gaoce holds a dominant #1 position in slicing equipment and a leading role in tungsten wire, providing a safety margin and cash flow stability.
4. Comparables: Compared to other high-tech manufacturing firms with exposure to robotics and new energy, Gaoce’s valuation is aligned with its growth profile and technological barrier.

We believe the market is currently undervaluing the speed of the margin recovery and the potential scale of the robotics business. As quarterly results continue to show sequential improvement, we anticipate a re-rating of the stock.

Risks / Headwinds

Investors should be aware of the following risks that could impact the company’s financial performance and stock price:

1. Technology Development Risks

• Robotics Commercialization Delay: The humanoid robotics industry is still in its early stages. Delays in mass production of humanoid robots by key clients (e.g., Tesla, Figure, domestic Chinese players) could delay the revenue contribution from Gaoce’s robotics components.
• R&D Failure: The development of planetary roller screw grinding equipment and other specialized robotics tools is technically challenging. Failure to meet precision or reliability standards could result in lost opportunities and sunk R&D costs.
• PV Technology Shifts: While tungsten wire is currently the dominant trend, any unexpected breakthrough in alternative cutting technologies (e.g., laser cutting improvements) could disrupt the demand for diamond wires.

2. Market and Pricing Risks

• Silicon Wafer Price Decline: If silicon wafer prices fall faster than anticipated, downstream manufacturers may further cut CapEx and delay equipment upgrades. This would directly impact Gaoce’s equipment orders.
• Intense Competition in Consumables: The diamond wire market, particularly for tungsten wires, is attracting new entrants. Intensified competition could lead to price wars, eroding the gross margins that Gaoce has recently recovered.
• Overcapacity in PV Industry: The global PV industry is grappling with significant overcapacity. If the clearance of this capacity takes longer than expected, the recovery in equipment and slicing service demand will be delayed, prolonging the period of suppressed revenues.

3. Operational and Financial Risks

• Accounts Receivable Risk: Although improving, the company still faces challenges with receivables in a stressed industry environment. Any deterioration in the financial health of downstream clients could lead to higher bad debt provisions.
• Raw Material Price Volatility: The cost of tungsten and other raw materials can be volatile. Inability to pass these costs onto customers could compress margins.
• Exchange Rate Fluctuations: With increasing overseas business, fluctuations in exchange rates (particularly USD/CNY) could impact the competitiveness of exports and the value of repatriated earnings.

4. Macro-Economic Risks

• Global Trade Policies: Tariffs or trade restrictions on Chinese PV products or equipment in key markets (US, Europe, India) could hinder overseas expansion plans.
• Interest Rates: High interest rates can increase the cost of capital for downstream PV projects, potentially slowing down new installations and equipment purchases.

Rating / Sector Outlook

Sector Outlook: Photovoltaics

The global photovoltaic sector is currently in a phase of consolidation and bottoming out. After years of rapid expansion, the industry is facing a painful correction characterized by:
* Price Bottoming: Prices for silicon material, wafers, cells, and modules have fallen to or below cash cost levels for many producers, forcing inefficient capacity to exit.
* Capacity Clearance: We expect the next 12-18 months to see significant M&A activity and bankruptcy among weaker players, leading to a healthier supply-demand balance by late 2026.
* Technological Iteration: The industry continues to shift towards N-type cells (TOPCon, HJT) and larger wafers, requiring continuous upgrades in equipment. This favors technology leaders like Gaoce who can offer efficiency-enhancing solutions.

Outlook: Neutral to Positive (Long-term). Short-term pain is inevitable, but the long-term demand for renewable energy remains robust. Leaders with strong balance sheets and technological edges will emerge stronger.

Sector Outlook: Humanoid Robotics

The humanoid robotics sector is in the early commercialization phase.
* Catalysts: Advances in AI (LLMs/VLA models), battery density, and actuator precision are accelerating development.
* Supply Chain Opportunity: Chinese manufacturers are well-positioned to become key suppliers for global robotics firms due to their cost advantages and manufacturing scalability.
* Growth Trajectory: We expect a surge in pilot projects and small-batch orders in 2025-2026, followed by mass production scaling post-2027.

Outlook: Highly Positive. This is a high-growth thematic sector with significant potential for value creation for early movers in the supply chain.

Investment Rating: BUY (Maintained)

We maintain our BUY rating on Gaoce Shares (688556.SH).

• Rationale:
  1. Resilience in Downturn: The company has demonstrated the ability to narrow losses and improve margins sequentially even in a harsh industry environment.
  2. Market Leadership: Dominant position in slicing equipment and tungsten wire provides a solid foundation for cash flow and market share retention.
  3. Optionality Value: The robotics business provides a compelling upside option that is not yet fully priced in.
  4. Valuation Appeal: At ~21x 2027E P/E, the stock offers an attractive entry point for investors willing to look through the short-term cyclical trough.

Investment View

Core Investment Logic

1. The "Turnaround" Play: Capturing the Margin Inflection
The most immediate investment case for Gaoce Shares is the clear inflection in profitability. The 2Q25 results showed a 9.22 pct QoQ expansion in gross margin. This is not a one-off event but the result of structural changes:
* Cost Leadership: The "Equipment + Consumables + Process" model creates a virtuous cycle. Better equipment allows for better consumable performance, which lowers customer costs, locking them into Gaoce’s ecosystem.
* Mix Shift: The 77%+ penetration of tungsten wires is a structural margin driver. As the industry fully transitions away from carbon steel, Gaoce’s premium product mix will sustain higher average margins.
* Operating Leverage: As revenue stabilizes and begins to grow in 2026, the fixed cost base will be spread over more units, leading to exponential profit growth. The move from a CNY 42 million loss in 2025E to a CNY 207 million profit in 2026E exemplifies this leverage.

2. The "Growth" Play: Robotics as a Valuation Catalyst
The market often values diversified tech manufacturers using a sum-of-the-parts (SOTP) approach. Currently, Gaoce is valued largely as a PV equipment company. However, the successful entry into the robotics supply chain changes this narrative.
* Validation: The securing of small-batch orders for dexterous hand tendons is a critical proof point. It moves the robotics business from "concept" to "commercial reality."
* Scalability: If Gaoce becomes a primary supplier for planetary roller screws or tendons for major humanoid robot manufacturers, the revenue potential is substantial. Even a modest share of this emerging market could add hundreds of millions in high-margin revenue.
* Multiple Expansion: Robotics companies typically trade at higher P/E multiples (often 30x-50x+) compared to traditional PV equipment makers (10x-20x). As the robotics revenue share grows, the overall company multiple should expand.

3. The "Moat" Play: Technological Barriers in Precision Manufacturing
Gaoce’s core competency is not just in making machines, but in mastering the process of precision material removal.
* High Switching Costs: Once a PV manufacturer adopts Gaoce’s slicing process, switching to a competitor involves significant re-tooling and yield risk. This creates sticky customer relationships.
* R&D Depth: The ability to pivot from PV slicing to robotics grinding demonstrates deep underlying R&D capabilities in tribology, materials science, and precision engineering. This platform approach allows the company to enter new markets with lower incremental R&D costs.

Strategic Recommendations for Institutional Investors

1. Accumulate on Weakness
Given the current market sentiment towards the PV sector, volatility is expected. Investors should view any dips in the stock price as buying opportunities, given the strong sequential improvement in fundamentals. The risk-reward ratio is favorable as the downside is limited by the company’s asset base and market position, while the upside is driven by the robotics optionality.

2. Monitor Key Leading Indicators
Investors should closely track the following metrics in upcoming quarterly reports:
* Gross Margin Trend: Confirmation that the 16%+ gross margin is sustainable and expanding towards 20%.
* Robotics Order Book: Announcement of larger contracts or new clients in the robotics sector.
* Tungsten Wire Penetration: Continued growth above 80% would indicate successful monopolization of the high-end wire market.
* Operating Cash Flow: A turn to positive OCF would signal full working capital health and reduce financing risks.

3. Long-Term Horizon
This investment is best suited for investors with a 12-24 month horizon. The PV cycle recovery will take time, and the robotics business will need several quarters to scale. Patience is required to capture the full value of the turnaround and the second growth curve.

Comparative Analysis

Gaoce offers a unique hybrid profile: the cash flow and market position of a PV leader combined with the growth potential of a robotics supplier.

Conclusion

Gaoce Shares is navigating a challenging macro environment with exceptional operational discipline. The 2Q25 results confirm that the worst of the profitability decline is behind us. The company is successfully defending its core PV business through technological leadership while aggressively pursuing a high-value diversification strategy in humanoid robotics.

For institutional investors, Gaoce represents a compelling opportunity to buy a market leader at a cyclical low, with a free option on a high-growth secular trend. The combination of margin recovery, market share gains in tungsten wires, and the emerging robotics revenue stream supports our BUY rating and positive long-term outlook.

Appendix: Detailed Financial Analysis

A. Income Statement Deep Dive

Revenue Structure:
The decline in revenue from CNY 6.18 billion in 2023 to an estimated CNY 3.02 billion in 2025 reflects the broader industry contraction. However, the composition of this revenue is shifting.
* Equipment Sales: Likely saw the steepest decline due to deferred CapEx by customers.
* Consumables (Diamond Wire): More resilient due to recurring nature. The shift to tungsten wire helps stabilize ASP.
* Slicing Services: Volume grew (26GW in 1H25), but revenue may have been pressured by lower service fees in a competitive market.

Cost of Goods Sold (COGS):
COGS as a % of revenue increased to 81.0% in 2024 but is expected to decrease to 79.0% in 2026 and 74.5% in 2027. This improvement is driven by:
1. Economies of scale in tungsten wire production.
2. Higher utilization rates of slicing facilities.
3. Cost reductions in raw materials procurement.

Operating Expenses:
* R&D Expenses: Maintained at ~5.0% of revenue. This is crucial for sustaining the technological edge in both PV and robotics. The absolute amount is decreasing slightly in line with revenue, but the focus is shifting towards high-impact projects (robotics).
* Selling & Admin Expenses: Controlled tightly, decreasing as a % of revenue from 9.3% in 2024 to 7.5% in 2026E. This demonstrates management’s commitment to cost discipline.

EBIT Margin:
EBIT margin collapsed to 1.4% in 2024 but is forecast to recover to 3.1% in 2025, 6.1% in 2026, and 10.6% in 2027. This recovery trajectory is the core of the investment thesis.

B. Balance Sheet Strength

Asset Quality:
* Inventory: Reduced from CNY 1.56 billion in 2023 to CNY 662 million in 2024, and expected to remain stable around CNY 687 million in 2025. This indicates effective inventory management and reduced risk of write-downs.
* Receivables: Decreased from CNY 3.63 billion in 2023 to CNY 3.21 billion in 2024, and further to CNY 2.25 billion in 2025E. This significant reduction improves liquidity and reduces credit risk.

Liabilities and Equity:
* Debt Levels: Short-term borrowings increased to CNY 445 million in 2025E, but long-term debt remains manageable. The net debt-to-equity ratio is projected to improve from 10.97% in 2025 to 0.51% in 2027, indicating a strong deleveraging trend.
* Equity Base: Shareholder equity remains robust at CNY 3.65 billion in 2025E, providing a solid buffer against losses.

C. Cash Flow Dynamics

Operating Cash Flow (OCF):
The swing from negative CNY 1.26 billion in 2024 to positive CNY 507 million in 2025E is a testament to improved working capital management. The reduction in receivables and inventory releases cash, while the narrowing losses reduce cash burn.

Investing Cash Flow:
Capital expenditures are expected to remain significant (CNY 376 million in 2025E) as the company invests in new production lines for tungsten wires and robotics equipment. This is a necessary investment for future growth.

Financing Cash Flow:
The company is reducing its reliance on external financing, with net financing cash flow turning slightly positive in 2025E and negative in subsequent years as it pays down debt.

D. Sensitivity Analysis

To assess the robustness of our forecasts, we consider the following scenarios:

Base Case (Probability: 60%):
* PV industry stabilizes in 2H25.
* Tungsten wire penetration reaches 85% by 2026.
* Robotics business generates CNY 50-100 million revenue in 2026.
* Result: 2026 Net Profit CNY 207 million; 2027 Net Profit CNY 417 million.

Bull Case (Probability: 25%):
* Faster-than-expected PV recovery due to policy stimulus.
* Major contract win for robotics components (e.g., supply to a top-tier robot maker).
* Gross margins expand to 25% earlier in 2026.
* Result: 2026 Net Profit could exceed CNY 300 million; 2027 Net Profit could exceed CNY 600 million. Stock re-rates to 30x+ 2027E P/E.

Bear Case (Probability: 15%):
* Prolonged PV downturn with further price wars.
* Robotics commercialization delays.
* Credit losses from struggling PV clients.
* Result: 2026 Net Profit remains flat or slightly negative; 2027 recovery delayed. Stock underperforms.

Even in the Bear Case, the company’s strong balance sheet and market position limit the downside risk, making the asymmetric payoff favorable for buyers at current levels.

Final Remarks

Gaoce Shares stands at a pivotal juncture. The company has successfully navigated the initial shock of the PV industry downturn, demonstrating resilience through technological innovation and operational efficiency. The sequential improvement in 2Q25 margins is a clear signal that the company is adapting to the new normal.

The strategic pivot to humanoid robotics is not merely a diversification tactic but a logical extension of the company’s core competencies. It positions Gaoce to participate in one of the most transformative technological trends of the next decade.

For institutional investors, the current valuation offers an attractive entry point to capitalize on both the cyclical recovery of the PV sector and the secular growth of the robotics industry. We recommend accumulating positions with a medium-to-long-term horizon, monitoring the key catalysts of margin expansion and robotics order conversion.

Disclaimer: This report is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with financial advisors before making investment decisions. The views expressed herein are subject to change based on market conditions and other factors. Past performance is not indicative of future results.