Machinery & Equipment Sector Weekly Tracker: Strategic Opportunities in Photovoltaic Export, Space Computing, and Construction Machinery Recovery

Date: February 1, 2026
Analyst Team: Zhou Ershuang, Li Wenyi, Wei Yijie, Qian Yaotian, Huang Rui, Tao Ze
Rating: Overweight (Maintained)

Executive Summary

The global machinery and equipment sector is currently navigating a complex landscape defined by divergent regional demand cycles, technological disruption driven by Artificial Intelligence (AI), and the accelerating globalization of Chinese manufacturing capabilities. This report synthesizes critical developments across key sub-sectors—Photovoltaic (PV) Equipment, Construction Machinery, Humanoid Robotics, AI Data Center (AIDC) Power Infrastructure, Semiconductor Equipment, and Liquid Cooling Systems—to provide institutional investors with a comprehensive framework for capital allocation in early 2026.

Our overarching investment thesis rests on three pillars:
1. The "Space + Ground" PV Dual Engine: The convergence of terrestrial overseas demand and the emerging space-based solar market, driven by SpaceX’s ambitious satellite constellation plans, creates a unique growth vector for Heterojunction (HJT) technology providers.
2. Construction Machinery Cyclical Resonance: The domestic Chinese market is entering a confirmed recovery phase coinciding with the Q1 traditional peak season, while overseas markets are poised for a rebound driven by Federal Reserve rate cuts and infrastructure replenishment cycles.
3. AI-Driven Infrastructure Supercycle: The exponential growth in AI compute power is creating structural bottlenecks in power supply and thermal management. This necessitates immediate investment in gas turbines, diesel generators, and advanced liquid cooling solutions, where Chinese suppliers are gaining significant market share through cost efficiency and rapid delivery capabilities.

We maintain an Overweight rating on the Machinery & Equipment sector. We recommend a barbell strategy: positioning in high-certainty cyclical recoveries (Construction Machinery, Forklifts) alongside high-growth thematic exposures (Space PV, AIDC Power, Humanoid Robotics). Key recommended names include Sany Heavy Industry, Northern Huachuang, Jereh Group, Hengli Hydraulic, and Envicool.

Key Takeaways

1. Photovoltaic Equipment: The Convergence of Terrestrial Export and Space-Based Solar

1.1. The Space Computing Catalyst: SpaceX’s Million-Satellite Ambition

On January 30, 2026, SpaceX submitted a groundbreaking application to the U.S. Federal Communications Commission (FCC) for a new satellite constellation designed to support advanced AI models. This system, potentially comprising up to 1 million satellites, aims to establish an orbital data center network launched primarily via the next-generation "Starship" heavy-lift vehicle.

This development marks a paradigm shift in the energy requirements for space infrastructure. Traditional triple-junction gallium arsenide (GaAs) batteries, while efficient, face severe constraints in terms of production capacity, raw material scarcity, and cost, making them unsuitable for gigawatt-scale deployments required by such massive constellations.

Investment Implication: Silicon-based Heterojunction (HJT) solar cells have emerged as the optimal short-to-medium-term solution for space photovoltaics. Their advantages include:
* Flexibility and Weight Reduction: Critical for launch cost efficiency.
* Cost Efficiency: Significantly lower than GaAs.
* Material Availability: Unconstrained by rare earth dependencies.
* Future-Proofing: HJT serves as the ideal bottom cell for future Perovskite-HJT tandem structures.

Concurrently, China’s Radio Innovation Institute has applied for 200,000 low-earth orbit (LEO) slots, and SpaceX is accelerating its 42,000-starlink system construction. This signals an imminent explosion in GW-level space PV demand.

1.2. Terrestrial Market: Accelerating Overseas Equipment Exports

Beyond space, the terrestrial PV equipment market is experiencing robust overseas demand. European, Turkish, and Japanese clients have articulated clear procurement needs. Long-term forecasts suggest overseas equipment demand could exceed 70-90 GW, with the U.S. market alone accounting for approximately 40-50 GW.

Chinese equipment manufacturers are uniquely positioned to capitalize on this due to:
* Technological Leadership: Dominance in HJT whole-line equipment.
* Delivery Capability: Superior speed and scale compared to international peers.
* Tariff Advantages: Current window periods offering tariff exemptions or favorable trade conditions.

Key Recommendations:
* HJT Whole-Line Equipment Leaders: Beneficiaries of both terrestrial and space PV trends.
* Crystal Growth Equipment: Jingsheng Electromechanical (300316.SZ) is highlighted for its leadership in single-crystal furnace technology and exposure to large-size silicon carbide and space PV industrialization.
* Interconnection & Slicing: Autowell (688516.SH) (Ultra-thin 0BB stringer leader) and Gaoce Shares (688556.SH) (Ultra-thin wafer slicing equipment leader) are critical enablers of the HJT cost-reduction roadmap.

1.3. Technological Milestone: Maiwei’s Efficiency Record

On January 28, 2026, Maiwei Shares (300751.SZ) announced that its self-developed HJT solar cell achieved a certified full-area conversion efficiency of 26.92% (210 half-cell, 220.76 cm²), verified by the Institute for Solar Energy Research Hamelin (ISFH). This world record utilizes Maiwei’s proprietary whole-line equipment and full-process technology, including microcrystalline structure optimization and carrier transport-passivation balance. This milestone validates the scalability and commercial viability of HJT technology, reinforcing the investment case for HJT equipment suppliers.

2. Construction Machinery: Q1 Seasonal Peak and Cyclical Resonance

2.1. Historical Seasonality and Q1 Opportunity

Historical analysis of the construction machinery sector from 2021 to 2025 reveals a consistent pattern: the sector typically generates excess returns during the first quarter (Q1). This phenomenon is driven by a confluence of factors:
* Budget Release: Annual fiscal budgets are finalized and released.
* Post-Holiday Resumption: Workforce return after the Spring Festival.
* Favorable Climate: March-April represents the annual peak for construction activity.
* Policy Support: Post-"Two Sessions" policy stimuli often boost market sentiment.
* Promotional Activities: Manufacturers engage in aggressive Q1 sales promotions.

Data indicates that excavator operating hours peak in March-April. Furthermore, Q1 sales historically account for a significant portion of annual volume: 41% (2021), 34% (2022), 32% (2023), and 26% (2024). The slight decline in percentage share in recent years reflects a more balanced distribution, but the absolute volume in Q1 remains the critical determinant of annual performance.

2.2. Domestic Recovery: Data-Driven Validation

The domestic market is showing clear signs of comprehensive recovery.
* Sales Volume: From January to October 2025, cumulative domestic excavator sales increased by 19.6% year-over-year (YoY). In December 2025 alone, excavator sales reached 23,000 units, a 19% YoY increase.
* Product Mix: While small excavators dominate due to funding from central special treasury bonds, medium and large excavators have faced slower uptake due to local government debt constraints. However, the overall trend is positive.
* Profitability Improvement: As demand recovers, capacity utilization rates are rising. For instance, Sany Heavy Industry’s excavator capacity utilization, which was only 42% in 2024, has improved significantly in 2025. This operational leverage, combined with ongoing cost-reduction initiatives, has led to margin expansion. In the first three quarters of 2025, net sales margins for Sany Heavy Industry, XCMG, and Zoomlion increased by 2.4 pct, 0.1 pct, and 0.8 pct respectively.

2.3. Overseas Market: The Fed Pivot and Global Rebound

The overseas market, which had been in a four-year downtrend since peaking in 2021, is showing signs of stabilization and potential reversal.
* Export Data: From January to October 2025, cumulative excavator exports rose by 14.5% YoY.
* Macro Driver: The primary headwind for overseas demand has been the high-interest-rate environment maintained by the Federal Reserve. With the onset of the Fed’s rate-cutting cycle in late 2025/early 2026, we anticipate a resurgence in global construction and mining investment.
* Cycle Outlook: We project that overseas demand will enter a new upward cycle in 2026, creating a "resonance" effect with the domestic recovery. This dual-engine growth supports a projected profit growth rate of 20%+ for core sector players over the next 2-3 years.

Key Recommendations:
* Sany Heavy Industry (600031.SH): Leading domestic market share, strong export profitability.
* XCMG Machinery (000425.SZ) & Zoomlion (000157.SZ): Diversified product portfolios benefiting from broad-based recovery.
* LiuGong (000528.SZ) & Shantui (000680.SZ): Strong presence in emerging markets and specialized equipment.
* Hengli Hydraulic (601100.SH): Core component supplier with high operating leverage.

3. Humanoid Robotics: Tesla’s Mass Production Timeline and Supply Chain Certainty

3.1. Tesla Optimus V3 and Mass Production Roadmap

During its Q4 2025 earnings call, Tesla reiterated its commitment to accelerating the mass production of its Optimus humanoid robot. Key announcements included:
* Optimus V3 Launch: Expected within the next few months (early 2026).
* Mass Production Target: Scheduled to begin by the end of 2026.
* Capability Enhancement: Optimus can now perform simple tasks in factory settings and learns through observation of human behavior, indicating significant progress in embodied AI.

3.2. Investment Window: Q1 2026 as a Critical Catalyst

We identify Q1 2026 as a pivotal event window for the humanoid robotics sector. The anticipated release of Optimus V3, coupled with the confirmation of supply chain orders and volume targets, will provide much-needed clarity and de-risk investment theses. As mass production approaches, the supply chain is undergoing a "shrinking circle" process, where only the most capable and cost-competitive suppliers are securing definitive orders.

3.3. Supply Chain Analysis and Key Components

The value distribution in humanoid robots is shifting towards high-precision mechanical components and actuators. We highlight several sub-segments with elevated certainty:

• Tesla Supply Chain (T-Chain) Core Targets:

  • Hengli Hydraulic: Leveraging its hydraulic expertise for linear actuators.
  • Sanhua Intelligent Controls (002050.SZ) & Tuopu Group (601689.SH): Established leaders in thermal management and motion control components, deeply integrated into Tesla’s ecosystem.
  • Zhejiang Rongtai (603119.SH) & Wuzhou Xinchun (603667.SH): Providers of specialized insulation and bearing components.

• Harmonic Drive Upside:

  • Expectations for harmonic reducer usage per robot have been revised upwards.
  • Leader Harmonious Drive (688017.SH) and Siling Shares (301550.SZ) are well-positioned to benefit from this volume increase.

• Dexterous Hands:

  • The complexity of robotic hands requires precision manufacturing.
  • Dechang Electric (002677.SZ): Motor solutions.
  • New Coordinate (603097.SH): Cold heading technology is gaining market recognition for cost-effective production of hand components.
  • Zhenghe Industrial (300680.SZ): Precision transmission parts.

• Unitree Robotics Chain:

  • As a leading Chinese humanoid robot developer, Unitree’s supply chain offers alternative exposure.
  • Shoucheng Holdings (00697.HK) and Meihu Shares are identified as key beneficiaries.

4. AIDC Power Generation: Addressing the North American Electricity Deficit

4.1. The Structural Power Gap

The rapid deployment of AI Data Centers (AIDCs) in North America has created a nonlinear surge in electricity demand that existing grid infrastructure cannot meet.
* Demand Side: AI training and inference workloads require continuous, high-density power. U.S. AIDC projects are proliferating, driving unprecedented load growth.
* Supply Side: While total supply may meet short-term needs in 2025, long-term stability is compromised by aging grid infrastructure and regional bottlenecks. The U.S. Department of Energy (DOE) predicts an annual peak power shortfall of 20-40 GW by 2030.

4.2. Technology Agnostic Investment Thesis

Given the magnitude of the deficit (>40 GW) and the limited immediate capacity of any single technology, the market is not yet in a "winner-takes-all" phase. Instead, all viable power generation technologies are experiencing demand surges. Investment opportunities are expanding from traditional gas turbines to gas reciprocating engines, Solid Oxide Fuel Cells (SOFC), and diesel generators.

4.3. Technology Segments and Recommended Plays

Deep Dive: Jereh Group (002353.SZ)
Jereh has secured over $200 million in generator set orders from top U.S. AI firms. Its strategic partnerships with Siemens, Baker Hughes, and Kawasaki provide robust production capacity and technical credibility. The company is well-positioned to monetize the immediate demand for reliable power in the U.S. market.

Deep Dive: Liande Shares (605060.SH)
As a key supplier of castings for Caterpillar’s gas turbines and diesel engines, Liande benefits directly from the increased production volumes of these OEMs. Its diversified exposure across turbines, engines, and diesel generators makes it a pure play on the AIDC power theme.

5. Semiconductor Equipment: Domestic Substitution and Capacity Expansion

5.1. Capex Expansion in Logic and Memory

We forecast continued expansion in capital expenditure by Chinese wafer fabs in 2026-2027, driven by:
* Logic: SMIC’s capacity utilization reached 95.8% in Q3 2025. Breakthroughs in advanced logic processes are accelerating the rollout of new capacity.
* Memory: YMTC (NAND) and CXMT (DRAM) currently hold only ~5% global market share each. We estimate they will add 100,000–120,000 wafers/month of new capacity in 2026, focusing on 3D NAND and HBM, with total investments reaching $15.5–18 billion.

Global semiconductor equipment spending is projected to reach $882.7 billion (2026) and $947.1 billion (2027), growing 9% and 7% respectively. In China, equipment sales are expected to reach 441.4 billion RMB (2026) and 473.6 billion RMB (2027), representing YoY growth of 21% and 7%.

5.2. Accelerated Domestic Substitution

Geopolitical restrictions from the U.S., Japan, and the Netherlands have intensified the urgency for domestic substitution. In 2024, China accounted for 42% of global semiconductor equipment sales ($49.5 billion). We expect the domestic localization rate to rise to 22% in 2025.
* High Localization: Etching, Cleaning, CMP.
* Low Localization (<25%): Lithography, Thin Film Deposition, Inspection, Track. This segment offers the widest white space for growth.

5.3. Northern Huachuang (002371.SZ): The Platform Leader

Northern Huachuang continues to solidify its position as the dominant domestic semiconductor equipment platform.
* Etching: Dominant in ICP; expanding in CCP. High aspect ratio etching breakthroughs.
* Thin Film Deposition: PVD market leader; expanding CVD/ALD.
* Track (Coater/Developer): Acquisition of Kingsemi’s controlling stake fills a critical product gap, enabling participation in the track substitution wave.
* Cleaning: Acquisition of Akrion enhances product portfolio.
* Financials: We adjust our 2025-2027 net profit estimates to 5.85 / 7.78 / 10.24 billion RMB respectively, reflecting increased R&D intensity. Current valuation implies dynamic PEs of 63x / 48x / 36x. We maintain a Buy rating.

6. Liquid Cooling: The Thousand-Billion Yuan Market Inflection Point

6.1. From Optional to Mandatory

The power density of AI servers, particularly with NVIDIA’s Blackwell (GB200/GB300) and future Rubin architectures, has rendered traditional air cooling insufficient. Liquid cooling is transitioning from an optional efficiency measure to a mandatory thermal management solution.
* Market Size: We estimate the global server liquid cooling market will reach 800 billion RMB in 2026.
* ASIC-specific liquid cooling: 294-353 billion RMB.
* NVIDIA-related liquid cooling: 581-697 billion RMB.

6.2. Technical Evolution: Cold Plate to Micro-Channel

• Current Standard: Cold plate liquid cooling dominates.
• Rubin Architecture Challenge: The Rubin architecture features a TDP of 2300W per chip and rack powers exceeding 200KW. Single-phase cold plates (limit ~150KW/rack) are inadequate.
• Future Solutions:
  1. Phase-Change Cold Plates: Utilize latent heat of vaporization. Suitable for 300KW+ racks.
  2. Micro-Channel Liquid Cold Plates (MLCP): Integrate micro-scale channels directly into the cold plate substrate. We view MLCP as the likely long-term solution for Rubin Ultra (TDP 4000W+, Rack >600KW) due to its scalability and superior heat transfer efficiency.

6.3. Supply Chain Dynamics and Chinese Entry

NVIDIA has opened its supplier list, allowing ODMs/OEMs to select components from a broader pool. This shifts the model from Vertiv’s exclusive CDU certification to a multi-supplier environment.
* Opportunity: Chinese suppliers, offering competitive pricing and rapid iteration, are entering the supply chain either as Tier-2 suppliers to ODMs or directly as Tier-1 suppliers for non-core components.
* Key Players:
* Envicool (002837.SZ): Developed the "Coolinside" full-chain solution. Entered NVIDIA’s GB200/300 RVL list. Strong partnerships with Tencent, Alibaba, and Tianhong Technology (ASIC).
* Hongsheng Shares (603090.SH): Joint venture with Hexin Precision provides access to Taiwanese ODM channels. Specializes in brazed aluminum heat exchangers.
* Shenling Environment, Gaolan Shares, Zhongke Sugon: Other notable participants in the domestic and emerging export markets.

Envicool Financials: We forecast 2025-2027 net profits of 6.5 / 10.0 / 14.2 billion RMB. Current PE: 146x / 95x / 67x. Buy rating.

7. Other Notable Sector Developments

7.1. PCB Equipment: AI-Driven Drill Bit Demand

Dingtai High-Tech (301377.SZ), the global leader in PCB drill bits, is benefiting from the AI server boom.
* Volume Driver: AI servers use thicker, multi-layer PCBs (e.g., NV576 uses 78-layer boards). This increases the number of holes and the consumption of drill bits.
* Price Driver: High aspect ratio drilling requires premium, coated drill bits. The shift to M9 grade materials (high SiO2 content) increases tool wear, driving replacement frequency and unit price.
* Capacity: Monthly capacity exceeded 100 million units in Q3 2025, targeting 180 million by end-2026.
* Forecast: 2025-2027 net profits of 4.0 / 6.3 / 9.0 billion RMB. Buy rating.

7.2. Industrial Forklifts: Electrification and Intelligence

Zhongli Shares (603211.SH) is the global leader in electric warehouse forklifts.
* Trends: Global lithium-ion forklift penetration is only ~20%, offering significant room for growth. The market is shifting towards "Software + Hardware + Platform" intelligent logistics solutions.
* Performance: 2025 Q1-Q3 revenue +8.6%, Net Profit +5.5% despite North American headwinds.
* Strategy: "Oil-to-Electric" conversion market (~50 billion RMB potential) and expansion in Class I forklifts (currently 7% share).
* Forecast: 2025-2027 net profits of 9.1 / 10.0 / 11.3 billion RMB. Overweight rating.

7.3. Hand Tools: Real Estate and Restocking Cycle

Great Star Industrial (002444.SZ) is the leading Chinese exporter of hand tools.
* Drivers: U.S. housing market recovery (fed by rate cuts) and channel restocking by major retailers (Home Depot, etc.).
* Transformation: Shift from OEM to OBM (Own Brand Manufacturing), with OBM revenue reaching 48% in 2024.
* Supply Chain: "Roaming Factory" strategy mitigates tariff risks.
* Forecast: 2025-2027 net profits of 25 / 30 / 36 billion RMB. Buy rating.

Risks / Headwinds

While the outlook for the machinery sector is broadly positive, investors must remain cognizant of the following risks:

1. Macroeconomic Volatility:

   • Downside Risk to Fixed Asset Investment: If global manufacturing PMI contracts or if China’s economic recovery stalls, downstream capital expenditure may be deferred, impacting order books for equipment manufacturers.
   • Interest Rate Trajectory: While rate cuts are expected, any delay or reversal by the Federal Reserve could dampen the anticipated recovery in overseas construction and real estate markets.

2. Industry Cyclicality:

   • The construction machinery and semiconductor sectors are inherently cyclical. Misjudging the timing of the cycle peak or trough can lead to valuation compression. Specifically, if the domestic construction recovery proves to be shallower than expected due to persistent local government debt issues, earnings multiples may contract.

3. Geopolitical and Trade Risks:

   • Export Restrictions: Escalating trade tensions, particularly between the U.S./EU and China, could result in higher tariffs, export controls on advanced technologies (semiconductors, AI chips), or sanctions against specific entities. This directly impacts companies with high overseas revenue exposure (e.g., Great Star, Jereh, PV equipment exporters).
   • Supply Chain Decoupling: Efforts by Western nations to diversify supply chains away from China ("China Plus One") could erode the long-term market share of Chinese manufacturers if they fail to successfully localize production overseas.

4. Technology Execution Risks:

   • Humanoid Robotics: Delays in Tesla’s Optimus mass production or failure to achieve cost targets could disappoint the market and lead to sharp corrections in related supply chain stocks.
   • Space PV: Technical challenges in deploying and maintaining large-scale solar arrays in orbit, or regulatory hurdles regarding space debris and orbital slots, could slow the adoption of space-based solar power.
   • Liquid Cooling: Slower-than-expected adoption of liquid cooling by hyperscalers due to reliability concerns or high initial CAPEX could delay revenue realization for companies like Envicool and Hongsheng.

5. Exchange Rate Fluctuations:

   • Significant appreciation of the RMB against the USD or EUR could negatively impact the profitability of export-oriented companies by reducing the value of overseas earnings when repatriated.

Rating / Sector Outlook

Sector Rating: Overweight (Maintained)

We believe the Machinery & Equipment sector is poised for outperformance in 2026, driven by a unique combination of cyclical recovery and secular growth themes. The sector is no longer viewed solely as a proxy for traditional industrial activity but as a critical enabler of the AI and Green Energy transitions.

Sub-Sector Ratings:

Investment View

1. Strategic Allocation Framework

For institutional investors, we recommend a barbell strategy that balances high-certainty cyclical recovery with high-growth thematic exposure.

Leg 1: Cyclical Recovery & Value (Core Holding)
* Focus: Construction Machinery, Industrial Forklifts, Hand Tools.
* Logic: These sectors offer visible earnings growth, reasonable valuations, and dividend yield potential. The macroeconomic tailwinds (Fed cuts, domestic stimulus) provide a high degree of certainty for revenue acceleration in 2026.
* Key Picks: Sany Heavy Industry, Hengli Hydraulic, Zhongli Shares, Great Star Industrial.

Leg 2: Thematic Growth & Alpha (Satellite Holding)
* Focus: AIDC Power/Cooling, Semiconductor Equipment, Space PV, Humanoid Robotics.
* Logic: These sectors are driven by secular trends (AI, Energy Transition, Automation) that are less sensitive to short-term economic fluctuations. They offer higher beta and potential for multiple expansion, albeit with higher volatility.
* Key Picks: Jereh Group, Envicool, Northern Huachuang, Jingsheng Electromechanical, Leader Harmonious Drive.

2. Detailed Company Analysis & Recommendations

A. Sany Heavy Industry (600031.SH) – Buy

• Investment Logic: As the domestic leader, Sany is the primary beneficiary of the construction machinery recovery. Its internationalization strategy has matured, with overseas revenue contributing significantly to profit stability. The improvement in capacity utilization (from 42% in 2024) will drive operating leverage, leading to margin expansion.
• Catalysts: Q1 seasonal sales spike, successful launch of new electric/mining models, stabilization of overseas markets.
• Valuation: Trading at <15x 2026E PE, offering an attractive entry point for a cyclical upturn.

B. Jereh Group (002353.SZ) – Buy

• Investment Logic: Jereh is a dual-play on Oil & Gas services and AIDC power. Its $200M+ order book from U.S. AI firms validates its ability to penetrate the high-end power generation market. The company’s partnerships with Siemens and Baker Hughes provide technical credibility, while its Chinese manufacturing base ensures cost competitiveness.
• Catalysts: Delivery of gas turbine/generator sets to U.S. clients, expansion in Middle East EPC projects.
• Risk: Geopolitical tension affecting U.S. operations.

C. Northern Huachuang (002371.SZ) – Buy

• Investment Logic: The undisputed leader in Chinese semiconductor equipment. Its platform strategy allows it to capture value across multiple process steps (Etch, Deposition, Cleaning, Track). The acquisition of Kingsemi strengthens its position in the critical Track segment. With domestic fabs aggressively expanding capacity, Northern Huachuang’s order visibility is high for the next 2-3 years.
• Catalysts: Breakthroughs in advanced node equipment, market share gains in CVD/ALD.
• Valuation: Premium valuation justified by high growth visibility and strategic importance.

D. Envicool (002837.SZ) – Buy

• Investment Logic: Pure play on the AI liquid cooling supercycle. Its "Coolinside" solution is technologically competitive, and its inclusion in NVIDIA’s supply chain (RVL list) is a major validation. The shift from air to liquid cooling is inevitable for high-performance AI clusters, ensuring long-term demand.
• Catalysts: Large-scale orders from domestic CSPs (Tencent, Alibaba) and potential direct supply to NVIDIA ODMs.
• Risk: Competition intensifying; margin pressure from ODMs.

E. Jingsheng Electromechanical (300316.SZ) – Buy

• Investment Logic: Dominant in crystal growth equipment for PV and Semiconductors. The emergence of space PV provides a new, high-margin growth avenue for its HJT-compatible technology. Additionally, its exposure to Silicon Carbide (SiC) positions it well for the EV and power electronics boom.
• Catalysts: Adoption of HJT in space applications, SiC capacity expansion by downstream customers.

F. Leader Harmonious Drive (688017.SH) – Overweight

• Investment Logic: Critical supplier for humanoid robots. As Tesla and other players ramp up production, the demand for high-precision harmonic reducers will surge. Leader’s technological moat and cost advantage make it a preferred supplier for both domestic and international robot makers.
• Catalysts: Confirmation of large-volume orders from Tesla or other major robot OEMs.

3. Portfolio Construction Advice

• Weighting: We suggest a 60% allocation to Cyclical Recovery (Construction, Forklifts, Tools) and 40% allocation to Thematic Growth (Semiconductor, AIDC, Robotics).
• Rebalancing: Monitor monthly excavator sales data and U.S. interest rate decisions. Adjust cyclical exposure if macro data deviates from expectations. For thematic holdings, track technological milestones (e.g., Optimus V3 launch, NVIDIA Rubin specs) and order announcements.
• Hedging: Consider hedging currency risk for companies with high USD/EUR revenue exposure if the RMB shows signs of significant appreciation.

4. Conclusion

The Machinery & Equipment sector stands at an inflection point. The convergence of domestic policy support, global monetary easing, and technological innovation creates a fertile environment for investment. By focusing on companies with proven execution capabilities, strong technological moats, and exposure to high-growth end markets (AI, Space, Green Energy), investors can capture significant alpha in 2026. We reiterate our Overweight rating and encourage active positioning in the recommended names.

Appendix: Data Tables & Charts Reference

(Note: The following data points are derived from the source report and serve as reference for the analysis above.)

Table 1: Recommended Stock Pool by Sector

Table 2: Key Financial Forecasts (Selected Companies)

Table 3: Macro & Industry High-Frequency Data (Dec 2025)

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Dongwu Securities Investment Rating Standards:
Investment ratings are based on analysts' expectations of the relative performance of the industry or company compared to the benchmark within 6 to 12 months after the report's publication.
* A-Share Benchmark: CSI 300 Index
* HK Market Benchmark: Hang Seng Index
* US Market Benchmark: S&P 500 Index

Company Ratings:
* Buy: Expected outperformance of >15% relative to benchmark.
* Overweight: Expected outperformance of 5%-15% relative to benchmark.
* Neutral: Expected performance within -5% to +5% relative to benchmark.
* Underweight: Expected underperformance of -5% to -15% relative to benchmark.
* Sell: Expected underperformance of >15% relative to benchmark.

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