Shuanghuan Driveline’s NEV gears accelerate in the third quarter as overseas expansion and robotics open growth opportunities
Third-quarter revenue rose 14% year on year and net profit grew 4%; Morgan Stanley sees NEV gears and overseas operations as the main drivers, while the robotics business is expanding.
Original source：Morgan StanleyFirst published on Unhidea：Original source date：
Key takeaway
Morgan Stanley maintains its Overweight rating on Shuanghuan Driveline, expecting overseas operations and rising coaxial gearbox volumes to support growth and humanoid robots to provide additional opportunities, although conventional automotive gears remain in decline.
What drove third-quarter growth?
Third-quarter 2026 revenue rose 14% year on year and 4% quarter on quarter, in line with Morgan Stanley’s expectations and market consensus; NEV gears, construction machinery gears, smart actuators and reducers jointly drove growth.
Net profit rose 4% year on year and 10% quarter on quarter, in line with the bank’s expectations but slightly below market consensus. Gross margin recovered quarter on quarter and was broadly flat year on year; foreign exchange losses narrowed from approximately 20 million yuan in the second quarter to 7 million–8 million yuan.
Can growth in the NEV business continue?
Third-quarter NEV gear revenue rose 26% year on year and 18% quarter on quarter. Monthly coaxial gearbox capacity has reached 80 thousand units, with utilization above 90%; the company aims to raise capacity to 100 thousand units by year-end.
The Hungarian plant continues to ramp up. Revenue for the first three quarters of 2026 was 300 million–400 million yuan, with a net margin of 2%. The company is supplying differential modules to Tesla’s European operations at an average selling price of approximately 400 yuan per set, and is also pursuing opportunities in North America.
The traditional business remains a drag: third-quarter revenue from internal combustion vehicle gears fell 14% year on year and was flat quarter on quarter; commercial vehicle gears fell 7% year on year. The company expects internal combustion vehicle gear revenue to decline approximately 10% year on year in the fourth quarter and full-year commercial vehicle gear revenue to be flat year on year.
How far has the robotics business progressed?
Revenue from reducers for embodied robots exceeded 100 million yuan in the first three quarters of 2026. Management expects shipments to accelerate in the fourth quarter and targets revenue of 150 million–200 million yuan in 2026 and 400 million–500 million yuan in 2027.
The company is expanding from RV, cycloidal, harmonic and planetary reducers into reducer components and actuator modules, broadening its coverage across the value chain. Third-quarter industrial robot reducer revenue grew more than 20% year on year, and the company maintained its guidance for full-year revenue above 500 million yuan.
Third-quarter smart actuator revenue grew more than 30% year on year, and the company maintained its full-year revenue guidance of 1.05 billion–1.1 billion yuan.
How does Morgan Stanley view valuation and the conditions for growth?
The bank is optimistic about overseas operations and rising coaxial gearbox volumes, and sees humanoid robots as an additional growth opportunity. It maintains its Overweight rating and target price of 46 yuan; the report lists a closing price of 41 yuan on 26 October.
In its sum-of-the-parts valuation, the bank applies a 25 times 2026 estimated price-to-earnings ratio to the core business. For the humanoid robotics business, it applies a 6 times price-to-sales ratio under a scenario in which global humanoid robot sales reach 1 million units and the company’s sales reach 1.1 billion yuan.
The bank says overseas capacity expansion and customer demand, coaxial gearbox penetration and progress in robot reducers could provide upside; slower-than-expected share gains, weak overseas demand and intensifying domestic competition in gears and actuators are downside factors.
