CICC released a research report stating that AINNOVATION (02121) performance is steadily recovering. The firm raised 2025E/2026E revenue forecasts by 12.2%/19.6% to RMB 1.47/1.73 billion, and increased 2025E/2026E adjusted net profit attributable to shareholders. CICC maintained the company's outperform rating and, considering the company's operating leverage effect combined with rising industry valuation center, raised the target price by 88.9% to HK$8.5, corresponding to 2.99x/2.54x 2025e/2026e P/S ratios, representing 25.7% upside potential from current stock price. The current stock price trades at 2.38x/2.01x 2025e/2026e P/S ratios.
CICC's main viewpoints are as follows:
**Strong Revenue Turnaround, Continued Focus on Manufacturing**
During the 2024 annual results conference, management mentioned the company's 2025 strategic shift from "defense to offense," expecting to achieve revenue growth recovery. 1H25 revenue growth reached +22.3% (compared to 1H24 growth of -38.11%), with the company achieving significant turnaround by focusing on its core AI+Manufacturing strategy. In 1H25, revenue from manufacturing increased 27.0% year-on-year to RMB 556 million, accounting for 79.5% of total revenue, up 3.0ppt year-on-year. By industry breakdown, manufacturing sub-sectors recovered, with energy & power/automotive equipment/food & beverage/3C high-tech generating revenues of RMB 108/100/76/73 million respectively, up 48.5%/12.1%/14.8%/34.6% year-on-year.
**Continuous Gross Margin and Cash Flow Optimization**
1H25 gross margin reached 35.0%, up 1.2ppt year-on-year. The company has achieved annual 1ppt improvement from 29.1% gross margin in 2020, through strict delivery efficiency control and cost management, while continuously optimizing business structure. 1H25 R&D expenses increased 11.2% year-on-year to RMB 165 million, mainly due to increased overall R&D investment from business expansion. The company intensified accounts receivable collection efforts, with 1H25 receivables period shortened by 52 days year-on-year to 122 days, significantly improving collection efficiency. 1H25 total cash and equivalents reached RMB 997 million, with net cash from operating activities at RMB 8.4 million, achieving positive cash flow (from 1H24 cash flow of -RMB 26 million to 1H25 cash flow of +RMB 8 million), approaching breakeven in 1H25.
**Further Strengthening Industrial AI Software and Robotics Development, Share Buyback Demonstrates Confidence**
In the industrial sector, AINNOVATION launched AEAM industrial equipment intelligent management software and, based on its existing industrial large model technology product matrix, partnered with KUKA robotics in June 2025 to jointly promote new industrialization development. In embodied intelligence, AINNOVATION collaborated with Pudu Robotics to develop embodied intelligent robot solutions for industrial applications and obtained two invention patents in August. In May 2025, the company announced a RMB 100 million share buyback program, using proprietary funds for cancellation/treasury stock holding, demonstrating development confidence.