Wolong Electric Drive's new business prospects remain to be seen; is the stock price being overly overstretched? The behind-the-scenes maneuvering of the Wolong group related to "relocation" reveals an "arrow with three targets"

Produced by: Sina Finance Listed Company Research Institute

Written by: Xia Chong Studio

Core Viewpoint: Wolong Electric Drive’s revenue is expected to slightly decline in 2025, but net profit will surge by 42%. This divergence may hide the capital maneuvering of the Wolong system. Just before Wolong Electric Drive’s listing in Hong Kong, it may have shifted its photovoltaic energy storage assets to the related party Wolong New Energy, achieving multiple goals: optimizing its own financial statements, assisting the related party in shell protection transformation, and achieving the goal of getting the target assets listed. It is worth noting that the company’s emerging businesses, such as robotics and low-altitude economy, account for only about 6% of revenue, with some business gross margins as low as 6%. Given such business quality, is the company’s skyrocketing stock price overly stretched?

Recently, Wolong Electric Drive released its 2025 annual report, showing a mismatch between revenue and net profit.

Data shows that in 2025, the company’s main revenue reached 15.454 billion yuan, a year-on-year decrease of 4.88%; net profit attributable to shareholders was 1.126 billion yuan, a year-on-year increase of 42.04%; and net profit after deducting non-recurring items was 823 million yuan, a year-on-year increase of 29.58%. From this, it can be seen that the company experienced a significant profit increase despite a decline in revenue.

Looking at it quarterly, the mismatch between revenue and profit is even more pronounced. In the fourth quarter of 2025, the company’s single-quarter main revenue was 3.486 billion yuan, a year-on-year decrease of 13.97%; single-quarter net profit attributable to shareholders was 308 million yuan, a year-on-year increase of 98.93%; and single-quarter net profit after deducting non-recurring items was 105 million yuan, a year-on-year increase of 64.76%.

Stock price diverging from fundamentals? Is it overly stretched?

Wolong Electric Drive’s main business involves the research, development, production, sales, and service of motors and controls. Its main business covers areas such as explosion-proof electric drive systems, industrial electric drive systems, HVAC electric drive systems, new energy transportation electric drive systems, and robotic components. In terms of revenue structure, the HVAC electric drive system solutions lead with approximately 4.958 billion yuan in revenue, accounting for about one-third of total revenue, while explosion-proof and industrial electric drive system solutions contribute approximately 4.633 billion yuan and 4.095 billion yuan, respectively. These three major segments make up the company’s core, contributing around 90% of revenue.

In terms of business growth, the company’s explosion-proof electric drive system solutions and industrial electric drive system solutions show weak growth, while the HVAC electric drive system solutions only grew by 7.95%.

Since the “924” market surge, the company’s stock price has skyrocketed more than threefold. On one hand, the company has embraced the robotics concept, collaborating with Tencent to invest in ZhiYuan Robotics, gaining significant market attention in the field of embodied intelligence; on the other hand, the company is an important supplier for electric aviation propulsion systems, and the continuous benefits from the low-altitude economy may further catalyze its stock price increase.

It is worth noting that both in the 2025 annual report and in the prospectus for the Hong Kong stock market, Wolong Electric Drive has heavily emphasized its new energy transportation electric drive system solutions (including low-altitude) and robotic electric drive system solutions.

The company has strategically clarified its intention to develop bionic robots and electric aviation as new growth businesses. So how valuable are these two businesses?

In terms of revenue structure, the company’s robotic components and system applications and new energy transportation electric drive system solutions achieved approximately 500 million yuan and 400 million yuan in revenue in 2025, respectively, with a combined revenue accounting for about 6% of total revenue, below 10%. Notably, Wolong Electric Drive’s new energy transportation electric drive system solutions have a gross margin of only 6.06%. With such a low gross margin, does its competitiveness need further observation?

In terms of growth rate, Wolong Electric Drive’s new energy transportation electric drive system solutions have a growth rate of 11.09%, which is weaker than the industry growth rate. According to the Passenger Car Association, in 2025, global sales of new energy vehicles exceeded 22.89 million units, a year-on-year increase of 27%, with a global penetration rate approaching one-quarter. China remains the largest market for new energy vehicles, with sales reaching 16.49 million units and a new energy penetration rate of 47.9%.

Wolong Electric Drive’s robotic components and system applications segment has a revenue growth rate of 14.13%, which is slightly inferior compared to the explosive growth of the robotics sub-sector. According to IDC data, in 2025, the global humanoid robot market will reach a scale-up starting point, with nearly 18,000 humanoid robots shipped globally, a year-on-year increase of approximately 508%, with sales of about $440 million. According to an industry report released by Frost & Sullivan, the global embodied intelligence cluster market is expected to grow from $12.5 billion in 2020 to $34.3 billion in 2024, with a compound annual growth rate of 28.7%. In the future, as application scenarios further expand, the global embodied intelligence cluster market is projected to reach $200.2 billion by 2030, with a compound annual growth rate of 34.2% from 2024 to 2030.

Capital maneuvering with related parties

In fact, Wolong Electric Drive has experienced mismatches between revenue and net profit in several financial years. In contrast to the 2025 fiscal year, the company saw revenue growth in 2022 and 2023 but a significant drop in net profit. Data shows that in 2022 and 2023, the company’s revenue growth rates were 4.15% and 9.12%, respectively, while the net profit attributable to shareholders dropped by 19.06% and 33.73% during the same period.

It is worth noting that Wolong Electric Drive stripped its photovoltaic and storage business before filing for Hong Kong stocks.

In early 2025, Wolong Electric Drive announced that its holding subsidiary Zhejiang Longneng Electric Power Technology Co., Ltd. (referred to as “Longneng Electric Power”) would terminate its listing on the New Third Board and abandon its original plan to list on the Beijing Stock Exchange. At the same time, Wolong Electric Drive plans to transfer its 43.21% equity in Longneng Electric Power, as well as 80% equity in Zhejiang Wolong Energy Storage System Co., Ltd., 51% equity in Wolong Yingnaide (Zhejiang) Hydrogen Energy Technology Co., Ltd., and 70% equity in Shaoxing Shangyu Shunfeng Electric Power Co., Ltd., to the related party Wolong Real Estate (later renamed Wolong New Energy), with a transaction price of 720 million yuan. After the transaction is completed, Wolong Electric Drive will no longer hold control over the aforementioned four companies.

This maneuver by the Wolong group can be described as “killing three birds with one stone.”

On one hand, in the photovoltaic and energy storage fields, there is a serious overcapacity and price competition. For non-leading enterprises, maintaining high investment in research and capacity construction means enormous cash flow pressure. At this time, divesting related targets may help optimize the balance sheet. In 2025, the company’s non-recurring gains and losses were 303 million yuan, accounting for nearly 30% of net profit for the year, with an increase of nearly 100% compared to the previous year.

On the other hand, for Wolong Real Estate, it solves the shell protection issue, while Longneng Electric Power completes its curve listing.

Wolong Electric Drive has long sought to spin off its new energy platform Longneng Electric Power for listing, but this has been fraught with twists and turns. As early as 2021, the company planned to push this business, centered on photovoltaic power plant operation, toward the main board of the Shenzhen Stock Exchange, intending to create an independent new energy listing platform. In 2023, this spin-off plan was formally clarified to enhance the financing capacity and competitiveness of this segment. However, on April 25, 2024, this plan encountered setbacks, and Wolong Electric Drive announced the termination of Longneng Electric Power’s listing plan on the Shenzhen Stock Exchange, instead planning to list on the Beijing Stock Exchange. However, in 2025, this plan was also abandoned.

For Wolong Real Estate, affected by the downturn in the real estate market and industry cycles, the dual-main business model of “real estate + minerals” that it relies on saw a sharp decline in performance in 2024, and future operational sustainability may face challenges. Wolong Real Estate’s 2024 annual report shows that the company’s operating revenue was 3.611 billion yuan, a year-on-year decrease of 24.08%; net profit attributable to shareholders was 41 million yuan, a year-on-year decrease of 75.15%; and net profit after deducting non-recurring items was 51.596 million yuan, a year-on-year decrease of 68.37%.

In March 2025, Wolong Real Estate acquired 44.90% equity in Longneng Electric Power, 80% equity in Wolong Energy Storage, 51% equity in Wolong Hydrogen Energy, and 70% equity in Shunfeng Electric Power, bringing four new energy companies into the scope of consolidated financial statements and implementing a strategic transformation toward photovoltaic, wind power, hydrogen storage, and other new energy business areas. Shortly thereafter, the company was renamed Wolong New Energy.

At the same time, Wolong Electric Drive initiated capital operations for its secondary listing in Hong Kong in June 2025. On June 19, 2025, Wolong Electric Drive officially announced its plan to issue H shares and list on the main board of the Hong Kong Stock Exchange, aiming to deepen its global strategic layout and build an “A+H” dual financing platform. On August 13, 2025, the company formally submitted its listing application documents to the Hong Kong Stock Exchange. On February 13, the initially submitted prospectus expired after six months; on February 27, just 14 days after the prospectus expired, the company quickly updated and resubmitted its listing application.