Pike New Materials 2025 Annual Report Review

Source: YiLiu Investment Research Notes

Disclaimer: This article is for research and discussion purposes only and does not constitute any investment advice. There are risks in the stock market; decisions must be made through independent thinking. Build your own logic framework and risk-control framework, and under no circumstances follow the crowd.

Today, Parker New Materials released its 2025 annual report. The stock had also seen a round of trading momentum toward the end of last year driven by commercial aerospace. Based on traditional valuation analysis, the current valuation is not cheap. However, I’ll still track its latest changes.

The report below doesn’t use “buttons” anymore— it sometimes uses an internet search mechanism to find things that aren’t on the annual reports and put them into the report. Therefore, I used ByteDance’s open-source platform deer-flow, and the following is the next set of commentary I got from it (I built a local knowledge base: after converting the PDFs to TXT, I fed them into the large model, and the data found was fairly accurate). Of course, I made some small custom adjustments to the platform’s source code (for example, adding a local knowledge base, disabling internet search), and also built a financial report commentary skill (skill). In the agent platform architecture, the most prominent new setup is this “skill”; openclaw also used a skills design.

1. Financial Summary: Steady revenue growth, with profits slightly declining

In 2025, Parker New Materials recorded operating revenue of 3.543 billion yuan, up 10.28% year over year, continuing the steady growth trend in recent years. Revenue growth was mainly driven by the ramp-up in the power forging segment and the expansion of other emerging businesses. Full-year net profit attributable to shareholders of listed companies was 252 million yuan, down 4.37% year over year on a slight basis. After excluding non-recurring gains and losses, net profit was 216 million yuan, down 13.13% year over year. The decline on the profit side was mainly affected by rising raw material prices, margin pressure from gross margin, and the delayed delivery of some high-gross-margin orders.

Net cash flow from operating activities in the reporting period reached 829 million yuan, up 39.49% year over year, with a significant improvement in cash flows. This was mainly attributable to improved efficiency of sales collections, faster turnover of accounts receivable, and reduced financial expenses brought by foreign exchange gains. During the reporting period, the company’s cash dividend policy remained stable. Total cumulative cash dividends for the year were 94.5133 million yuan, accounting for 37.45% of net profit attributable to the parent company, continuing to provide stable returns to shareholders.

2. Business Structure: Power segment leads growth, overseas expansion accelerates

By product, power forging is the company’s largest revenue source. In 2025, it achieved revenue of 1.389 billion yuan, up 25.37%. Growth was mainly benefited by the high industry momentum in wind power and nuclear power, especially the concentrated commencement of offshore wind power and third-generation nuclear power projects, which brought strong demand for forgings. Forgings for aerospace achieved revenue of 904 million yuan, up 7.6%, maintaining a steady growth trend. This was mainly supporting key projects such as domestically produced aero-engine components and large aircraft, with relatively strong demand certainty. Forgings for petrochemicals achieved revenue of 550 million yuan, down 10.93%, mainly influenced by the bottoming phase of the petrochemical industry cycle and slowing capital expenditure. Other forgings achieved revenue of 298 million yuan, up 30%, showing significant results from expansion into emerging areas.

By region, domestic markets generated revenue of 2.412 billion yuan, up 13.13%, benefiting from the domestic new energy investment boom and the accelerated localization of high-end equipment. Demand remained strong. Overseas markets generated revenue of 729 million yuan, up 9.99%. The company has passed global supply-chain certifications for international leading enterprises such as Rolls-Royce in the UK, GE Aerospace in the US, and Siemens in Germany. Export scale has steadily expanded. Although overseas business gross margin is currently slightly lower than that in China, in the long run the global high-end forging market has broad space, and overseas business will become a new growth engine for the company.

In terms of production capacity, in 2025 the company’s total output of various forgings reached 2.388 million tons, up 17.88% year over year. Total sales volume was 2.331 million tons, up 20.44% year over year. Capacity utilization has remained at a relatively high level. As the projects raised from the fundraising are gradually put into production, the capacity for special alloy forgings will be further released, providing support for subsequent business growth.

3. R&D: Ongoing increases in investment, with deep technical barriers

In 2025, the company’s R&D investment reached 168 million yuan, accounting for 4.73% of operating revenue. The company had 380 R&D personnel, representing 31.2% of the total number of employees. Among the R&D team, the proportion of personnel with master’s degree or above is close to 15%, and talent reserves are sufficient. During the reporting period, the company added 29 patent applications, including 18 invention patents. As of the end of the reporting period, the company had accumulated 105 authorized patents, including 58 invention patents, with deep technical accumulation.

The company masters several core technologies such as overall precision rolling of ring components with irregular cross-sections, rolling of special ring components, and rolling of extra-large diameter ring components. It is one of only a few private enterprises in China capable of providing supporting special alloy forgings for high-end equipment such as aircraft engines, aerospace launch vehicles, gas turbines, and controllable nuclear fusion devices, with relatively high technical barriers. During the reporting period, the company participated in drafting and has implemented 6 industry standards. It also successively received honors and qualifications such as being a demonstration enterprise for single-item champions in manufacturing, a national-level enterprise technology center, and a national-level specialized and innovative “little giant” enterprise.

Sustained investment in R&D has provided sufficient momentum for the company’s future development. Currently, the company has already laid out technology research in cutting-edge fields such as forgings supporting large aircraft, key domestic aero-engine core components, and special alloy forgings for controllable nuclear fusion devices. As the pace of downstream high-end equipment localization accelerates, the company’s technological advantages will gradually be converted into growth momentum for performance.

4. Core Competitive Strength: High-quality customer resources, and prominent capacity advantages

The company has high-quality customer resources and has entered the supply-chain systems of domestic industry leaders in various fields such as the AVIC Aero-Engine Group (China), the China Aerospace Science and Technology Corporation, Shanghai Electric, and Dongfang Electric. At the same time, it has passed global supply-chain certifications from international leading enterprises such as Rolls-Royce in the UK, GE Aerospace in the US, and Mitsubishi Electric in Japan. The customer certification cycle in the high-end forging industry lasts 3–5 years, with extremely high certification barriers. Once it enters the supply chain, it forms a long-term stable cooperative relationship. Currently, the company has a sufficient order backlog and strong ability to withstand cyclical fluctuations.

Regarding production equipment, the company has more than 400 production units, including pressure presses of multiple specifications from 3600T to over 7000T, precision CNC ring rolling machines of multiple specifications from 0.6m to 10m, and multiple-specification die-forging presses from 4MN to 220MN, among others. It can produce ring forgings with outer diameters of 200–10000mm and heights of 30–1600mm. The company is able to undertake various types of business including across industries, multi-specification, and small-to-large batches. Its capacity advantages are evident, allowing it to meet the diverse needs of different downstream customers.

In terms of management, in 2025 the company vigorously promoted the application of AI technology in production management, achieving end-to-end digitalized control and improving its refined operating level. While increasing production efficiency, costs are effectively controlled. The company’s cash-flow management capability is excellent. Its asset-liability ratio remains at a reasonable level, and its overall ability to withstand risks is outstanding.

5. Risk Warning: Raw material price fluctuations, and pressure from technological iteration

The company faces the risk of raw material price fluctuations. Direct materials such as carbon steel, stainless steel, and high-temperature alloys required for production account for more than 65% of the cost of its main business. Raw material price fluctuations have a significant impact on the company’s operating performance. If upstream raw material prices rise substantially in the future and the company fails to pass the cost pressure to downstream customers in a timely manner, it will directly squeeze profit margins and adversely affect operating performance.

Technological iteration risk should not be ignored. The technology update pace in the company’s downstream fields such as aerospace and new energy is fast, and the requirements for forging performance and precision keep increasing. This requires the company to continuously invest in R&D to follow technological iteration. If the company’s R&D capability cannot keep up with downstream customers’ product upgrade needs and fails to overcome related technical difficulties in a timely manner, it may face the risk of customer loss, which would affect the company’s market share and profitability.

Macroeconomic uncertainty risk also exists. In 2025, international geopolitical conflicts occur frequently, which may adversely affect the company’s overseas business expansion. Foreign exchange rate fluctuations may also lead to fluctuations in exchange gains and losses. Meanwhile, if domestic new energy project investment progress falls short of expectations, it may cause the order demand for the power forging segment to be below expectations, affecting the company’s growth rate.

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