Profit quality achieves a comprehensive breakthrough, Wolong Electric Drive approaches a structural growth turning point

Source: Titanium Media

On the evening of March 20, Wolong Electric Drives (600580.SH) turned in a distinctly “contrast” annual performance report: revenue slightly down, profit sharply up, reaching a historical high.

For the full year, the company achieved operating revenue of 15.45B yuan, down slightly by 4.88% year over year; but after excluding the effects of changes in the scope of the consolidated financial statements caused by the sale of subsidiaries, the core business actually grew by 2.59% year over year. Full-year net profit attributable to shareholders was 1.13B yuan, up 42.04% year over year. Non-recurring profit and loss (non-NI) net profit also reached 823 million yuan, up 29.58% year over year, demonstrating strong momentum for profit growth.

This was driven by the company’s clear strategic resolve and execution capability. It marks that Wolong Electric Drives’ transition to a “powertrain and electric drive system solutions provider” has achieved phased results. In 2025, when the overall traditional manufacturing industry faced heavy pressure, this performance was especially hard to come by.

I. “Addition and subtraction” in the core business—improvement in earnings quality

Revenue was slightly down while profits surged, owing to the “addition and subtraction” strategy inside Wolong Electric Drives’ core business: reducing scale and non-core assets, and continuing to divest assets such as photovoltaics and energy storage that have low synergy with the core business and poor earnings quality. Four subsidiaries were cleared—assets that were dragging profits on the statements and occupying capital:

What was “added” was profitability and business focus: resources were reallocated, concentrating on traditional strengths such as explosion-proof, industrial, and HVAC, as well as on directions considered future growth curves, such as robot components and electric aviation.

The company said that in 2025, it achieved substantial breakthroughs in frontier fields such as electric aviation and bio-mimetic robots, and its powertrain system solutions also completed key core technology breakthroughs.

The effectiveness achieved by this combination of moves is reflected in the fact that profit growth clearly outpaced revenue growth, while the gross margin hit a new high in five years. Net profit attributable to shareholders increased 42.04% year over year; non-NI net profit also achieved a high growth rate of 29.58%. Net profit margin rose from about 5.7% in the same period last year to about 7.3% in this period, significantly widening profitability space.

In addition, Wolong Electric Drives’ high-quality cash flows and ROE are also impressive in terms of operating efficiency and capital returns. In 2025, net cash flow from operating activities reached 1.78B yuan, up 15.98% year over year. Not only was the scale substantial, but the growth rate was higher than that of net profit, highlighting the “high-quality” nature of earnings and strong cash collection ability.

Gross margins across all businesses moved higher overall, meaning that Wolong Electric Drives’ product mix is at a turning point toward higher technical content and higher added value. For a mature manufacturing enterprise with annual revenue exceeding 10 billion yuan, being in a “low-speed, stable growth” range in itself is already noteworthy. The “breakthrough” direction mainly lies in changes to earnings quality and the business structure. This indicates that Wolong Electric Drives has received preliminary validation.​

II. From R&D to scenarios—three-tier R&D system supports breakthroughs in new tracks

Improving and enhancing profitability on the income statement is a short-term realization. Wolong Electric Drives’ true long-term “moat” lies in continuous breakthroughs in new tracks, supported by the three-tier R&D system.

In 2025, while profitability improved, system solution capability became an important support for building the company’s core competitiveness. Meanwhile, substantial breakthroughs were achieved in frontier fields such as electric aviation and bio-mimetic robots, and data center-related products advanced rapidly:

• In March 2025, Wolong Electric Drives strategically invested in Zhiyuan Robotics.
• In June 2025, Zhejiang Hllr and Shaoxing Shangyu Jiangke Intelligent Industrial Development Co., Ltd., together with Zhiyuan Innovation, contributed capital to establish Hang-Shao Embodied Intelligence. In this joint venture, the data assets and intellectual property rights are owned by the joint venture entity, and all parties enjoy usage rights.
• In June 2025, Wolong Electric Drives signed a joint-venture agreement with Wofei Changkong to establish a joint venture company, “Zhejiang Longfei Electric Drive Technology Co., Ltd.”, focusing on providing electric propulsion power systems and related products for airworthy aircraft with maximum takeoff weights from 750 kilograms to 5,700 kilograms for the market.
• In July 2025, Wolong Electric Drives released the domestic first vertical-domain model for industrial scenarios, “Shunzao GRP01.” The company’s embodied robot system is also driven by this model, enabling composable real-machine data for training, thereby achieving rapid few-shot generalization.
• In October 2025, the 8-unit electric engine contract signed between Wolong Electric Drives and Wofei Changkong completed relevant process validations, and in November 2025 completed the rollout of the first unit.
• In December 2025, Wolong Electric Drives’ independently developed high-performance electric aviation electric power system was selected as a provincial-level innovation achievement in Zhejiang.

Apart from single-point technology breakthroughs, the path for Wolong Electric Drives’ technology upgrades, cost reduction, and efficiency gains throughout the year primarily lies in systematized R&D capabilities.

In new materials and process innovation, drive/control integration and permanent magnetization, R&D efficiency improvement, and the unification of product platforms, Wolong Electric Drives completed an all-round upgrade. The new configuration of the three-tier R&D system—“Central Research Institute – business groups – factories”—is instrumental in enabling full-chain collaboration from frontier technology exploration, to customized development, and then to industrialization. Currently, Wolong Electric Drives has established five major R&D centers located in China, the United States, Germany, Japan, and India, and has a Central Research Institute in Shanghai. Leveraging national-level qualifications such as national high-tech enterprises and national technology innovation demonstration enterprises, it supports local innovation, customer collaboration, and product customization through strategic layout.

From the financial perspective, in 2025 the company’s R&D expense ratio remained stable at approximately 5.5%–6%. Full-year R&D investment was on the order of 890 million yuan, and both the number of authorized patents and the proportion of high-value invention patents continued to increase.

At the strategy level, the company, around its “three-thirds” strategy and “3+1” layout, has defined frontier directions such as bio-mimetic/embodied robots, electric aviation, and magnetic levitation/air-cushion bearings as new growth curves for the future. Unlike single-point trend-chasing hotspots, Wolong Electric Drives’ layout of new tracks has two distinct characteristics: it closely follows the company’s advantages in its core business; and it adheres to closed-loop validation from technology to scenarios.

In the robotics segment, the company builds on its core advantage of “motor + drive/control.” It focuses on high-value components such as joint modules for humanoid and quadruped robots, frameless torque motors, servo drives, and other parts with higher added value.

In the electric aviation sector, as one of the earliest companies in China to deploy electric aviation electric motors, Wolong Electric Drives has already built a fairly complete technological system in areas such as high power density motors, ducted-fan electric drive systems, and the formulation of airworthiness standards. It has established “one-to-one” cooperation with Commercial Aircraft Corporation of China (COMAC), civil aviation research institutions, eVTOL startups, and has jointly set up an aviation electric propulsion systems business unit and a joint laboratory.

In the area of magnetic levitation/air-cushion bearings and high-speed drive/control, the company has signed a strategic cooperation memorandum with SKF (Svenska Kullagerfabriken, Skf) for active magnetic bearing (AMB) technology, and has carried out deep cooperation in areas such as high-speed direct-drive systems, motor and magnetic levitation bearing integration technology.

These kinds of technology breakthroughs and scenario validations will be accelerated for rollout by relying on the company’s global network. The Hong Kong stock exchange prospectus shows that Wolong Electric Drives has already laid out 45 factories worldwide and 5 major R&D centers, and has obtained more than 1,400 authorized patents in total. It leads or participates in the formulation of 210 industry standards both domestically and internationally. The company’s business covers more than 100 countries and regions around the world. In 2025, overseas revenue accounted for nearly 30%. It also has overseas production bases in places such as Germany and Mexico, which can effectively mitigate the risk of international trade tariffs.

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