Hongfa Technology (600885.SS): 2Q26 in line; Buy on strong order visibility backed by market share gains and pricing power to support

研报英文原文证据摘录

Hongfa Technology (600885.SS): 2Q26 in line; Buy on strong order visibility backed by market share gains and pricing power to support

Goldman Sachs Hongfa Technology (600885.SS)

Investment thesis, Valuation methodology and Risks

Hongfa is a top relay producer with 27% global market share as of 2025 (No.1). We

expect continued market share gains driven by technology strength in the autos (both

ICE and EV)/home appliance/power/signal sectors, and by rising adoption of

high‑voltage DC architectures in AIDC and ESS applications. We believe the vehicle

electrification mega-trend is poised to power China’s industrial component champions

as content per vehicle rises significantly in EV vs. ICE, while Hongfa’s leading position in

HVDC relays positions it to benefit from the 800V DC transition in both automotive and

power infrastructure. In addition to strong smart meter demand as the global power grid

enters a replacement cycle to incorporate more renewable energy generation and adapt

for rising electricity demand, we now also see AIDC and ESS build‑out adding

incremental relay demand from data centers and backup/storage systems. We view the

stock’s valuation as attractive vs. our China Industrial Tech coverage, with potential

catalysts coming from: (1) strong customer penetration among global EV OEM

customers, (2) fast smart meter order gains against replacement demand, and (3) an

acceleration in AIDC‑related HVDC and general relay orders, as well as ESS‑HVDC

deployments, as global data center and power operators upgrade toward

higher‑efficiency DC and storage‑rich architectures. We are Buy rated.

Price Target Risks and Methodology - Hongfa Technology

Target price: Our 12m target price of Rmb45.5 is based on 2028E P/E of 24x discounted

back to 2027E.