Upcoming IPO| Yuchai Marine Electric: The largest supplier of large generators for power generation in China, with cash on hand of 1.3 billion yuan.

The largest supplier of large electric motors for power generation in China has shown strong performance growth, maintaining double-digit revenue growth and continuously improving profitability. Can Yuchai Ship Electric successfully go public on the Hong Kong Stock Exchange after its second submission? It has been reported that recently, Yuchai Ship Electric has submitted its listing application to the Hong Kong Stock Exchange again, with CMSC International and China Galaxy International as its joint sponsors. The company is a leading supplier of power generation engines in China and, according to Frost & Sullivan, it ranks first among domestic suppliers of power generation engines with a market share of 22.3% based on sales revenue projected for 2025. Yuchai Ship Electric has experienced strong performance growth, with revenue increasing from 3.239 billion yuan to 6.15 billion yuan from 2023 to 2025, reflecting a compound annual growth rate (CAGR) of 37.8%. In 2026, revenue is expected to reach 4.494 billion yuan, a year-on-year increase of 50.9%, while profitability continues to improve. During this period, the gross profit margin increased from 22.4% to 27.4%, and the net profit margin rose from 12.2% to 18.4%. As of June 2026, the company had cash and cash equivalents totaling 1.314 billion yuan. Driven by four major business segments, the overseas market is experiencing rapid growth. It has been noted that Yuchai Ship Electric sells products globally to original equipment manufacturers (OEMs), end users, and distributors, primarily focusing on OEM direct sales. Its main products include power generation engines and marine engines. The company primarily offers products under its "Yuchai" brand and also provides mtu brand products manufactured by its joint venture Yuchai Anteyou, thereby meeting the differentiated needs and preferences of customers through a dual-brand strategy. The company has four major business segments, including power generation generators, marine propulsion engines and auxiliary engines, generator sets, and generator components. Power generation generators are the core source of revenue, which maintains double-digit growth; in the first half of 2026, revenue reached 3.032 billion yuan, reflecting a year-on-year increase of 55.12%, contributing 67.5% of revenue. This product range includes large generators, heavy-duty generators, and medium and small generators, with large generators showing remarkable growth, as their revenue share increased from 26.4% in 2023 to 40.2% in the first half of 2026. Marine propulsion engines and auxiliary engines constitute the second-largest business segment, which also maintains a growth trend; however, their revenue share has gradually declined, falling to 8.4% in the first half of 2026, a decrease of 6.85 percentage points compared to 2023. Additionally, revenue from generator sets is expected to increase significantly starting in 2025, with their revenue share reaching 12.9% in the first half of 2026, while the revenue share from engine components and other sources is 11.1%. Yuchai Ship Electric's product sales include both self-produced and externally sourced items. Large generators are primarily self-produced, while heavy-duty generators are about evenly split between self-production and external procurement. Over 60% of medium and small generators are sourced externally, and over 80% of both marine propulsion engines and auxiliary engines, as well as generator sets, are self-produced. The company focuses on its proprietary products, maintaining high capacity utilization rates, which recorded 88.4%, 93%, 98.6%, and 94.3% for generators from 2023 to the first half of 2026. It is worth noting that the company has a significant amount of related party transactions. From 2023 to the first half of 2026, multiple transactions with related parties (including Yuchai Group entities and related parties of Yuchai Co., Ltd) were established, with income from related parties accounting for 25.4%, 19%, 10%, and 6.8% respectively; the proportion of purchases from related parties was 40.5%, 39.2%, 34.1%, and 31.5%. This indicates a gradual decrease in the company's reliance on related parties. This is supported by a stable growth in the number of customers; as of the first half of 2026, Yuchai Ship Electric had 556 customers, with the top five customers accounting for 39.9% of revenue, and the largest customer contributing 22.4%. Moreover, the company has a global presence, with rapid growth in overseas markets, where revenue surged 120.5% in the first half of 2026, increasing its revenue share to 5.2%. Currently, the companys overseas sales team covers Europe, the Middle East, Africa, Asia, and South America. Possessing industry-leading advantages, profitability continues to rise. From an industry perspective, according to data from Frost & Sullivan, the global market size for power generation engines is projected to reach 66.9 billion yuan in 2025, with a compound annual growth rate of 8.7% over the past five years, and is expected to reach 159.6 billion yuan by 2030, with its CAGR rising to 19%. The Chinese market is expected to account for 30% of this growth. In terms of application scenarios, data centers show the greatest potential, with a compound annual growth rate of 29.7% over the past five years; global market size is projected to reach 107.3 billion yuan by 2030, with a CAGR of 22.9%, making up 67.23% of the total. In addition, the global marine engine industry is growing slowly, with a market size of 77.4 billion yuan in 2025, and a CAGR of only 1.4% over the past five years, expected to reach 80.5 billion yuan by 2030, with a CAGR of 2%. Among marine engines, medium-speed and high-speed engines show strong growth, though they make up a relatively small market, projected to reach 5.4 billion yuan in 2025, with a CAGR of 23.5%, and expected to reach 7.7 billion yuan by 2030, with a CAGR of 7.5%. The power generation engine industry is highly concentrated, with fewer than 50 participants in the Chinese market. High-value, high-power products are concentrated in leading companies, with the top five participants accounting for a market share of 62.4% in terms of sales revenue by 2025. Yuchai Ship Electric, with a market share of 22.3%, ranks first in the industry, 9.4 percentage points higher than the second place. The same is true for the medium-speed marine engine industry, which also has fewer than 20 core participants, with the top three capturing 57% of the market share, and Yuchai Ship Electric again holding the leading position with a 22.3% share. Yuchai Ship Electric's core products possess a certain scale advantage within the industry, and with its leading position, it enjoys a certain degree of pricing power. Additionally, a high proportion of self-production allows for precise cost control, resulting in a rising trend in profitability. From 2023 to the first half of 2026, the gross profit margins were 22.4%, 23.4%, 24.9%, and 27.4% respectively. The gross profit margins for large generators and generator sets are notably high, contributing significantly to overall profits. In the first half of 2026, the gross margins were 38.8% and 33.2%, contributing 57.1% and 15.7% to gross profit, respectively. The net profit margin has also consistently increased, reaching 18.4% in the first half of 2026, up 6.2 percentage points compared to the annual figure for 2023. The company enjoys a sound financial position, with a debt-to-assets ratio of 65.7% in the first half of 2026, of which interest-bearing liabilities amounted to only 320 million yuan, accounting for 3.6% of total liabilities. As of June 2026, the company had cash equivalents of 1.314 billion yuan and receivables of 3.292 billion yuan, representing a high income proportion, though 2.86 billion yuan of the receivables are less than six months old. Historically, the impairment of receivables has been very low, indicating a high likelihood of cash recovery. In summary, Yuchai Ship Electric is experiencing steady growth, driven by its four major product lines. The core business of power generation generators continues to show growth across its three product series, while generator sets exhibit impressive growth, and the product mix continues to optimize. Furthermore, the overseas market is witnessing exponential growth, potentially creating a new growth trajectory. The company's core products lead the industry, displaying scale advantages, and with continuous domestic and international demand release combined with capacity expansion, performance may maintain high growth rates. Yuchai Ship Electric's profitability is also robust, with both gross and net profit margins on an upward trend and healthy cash flows. This upcoming listing is expected to accelerate the companys global strategy. However, it is important to keep in mind the company's related party transactions, as both income and procurement have significant proportions, meaning the fairness of these transactions and changes in transaction shares could impact the company's investment value.