Laifu Harmonic Drive Lists on Hong Kong: Opportunities and Challenges for the Harmonic Reducer Track Amid the Humanoid Robot Boom

Keywords: Laifu Harmonic Drive, harmonic reducer, HKEX Chapter 18C, humanoid robot, precision drive, robot joint, domestic substitution, price war

Introduction

On June 30, Zhejiang Laifu Harmonic Drive Co., Ltd. officially listed on the Hong Kong Stock Exchange under Chapter 18C, becoming the 'first harmonic reducer stock' on the Hong Kong market. On its debut, the company's share price performed strongly, reflecting the capital market's high attention to the robot core component sector.

From an industry perspective, Laifu's listing is not just a single company's financing event but a microcosm of the accelerated capitalization of the humanoid robot industry chain. Harmonic reducers are at the core of the robot joint transmission chain, determining robot positioning accuracy, response speed, and load capacity. As humanoid robots move from concept validation to small-volume mass production, harmonic reducers, as a 'bottleneck' component, are becoming a focus of industrial competition.

However, behind the heat, the industry also faces real constraints: high technical barriers, long expansion cycles, rising customer concentration, intensified price competition, and yet-to-be-fully-realized profitability. Laifu's listing represents both new opportunities and harsher tests.

1. Why Are Harmonic Reducers a Key Component for the Robotics Industry?

Harmonic reducers are high-precision components in robot transmission systems, with core value in 'achieving high reduction ratios and high-precision transmission in a small volume.' Compared to traditional reduction solutions, harmonic reducers offer advantages such as compact structure, light weight, small backlash, and high transmission accuracy, making them particularly suitable for robot joints requiring high precision, such as upper limbs and hands.

In humanoid robots, shoulders, elbows, wrists, and fingers require multiple degrees of freedom, high-frequency response, and fine control, placing extremely high demands on the precision manufacturing capability of reducers. Simply put, the motor outputs high speed and low torque, while robot joints require low speed and high torque; the reducer is the key component completing this conversion.

According to industry estimates, a single humanoid robot requires up to 14 or more harmonic reducers, and as action complexity increases, the demand per robot may further rise. That is, with the expansion of humanoid robot shipments, harmonic reducers are not 'optional' accessories but a key variable determining overall machine performance and cost structure.

2. Laifu's Listing Logic: On the Eve of Demand Explosion

Founded in 2013, Laifu Harmonic Drive entered the harmonic reducer business in 2015 and gradually expanded products to higher-value-added areas such as joint modules and robotic arms. The choice to list under Chapter 18C on HKEX is mainly due to its lack of profitability but strong growth potential and industrial strategic attributes.

In terms of market position, Laifu is among the top tier of Chinese robot harmonic reducer manufacturers. By shipment volume in 2025, it ranked second in market share; by revenue, it also ranked second. More importantly, as of the end of 2025, the company was one of only two domestic companies to have achieved delivery and entered mass production of harmonic reducers for humanoid robots, giving it a strong first-mover advantage.

This advantage comes not merely from market enthusiasm but is built on process accumulation, customer validation, and production capacity. The manufacturing difficulty of harmonic reducers is not whether they 'can be made' but whether they can be 'made stably, in volume, and with low error.' It imposes extremely high requirements on material heat treatment, flex spline processing, assembly precision, and life testing. For downstream robot manufacturers, stable supply capability and consistency metrics are often more important than single-point parameters.

Therefore, Laifu's value is not just 'selling reducers' but building a system-level component platform around robot joints. This is also an important reason why the capital market is willing to give high expectations.

3. Fast Growth, but Profitability Is Not Easy

Laifu's revenue growth is very impressive. In 2025, the company's operating revenue reached 261 million yuan, a year-on-year increase of 142.2%. Behind this is the order release driven by rising demand for humanoid robots and industrial robots, as well as the continuous release of production capacity.

However, high growth does not automatically equate to high profitability. The prospectus shows that Laifu recorded losses for three consecutive years from 2023 to 2025, with cumulative losses exceeding 500 million yuan, and the loss in 2025 still reached 171 million yuan. The choice to list under Chapter 18C on HKEX is largely because the A-share STAR Market has clear profitability thresholds, and the company has not yet met the continuous profitability requirement.

The reasons for the loss are not complicated but typical: first, the industry is still in the early stage of demand release, and the scale has not fully diluted fixed costs; second, the company's advance capacity layout led to increased depreciation, manufacturing management and other expenses; third, R&D expenditure accounted for a high proportion, with R&D spending as a percentage of revenue at 33.5%, 30.9%, and 18.9% from 2023 to 2025.

From a financial structure perspective, the company's adjusted EBITDA turned positive in 2025 to 16.87 million yuan, indicating improvement in cash generation ability at the main business level, but there is still a clear distance from achieving net profit. In other words, the company is transitioning from an 'investment phase' to a 'realization phase,' but this process still needs time and scale support.

4. Price War and Scale Effects Determine Future Profit Curve

Currently, the biggest contradiction in the harmonic reducer industry is the coexistence of rapid demand growth and continuous price decline. The prospectus shows that Laifu's average price for harmonic reducers dropped from 795 yuan in 2023 to 571 yuan in 2025, a cumulative decline of about 28%. This indicates that while the industry is hot, it is not naturally high-margin.

Behind the price decline, on one hand, the product structure has changed, with small-size, low-price products accounting for a higher share; on the other hand, companies are proactively lowering prices to seize market share. For emerging tracks, this phenomenon is not surprising: as technical standards gradually become clear, competition often shifts from 'can we make it' to 'who can make it at lower cost and higher yield.'

This also explains the fluctuation in Laifu's gross margin. From 2023 to 2024, the company's gross margin fell from 29.5% to 24.1%, mainly due to declining margins on reducers and other precision components. In 2025, the gross margin rebounded to 25.6%, thanks to the scale effect from increased sales of joint modules and robotic arms.

Notably, the industry leader, Leaderdrive Harmonic Drive, although also experiencing a declining gross margin, has achieved stable profitability. This means that in the precision reducer track, the real competitive barrier is not just market share but also manufacturing efficiency, product structure, and customer stickiness. In the future, whoever can first complete the upgrade from 'component supplier' to 'modular platform enterprise' is more likely to survive the price war.

5. Capacity, Customers, and Cash Flow: Triple Pressure on a Growth Company

The biggest practical issue for Laifu currently is not whether there is a market, but how to stabilize the expansion pace.

First, capacity pressure. From 2023 to 2025, the capacity utilization rate of the company's leased production facility in Shaoxing rose from 81.9% to 93%, and the utilization rate of the self-owned production facility put into operation in 2025 reached 97.1%, running at almost full capacity. This shows the necessity of expansion but also means future capital expenditure will continue.

Second, rising customer concentration. From 2023 to 2025, the revenue share of the top five customers rose from 29.3% to 42.3%, indicating that large customer orders increasingly contribute to revenue. For manufacturing companies, large customers are both a growth source and a risk source; once a single customer's introduction rhythm, procurement strategy, or technology route changes, performance fluctuations may be amplified.

Third, operating cash flow remains negative and the gap is widening. In 2025, net cash outflow from operating activities reached 63.41 million yuan. For a hard-tech company still in an expansion phase, cash flow pressure is not uncommon, but it determines the company's dependence on financing, orders, and payment cycles. If industry competition continues to intensify in the future, the company must find a more stable balance among 'capacity expansion, R&D, and receivables.'

Conclusion

Laifu Harmonic Drive's listing on Hong Kong marks the transition of the robot core component track from industrial expectations to capital validation. The harmonic reducer field it occupies is not only a beneficiary of the humanoid robot industry's volume growth but also one of the most fiercely competitive areas in terms of technology, cost, and scale.

In the long term, the increasing penetration of humanoid robots will continue to drive demand for high-precision reducers; in the medium term, domestic substitution and supply chain security needs will further strengthen opportunities for local players; but in the short term, price declines, profitability pressure, customer concentration, and cash flow constraints will continue to test the company's operational resilience.

For Laifu, listing is just the beginning of a new phase. What truly determines its future valuation and industry position is not how hot the market is, but whether it can establish a sustainable competitive advantage in capacity expansion, process improvement, and commercial efficiency. For the entire industry, whoever can first cross the threshold of 'scalable profitability' is more likely to upgrade from a track participant to a long-term winner.