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WUHAN - China Automotive Systems, Inc. (NASDAQ:CAAS), a key player in the power steering components industry in China with a market capitalization of $121 million, today announced a significant milestone with a new order for its R-EPS (Rack Electric Power Steering) products from a prominent European car manufacturer. According to InvestingPro analysis, CAAS is currently trading below its Fair Value, suggesting potential upside for investors interested in the automotive components sector. The deal, valued at over $100 million annually, will see Jingzhou Henglong Auto Parts Manufacturing Co., Ltd., a principal subsidiary of CAAS, supplying multiple vehicle models of the client. Production is slated to commence by 2027.
This order underscores the technical prowess of Jingzhou Henglong in the realm of advanced electric power steering systems and reflects an ongoing shift in the global automotive industry towards high-reliability and efficient steering configurations. The R-EPS system’s rapid response and high performance, bolstered by CAAS’s research and development in NVH (noise, vibration, and harshness), has met or surpassed the stringent requirements of the European OEM.
CAAS’s advancements, including their proprietary ball screw assembly and electronic control units, have enhanced product quality while optimizing costs. These improvements have not only reduced the likelihood of hardware failures but have also fortified network security and functional safety.
The CEO of CAAS, Mr. Qizhou Wu, expressed his views on the deal, highlighting it as an expansion of the company’s global footprint and an acknowledgment of the value offered by their high-technology EPS products. In anticipation of growing demand, CAAS is ramping up its R-EPS production capacity, aiming to reach 250,000 units in 2025 and projecting over 1 million units by 2030. The company’s robust growth trajectory is already evident in its impressive 18.33% revenue growth over the last twelve months. Get deeper insights into CAAS’s growth potential with InvestingPro, which offers exclusive access to 8 additional ProTips and comprehensive financial analysis.
China Automotive Systems has established itself as a formidable force in the steering industry, with a comprehensive product line and a robust customer base that includes several of China’s and North America’s top auto manufacturers. This recent development further cements the company’s strategic shift from being a cost-effective supplier to a provider of high-value-added technology products. Financial metrics from InvestingPro support this transformation, showing the company maintains profitability with a 16.54% gross margin and trades at attractive valuations with a P/E ratio of 4.31, suggesting potential value opportunity for investors looking at the automotive sector.
This news is based on a press release statement and reflects the company’s forward-looking statements, which are subject to risks and uncertainties as outlined in their SEC filings.
In other recent news, China Automotive Systems reported a significant increase in its first-quarter revenue for 2025, reaching $167.1 million, a 19.9% rise from the previous year. Despite this growth, the company’s adjusted earnings per share decreased to $0.24 from $0.27 in the same period last year. The company’s electric power steering products saw a notable sales surge of 54% year-over-year, contributing $73 million and making up 43.7% of the total revenue. Meanwhile, sales of traditional hydraulic steering products experienced a modest growth of 2.3%, totaling $94.1 million. Gross profit rose by 18.8% to $28.6 million, though the gross margin slightly decreased to 17.1% from 17.3% the previous year. Operating income declined by 10.5% to $8.6 million due to increased operating expenses. CEO Qizhou Wu highlighted the pivotal shift towards advanced electric power steering products. The company maintained its full-year revenue guidance of $700 million. Additionally, China Automotive Systems ended the quarter with $89.9 million in cash, cash equivalents, and short-term investments, with net cash from operating activities increasing to $18.1 million from $10.5 million a year ago.
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