"Increase revenue without increasing profit," Top Group's strategic restructuring triggers growing pains

In 2025, Top Group (601689.SH) reported operating revenue of 29.58 billion yuan, up 11.21% year over year; net profit attributable to shareholders was 2.779 billion yuan, down 7.38% year over year. This is the first time since 2020 that the company’s net profit attributable to shareholders has declined year over year, reflecting increased revenue without increased profit. So, how can it break the deadlock?

In addition to optimizing day-to-day operations to strengthen its core fundamentals, Top Group is currently placing even greater focus on strategic adjustments. The company recently plans to issue H-share stocks and list on the Hong Kong Stock Exchange—this is also one of the key strategic initiatives to advance its internationalization strategy and expand overseas production capacity.

Its deeper strategic focus is still on concentrating on the transformation and upgrading of the industries, for example, deploying cutting-edge industries such as humanoid robots.

Tier0.5-level model

Top Group, founded in 1983, is headquartered in Ningbo. After more than 40 years of deep involvement in the automotive industry, it is a platform-based auto parts enterprise mainly dedicated to R&D and manufacturing in areas such as automotive powertrain and chassis systems, trim systems, and intelligent driving systems.

Looking back at its development path, it can be seen that the company’s size leap mainly went through three key stages.

First stage: seize the localization dividend from joint-venture automakers and enter the supply chains of well-known automakers such as FAW Volkswagen and SAIC-GM;

Second stage: expand the product lines, improve the product matrix, and actively expand to more customers by leveraging platform-based advantages;

Third stage: seize opportunities from the rise of independent brands and the wave of automotive electrification, build deep cooperation relationships with core customers, and thereby accelerate its scale advantages.

Today, Top Group already has 8 major product series in the automotive sector, such as automotive NVH damping systems, interior and exterior trim systems, vehicle lightweighting, intelligent cockpit components, thermal management systems, chassis systems, air suspension systems, and intelligent driving systems.

Public information shows that the multi-product line layout in the automotive sector has driven Top Group’s per-vehicle supporting amount to keep rising. When the company listed in 2015, its per-vehicle supporting value was around 300-500 yuan; now, the per-vehicle supporting amount has increased to around 30,000 yuan.

Moreover, Top Group has already built solid cooperative relationships with many well-known domestic and international automakers, including Tesla, BYD, Huawei-Seres, Geely, and others. In addition, the Tier0.5-level supplier cooperation model implemented by the company can help automakers improve efficiency and reduce costs, aligning with current development needs in the automotive industry, and it has also earned recognition and praise from customers—laying a foundation for future supporting cooperation at the scale of millions of vehicles.

When mentioning the Tier0.5-level cooperation model, Tesla is undoubtedly the most successful example of Top Group’s execution of this strategy.

In 2016, Top Group entered Tesla’s new energy vehicle supply chain and provided lightweight chassis structural components for Model 3. With Tesla’s Shanghai Gigafactory completed and put into operation in 2019, local supporting demand was rapidly released. Top Group’s order scale achieved leapfrog growth, and the scope of cooperation also expanded from individual components to more integrated systems. Going forward, the two sides continued to deepen cooperation. The cooperation model upgraded from the traditional Tier1 to the Tier0.5 model—meaning deep participation in vehicle design and providing modular solutions. This makes Top Group’s position in Tesla’s supply chain difficult to replace in a simple way.

Tight integration with Tesla has driven rapid growth in the company’s operating revenue. Tesla’s contribution to Top Group’s revenue also rose from initially less than 5% to over 30%, becoming the company’s largest customer.

Benefiting from the increase in per-vehicle value and the continued ramp-up of core strategic customers, in recent years Top Group’s operating revenue has achieved relatively rapid growth. Its operating revenue increased from 6.511 billion yuan in 2020 to 26.6 billion yuan in 2024—about a fourfold increase. At the same time, the company’s net profit attributable to shareholders increased from 6.3 billion yuan in 2020 to 30 billion yuan in 2024—nearly a fivefold increase.

In 2025, the company’s operating revenue was 29.58 billion yuan, up 11.21% year over year; net profit attributable to shareholders was 2.779 billion yuan, down 7.38% year over year. From the perspective of product structure, revenue from interior functional parts was 9.672 billion yuan, chassis system revenue was 8.722 billion yuan, shock absorber revenue was 4.256 billion yuan, and automotive electronics revenue was 2.769 billion yuan; the contributions to revenue were 32.70%, 29.49%, 14.39%, and 9.36%, respectively.

It is worth noting that in 2025, Top Group’s operating revenue still maintained an upward growth trend, reflecting the company’s solid results in market expansion and product sales. However, while revenue scale expanded, the company’s profitability and profit level showed signs of decline, suggesting that the company may face certain challenges in areas such as efficiency and market competition pressure.

From the stage Top Group is currently in, the financial performance of “increased revenue without increased profit” is essentially a phase of cyclical pain that the company inevitably has to go through and endure during a deep strategic transformation and the rebuilding of its business model.

This process is the cost the company must pay in order to pursue longer-term and healthier development, and it is a common transitional characteristic during strategic transformation. So, as a leading enterprise in China’s automotive parts industry, what major strategic transformations is Top Group promoting?

Three major new strategic focuses

In recent years, while continuously strengthening its core automotive businesses, Top Group has consciously launched forward-looking and diversified strategic planning.

As shown in Figure 1, relying on its existing capabilities along the automotive industrial chain as the foundation and springboard, the company steadily extends its business into the humanoid robot field. At the same time, it seizes opportunities arising from the development of data centers and high-performance computing, and actively expands in the key track of AI liquid cooling. In addition, based on its deep accumulation in precision manufacturing and materials, the company is further moving into the more challenging aerospace technology sector.

At present, the humanoid robot strategy is arguably the top priority, while AI liquid cooling and aerospace technology come next.

As early as 2022, Top Group had already clearly laid out related businesses for key components of humanoid robots; in 2023, the company established an independent management structure, allocated professional teams and integrated resources across the group to begin focusing on its robot business; in 2024, the production lines for robot electric drive systems were officially put into operation; in 2025, it began a platform-based product layout.

In just a few years, the company’s robot business has achieved phased results. For example, in the robot actuator business, it has in-house developed capabilities for various types of motors such as permanent magnet servo motors and frameless motors; it has experience integrating motors, reduction mechanisms, and controllers; it has precision mechanical processing capabilities; and it has the ability to coordinate various R&D resources and testing resources.

In addition, Top Group is also actively deploying robot component parts such as torso structural components, sensors, foot shock absorbers, and electronic flexible skins, further strengthening the company’s platform-based product layout in the robot business.

Specifically, the key strategy Top Group adopts in the humanoid robot field is: bind core customers and prioritize capacity ahead of time.

In binding core customers, the company deeply partners with the industry leader Tesla, and simultaneously expands customers in the domestic supply chain (such as Xpeng and Xiaomi), while taking equity in Leju Robotics. Recently, Tesla’s Optimus V3 entered its product unveiling window, and it plans to start large-scale mass production within the year. As a Tier 1 supplier for Tesla’s humanoid robots, Top Group will directly benefit from the mass-production rollout of leading humanoid robot players.

In terms of prioritizing capacity ahead of time, Top Group has carried out forward-looking capacity planning. It has already planned to build a Ningbo production base for core robot components, with a total investment of about 5 billion yuan. The base’s two electric drive system production lines were officially put into production in January 2024, with annual capacity of 300,000 sets of electric drive actuators, and bulk supply has already been achieved. If core customers accelerate large-scale mass production of humanoid robots, then to effectively avoid trade barriers, Top Group’s production bases in Thailand and Mexico can quickly take on relevant robot component production tasks.

The core logic of this strategy is that, by leveraging deep binding with top customers to ensure order certainty, and by investing in large-scale capacity ahead of time to build delivery barriers early during the industry’s initial explosive growth, it consolidates its core position in the supply chain.

Overall, the real breakout of Top Group’s humanoid robot core growth will depend on whether the end products can achieve large-scale commercial mass production.

Regarding the AI liquid cooling strategy, traditional air-cooling technology can no longer meet the heat dissipation needs of high-performance HPC computing today. Liquid cooling, with its significant advantages such as efficient heat dissipation, low energy consumption, and low noise, has become the inevitable solution to the current heat dissipation challenges. The industry related to liquid-cooled servers has a huge market space.

Facing the rapid development opportunities in the AI liquid cooling server industry, Top Group, relying on its accumulated technologies and experience in areas such as thermal management and IBS, quickly tackles key technical research and develops liquid-cooling pump products, temperature and pressure sensors, various flow control valves, gas-liquid separators, and liquid-cooling flow guide plates, among others.

The company has already provided related products to Huawei, Client A, NVIDIA, META, as well as other enterprise customers and data center providers, and it has gained recognition from the market.

As for its strategic layout in aerospace technology, Top Group wholly established Ningbo Top Aerospace Technology Co., Ltd., with registered capital of 100 million yuan. Its business scope covers core aerospace fields such as spacecraft manufacturing and rocket engine R&D.

From the automotive parts industry to the aerospace industry, Top Group’s cross-industry move may appear to be extremely broad, but in reality it follows a clear logic of technical migration. For example, precision casting technology used in automotive chassis can be transferred to the manufacturing of rocket body structures; the engineering experience in material mechanics accumulated from shock absorption systems can support the development of high-temperature materials for rocket engine research. The precision manufacturing and systems integration capabilities of the automotive industry fully have the potential to extend into the aerospace domain.

With the entry into aerospace technology, Top Group has formed a layout across three technology tracks: “humanoid robots + AI liquid cooling + commercial aerospace.” On the surface, this looks like an expansion of a diversified strategy, but in fact it is a systematic shift of capabilities based on its long-term core technologies, engineering platforms, and large-scale production capacity in the automotive sector—moving into high-potential areas.

For Top Group, this not only reduces dependence on a single automotive track, but also, through technology reuse and synergy, strengthens the linkage among its different business segments, while controlling risks and creating more room with flexibility for long-term growth.

Source: Managerial Network

Editor: Cao Sheng

Proofreader: Zhi Yan