Motor veteran Broad-Ocean drives towards new image as NEV champion

The company is seeking a Hong Kong listing, reporting its profit doubled in the last three years on rising sales of its auto-tech, from garage door remotes to EV powertrains

Key Takeaways:

• IPO candidate Broad-Ocean Motor is ranked second globally by market share for HVAC motors, and holds the top position in China and North America
• The car technology company’s Shenzhen-listed shares are up 130% in the last year, giving it a market cap of about 28.5 billion yuan

By Lee Shih Ta

Imagine your garage door remote control, EV powertrain, and air conditioning compressor are all made by the same manufacturer: Zhong Shan Broad-Ocean Motor Co. Ltd.（002249.SZ). The Chinese auto propulsion technology specialist may hardly be a household name, but it’s the important motor powering the essential needs for many car owners.

Now, after more than 15 years of trading on the Shenzhen Stock Exchange, the company has applied for a second listing in Hong Kong, joining a growing queue of Shenzhen- and Shanghai-listed Chinese companies to make such second listings to raise their global profiles.

Founded in 2000 as a conventional motor technology maker, Broad-Ocean now spans a wide range of car propulsion essentials, including heating, ventilation and air conditioning (HVAC), automotive propulsion and hydrogen fuel cell systems. Third-party data in its listing document, filed last week, shows it was the world’s second largest supplier of HVAC electric drive solutions in terms of revenue last year, and is the leader across China and North America.

Competing on two fronts

Broad-Ocean’s business is built on two pillars: Its building and home appliance motor unit generated 7.08 billion yuan ($995 million) in 2024, making it the company’s biggest revenue source with 58.4% of sales. That unit was led by HVAC motors, which accounted for over 55% of segment revenue and feature compressors, garage-door openers and ventilation units.

The company’s other pillar, its powertrain and key component arm, booked 5.02 billion yuan, or 41.5% of the total last year. Its products included legacy engine starters and alternators, at 25.8% of the company’s overall total, and newer drivetrains and components for electric vehicles (EV) and hybrids, which accounted for 15.7%.

Broad-Ocean’s strategy rests on two main pillars. One of those is markets that require steady supplies of traditional HVAC motors and components, providing stable cash flow for the company. The other is focused on rapidly rising demand for new energy vehicles (NEVs), which is a key growth driver for the future.

As it moves into higher-margin NEV products and controls costs, the company’s profits have been growing faster than its overall revenue. Broad-Ocean’s revenue grew at a modest annual rate of just 5% from 10.93 billion yuan in 2022 to 12.11 billion yuan last year. Yet its net income accelerated by a much faster annual average of 44% during the period to 888 million yuan. The figure continued its brisk growth this year, rising 34.6% year-on-year to 602 million yuan in the first half of 2025.

That faster profit growth is being powered by rising margins. The company’s gross margin grew from 19.3% in 2022 to 22.2% last year, while its net margin jumped from 3.9% to 7.5% over that time. The company’s overseas business generates generally higher gross margins than that in China, and has remained stable at about 45% of total revenue over the last three years.

Ahead of the curve in global expansion

Unlike many Chinese manufacturers, which use their home country as their main manufacturing base to service customers around the globe, Broad-Ocean’s geographic footprint looks much more international. The company has factories in the U.S., Mexico, Britain, Thailand, Vietnam, Morocco and elsewhere — with a total of 15 manufacturing facilities as of this year. It also has R&D centers in Detroit, Chicago and London.

The company was also a relatively early mover in overseas M&A and other tie-ups. It acquired U.S. vehicle parts maker Prestolite, a company with more than a century of history, in 2015, and later used that company to form its Tata Prestolite joint venture with India’s Tata Motors (TATAMOTORS.BO). Such connections enhance its international influence in commercial vehicle parts, giving it the resources and relationships to serve global automakers and HVAC customers locally and providing it with geographic flexibility to deal with rising geopolitical tensions and trade barriers.

But the company’s story isn’t without shortcomings. Its 5% annual sales growth over the last three years is well behind many of its peers, especially in the roaring EV auto-tech segment, reflecting potential bottlenecks that could constrain its future growth.

A second threat is concentration risk, particularly its reliance on traditional internal combustion engine technologies that are rapidly losing ground to NEVs. Legacy starters and alternators contributed 25.8% of the company’s revenue last year, compared with just 15.7% of its revenue coming from EV powertrains and key components. The company also looks less aggressive in terms of R&D, with just 4.3% of revenue allocated for such spending last year, trailing Japanese electric motor maker Nidec Corp’s (6594.T) 6% benchmark.

Despite any potential shortcomings, investors are broadly bullish on Broad-Ocean. The company’s Shenzhen-listed stock is up about 130% over the past year, and the shares jumped to a 52-week high of 11.69 yuan on the first trading day after it submitted its Hong Kong listing application. That values the company at about 28.5 billion yuan, giving it a price-to-earnings (P/E) ratio of 27.2 times — much lower than peer Wolong Electric Drive’s (600580.SH) 85 times, but higher than Nidec’s 18.7 times.

Strategically speaking, a Hong Kong listing will provide Broad-Ocean with more direct access to overseas capital and enhance its international brand and governance image. The timing looks aimed at capitalizing on one of the hottest Hong Kong IPO markets in years, with new energy and tech companies leading the fundraising charge.

NEV and related manufacturing companies have become hot commodities in the current market, and strong investor interest in such listings could create fertile ground for Broad-Ocean’s IPO plan. That could work to the company’s advantage in the current market. But longer-term success will depend on effectively telling – and executing – its “new energy + global supply chain” story.

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