Jiangsu Tongli Risheng Machinery Co., Ltd. (605286.SS): BCG Matrix [Dec-2025 Updated]

Jiangsu Tongli Risheng is balancing a decisive pivot-high-growth 'stars' in new-energy vehicle components and energy storage are poised to drive future value, funded by cash-rich elevator drive systems and metal components that remain steady earners; meanwhile, smart IoT and overseas plant development are high-potential but capital-hungry question marks requiring careful investment choices, and legacy agricultural and low-speed hydraulic lines are fading dogs prime for divestment-read on to see how management should reallocate cash and risk to accelerate the transformation.

Jiangsu Tongli Risheng Machinery Co., Ltd. (605286.SS) - BCG Matrix Analysis: Stars

Stars

New energy vehicle component manufacturing expansion has become a core 'Star' for Tongli Risheng. In H1 2025 the NEV-related segment contributed 32.07% of consolidated revenue. Domestic NEV penetration reached 51.6% in October 2025, with year-on-year vehicle production growth of 33.1%, creating a high-growth end-market for precision metal parts and lightweight structural components. The company increased capital expenditure in 2024-H1 2025 to scale high-precision stamping, CNC machining and laser welding lines, with disclosed incremental capex of RMB 180-230 million aimed at Tier-1 supplier partnerships. Reported gross margin expansion in NEV components is estimated at 6-9 percentage points above legacy machinery margins, driven by higher ASPs, design premiums and vertical integration of subassembly processes.

Energy storage system integration and development sits alongside NEV components as a parallel Star under the New Energy Business segment. Global energy storage capacity additions were projected to grow ~23% in 2025; China's storage market valuation is cited at approximately USD 223.3 billion. Tongli leverages existing metal fabrication capabilities to supply integrated enclosures, thermal management skids and specialized industrial storage racks. The company targets a double-digit share in specialized racks by end-2025, aiming for 10-15% in selected provincial tenders. Government subsidy support and favorable tariff/policy frameworks enhance project-level IRR and reduce payback horizons.

Key quantitative indicators for the Star businesses are summarized below.

Strategic and operational implications for maintaining Star status:

• Increase targeted R&D and process automation investments to improve yield and reduce unit cost for high-precision NEV parts; maintain capex intensity at levels supporting 20-30% segment revenue growth year-over-year.
• Deepen Tier-1 supplier integrations through long-term contracts and co-development agreements to secure stable order flow and capture higher upstream value.
• Scale modular production lines and introduce flexible cell manufacturing to serve both NEV and energy storage orders, reducing changeover loss and improving capacity utilization.
• Pursue government-backed projects and subsidy-eligible tenders for energy storage enclosures to accelerate utilization of newly commissioned fabrication capacity.
• Implement product-costing analytics and value-based pricing for bespoke storage racks and thermal systems to protect margin premium and justify higher ASPs.
• Monitor component-level inventory and working capital tied to large-scale storage projects; optimize payment terms and milestone invoicing to preserve cash conversion.

Operational KPIs to track ongoing Star performance include quarterly revenue contribution by product line, segment gross margin, utilization rate of NEV-dedicated lines, number and value of long-term Tier-1 contracts signed, backlog for storage projects (RMB), and capex-to-sales ratio for new energy expansion.

Jiangsu Tongli Risheng Machinery Co., Ltd. (605286.SS) - BCG Matrix Analysis: Cash Cows

Cash Cows

Escalator and elevator drive systems remain the company's principal cash cow, generating the majority of free cash flow and sustaining corporate investment programs. The elevator segment accounted for 69.13% of total revenue as of mid-2025, and the escalator/elevator drive product line peaked at 2.526 billion CNY in annual revenue by late 2024. The global elevator parts market is expanding at an estimated 9.28% CAGR, while Tongli Risheng's established domestic supply chain and long-term OEM contracts support stable unit volumes and pricing power. Standardized component manufacturing yields predictable operating margins and low incremental capital expenditure needs to maintain capacity.

Key financial and operational metrics for the escalator and elevator drive segment:

Operational characteristics and strategic role of the escalator/elevator drive cash cow:

• Reliable recurring revenue from maintenance and replacement cycles in mature urban installations.
• Low incremental production investment due to mature process technology and high utilization of Danyang facilities.
• Predictable margins enabling cross-subsidization of higher-risk segments (e.g., new energy, smart elevator sensors).
• Exposure to cyclical real estate demand mitigated by long service life and aftermarket parts demand.

Elevator metal materials and car components represent a secondary cash cow within the passenger elevator value chain, supplying structural and decorative parts that captured significant share in a market where passenger elevator end-use accounted for roughly 82% of application revenue in 2024. Manufacturing scale in Danyang delivers unit cost advantages and a robust domestic niche share for shaft and car components despite broader real estate sector deceleration.

Performance snapshot for elevator metal materials and car components:

Strategic actions and resource allocation linked to these cash cow segments:

• Allocate majority of operating cash flow from escalator/elevator drives to finance R&D in smart elevator sensors and new energy initiatives without external financing.
• Maintain modest maintenance CAPEX to preserve plant efficiencies while deferring large-scale expansion until demand signals improve.
• Protect market position through long-term OEM supply agreements and aftermarket service contracts to secure recurring revenue streams.
• Use manufacturing scale in metal components to negotiate supplier terms and compress cycle times, preserving margin in a slower end-market.

Jiangsu Tongli Risheng Machinery Co., Ltd. (605286.SS) - BCG Matrix Analysis: Question Marks

Dogs - Question Marks

Smart elevator IoT and sensor systems: The company is actively exploring integration of IoT sensors, edge computing and AI-driven predictive maintenance tools for elevator and escalator fleets. Global market forecasts indicate a 12.1% CAGR for smart building control and predictive maintenance technologies through 2032. Tongli Risheng's current revenue from advanced digital elevator solutions is below 5% of its total elevator segment as of Q4 2025, and its installed base of connected units is estimated at 3-4% of the company's total fleet. Relative market share versus specialized tech integrators and global OEMs such as Schindler, KONE and Otis is low; proprietary software and cloud-service competencies are underdeveloped.

Overseas new energy power plant development: This nascent unit targets development of solar, wind and battery storage plants in emerging markets. The segment is characterized by high CAPEX, long construction-to-operation timelines (typically 18-36 months for grid connection) and exposure to geopolitical and regulatory risk. China's NEV and energy storage exports grew 90.4% in 2025, illustrating supply-chain momentum, but Tongli Risheng's market share in international plant development is currently negligible (estimated <0.1% global share) and ROI metrics remain unproven compared to its core domestic manufacturing operations.

• Strategic investment requirements for IoT unit: allocate RMB 200-700 million over 2-4 years to build SaaS platform, cybersecurity, AI models, and field sensor supply chain; target increasing digital revenue to 15-20% of elevator segment by 2028.
• Operational milestones for overseas power development: secure 2-4 off-take agreements or PPAs in target markets within 24 months; commit initial equity of USD 50-200 million and partner with local EPC/IPP firms to limit deployment risk.
• Financial sensitivity: a 20% delay in commercial adoption of IoT services reduces the internal rate of return (IRR) on platform investments by ~6-10 percentage points; a single large project cancellation in overseas development can reduce segment-level ROIC by >3 percentage points in early years.

Risks and required capabilities: Success in both Question Mark units depends on rapid capability building. For IoT systems, core needs are software engineering, cloud ops, data science and cybersecurity certifications; projected incremental gross margin on digital services could exceed 40% if scaled. For overseas plant development, needs include project financing expertise, local regulatory compliance teams, currency hedging and EPC partnerships; target project-level IRR thresholds should exceed 8-12% to justify allocation given long payback.

Recommended strategic options (high level): pursue selective partnerships with global elevator software providers to accelerate product maturity; adopt milestone-based funding for overseas projects with syndication by development banks; set strict go/no-go IRR and PPA thresholds to contain capital exposure; pilot IoT services on core domestic accounts before international roll-out.

Jiangsu Tongli Risheng Machinery Co., Ltd. (605286.SS) - BCG Matrix Analysis: Dogs

Dogs - Traditional agricultural machinery components

Traditional agricultural machinery components represent a legacy product line suffering sustained contraction. Demand has declined at an estimated compound rate of 10.0% per annum since 2022, driven by shifting government subsidy policies and farm mechanization trends favoring integrated electronic systems over low-tech mechanical parts. Revenue from non-core agricultural components fell below 3.0% of consolidated revenue as of December 31, 2025. Operating margins for this segment are effectively zero or negative after accounting for escalating material and legacy labor costs; EBIT margin estimates range from -2.0% to 1.0% in 2024-2025.

Management has curtailed new capital expenditure on this line, redirecting investment toward conversion of assembly capacity for new energy vehicle (NEV) components. Asset retirement and phase-out scenarios are under evaluation; impairment charges of RMB 12-18 million were recorded in the 2024-H1 2025 internal review. Continued operation maintains high fixed overhead absorption needs with diminishing returns.

Key characteristics and risks of the agricultural components Dog segment:

• Highly fragmented low-tech market with intense price competition and minimal product differentiation.
• Exposure to policy changes (subsidies and procurement rules) that materially shift demand.
• High unit cost sensitivity; small order volumes increase per-unit overhead.
• Limited synergies with NEV and high-tech elevator businesses beyond assembly capacity reuse.
• Increasingly likely asset liquidation or controlled phase-out within a 12-36 month horizon unless a strategic buyer emerges.

Dogs - Low-speed hydraulic elevator components

Low-speed hydraulic elevator components have lost relevance amid industry migration to high-speed traction drives and machine-room-less (MRL) systems. In 2024 MRL elevator configurations captured an estimated 38% market share of new installations in China's urban mid- and high-rise segments, while hydraulic systems declined to sub-10% share in major metropolitan projects. Tongli Risheng's sales in this hydraulic category have been effectively flat from 2021-2024, with volume growth at approximately 0-1% annually versus the broader elevator component industry CAGR of 9.4% during 2020-2024.

Maintenance and warranty costs for aging hydraulic inventories stress margins: average lifecycle maintenance cost per installed unit is estimated at RMB 2,400/year, exceeding per-unit gross profit of RMB 1,800 in 2024. The product lifecycle places this category in a low-growth, low-share quadrant, prompting recommendations for divestment to redeploy resources toward Star segments (NEV traction motors, high-speed elevator components).

Operational and strategic implications for hydraulic elevator components:

• Sales stagnation despite overall industry expansion indicates structural obsolescence for hydraulic technology in primary growth segments.
• Rising maintenance burden and warranty liabilities depress segment EBITDA; estimated segment EBITDA margin fell from 6.4% in 2020 to 2.1% in 2024.
• Divestment or targeted carve-out recommended to release factory floor, skilled labor, and working capital for expansion of high-growth NEV and traction motor lines.
• Potential buyers include specialist retrofit/maintenance firms and SMEs serving rural/low-rise markets; expected disposal value is limited (estimated enterprise value RMB 20-35 million) due to asset aging and low margins.