【AI+1286】Yingpu Precision's sales increased by approximately 15% this year. Large horsepower engines benefited from the AI boom, with sales rising by 40%.

Benefiting from the AI boom and huge demand for electricity, Yingpu Precision (01286) saw a 43% year-over-year increase in sales of high-power engines in the end-market by 2025, accounting for about 22% of the group’s total revenue for the year. Group Chairman and CEO Lu Ruibo revealed that approximately 50% to 60% of current high-power engine sales are driven by AI-related demand, compared to only 10% three years ago. Over the next 3 to 5 years, it is expected that AI demand could drive the growth potential of the high-power engine end-market by 20% to 50%.

Group CFO Ye Hui-rong stated that based on this month’s order situation, the group is expected to achieve double-digit year-over-year growth in sales this year. Lu Ruibo added that the growth in the next two to three years could exceed 15%.

AI-Related Hardware and High-Power Engines Show Clear Growth Prospects

High-power engines are key components for AI data center distributed generators. Lu Ruibo pointed out that over the past year, the main markets for high-power engines have been China and the United States. Globally, the group’s market share in engine cylinder blocks is approximately 20% to 25%.

Lu Ruibo noted that the energy market demand driven by AI will also increase the demand for high-power engines, as they will be used in natural gas power generation. He stated that the growth outlook for the high-power engine end-market before 2030 is certain.

Mexico Plant Still Reported Losses Last Year, Aiming to Break Even This Year; Sales Expected to Match Last Year’s Global Total After Phase Three Completion

The group expects capital expenditure of HKD 850 million in 2026, with over three-quarters allocated to the still-expanding Mexico SLP (San Luis Potosí) plant for Phase II and its living facilities. The remaining funds will be invested in Chinese factories. Lu Ruibo said that the Mexico SLP plant is the group’s largest investment project in history, with a total investment of HKD 2.5 billion so far.

Although the factory reported losses last year, Lu Ruibo expressed optimism about the outlook and aims to break even on operating profit this year. He further stated that after completing the first three phases of the Mexico plant, the sales volume of the plant will be roughly equal to the group’s total global sales last year.

New Cycle in Medical End-Market to Be Evident by 2027

In addition to AI-related business, the group’s revenue in the medical end-market is expected to grow 55% year-over-year by 2025, mainly benefiting from development work for surgical robots during 2023-2024. Lu Ruibo said that with a new development cycle starting from the second half of 2025 to 2026, the related achievements will be reflected in the growth of the medical end-market from 2027 to 2028.