Zhejiang Shibao Co Ltd: A Momentum‑Driven Surge in the L3 Autonomous‑Driving Landscape
Zhejiang Shibao Co Ltd (HK Stock Exchange: SZ 002703) has accelerated from a niche steering‑system supplier into a high‑growth play driven by the commercialization of Level‑3 (L3) autonomous‑driving. The company’s focus on hydraulic power recirculating ball steering, steering boosters, rack‑and‑pinion assemblies and control valves positions it at the core of the rapidly expanding smart‑vehicle ecosystem.
1. Catalysts Behind the Recent Rally
L3 Autonomous‑Driving Momentum – In late December, the market reacted sharply to a series of L3‑level policy releases and the entry of new commercial pilots. Shibao’s technology, which integrates with “smart chassis” and “line‑control steering” systems, directly supports these pilots. The company’s stock traded an “8‑day, 5‑board” rally, a rare technical feat that underscores institutional conviction.
Strong Institutional Support – Deep‑stock‑trading (深股通) data from 24 December shows that Shibao appeared on the top 17龙虎榜 (trading‑volume leaders). The net‑sell figure for Shibao was 10 460 63 000 CNY, yet the overall trend in the market was bullish, and the company was one of the few that attracted deep‑market capital. Subsequent net‑buy activity by brokerage “营业部” on 24 December, where Shibao was among the top five net‑buyers, further confirms that domestic funds are re‑allocating into the firm.
Sectoral Flow of Capital – Across the Chinese equity market, the latest data shows a pronounced flow of “主力资金” into the power‑equipment and automotive‑components sectors. Shibao, a leading steering‑system maker, benefits from this broader structural shift. Even though the overall A‑share market saw a net outflow of 242 billion CNY on 26 December, the steering‑component niche received a net inflow, supporting the firm’s valuation.
2. Fundamental Snapshot
| Item | Value |
|---|---|
| Market Capitalisation (2025‑12‑24) | 4.68 billion HKD |
| 52‑week High (2025‑12‑24) | 21.22 HKD |
| 52‑week Low (2025‑04‑08) | 2.49 HKD |
| Close Price (2025‑12‑24) | 21.60 HKD |
| P/E Ratio | 86.08 |
| Primary Products | Hydraulic power steering, steering boosters, rack‑and‑pinion, control valves |
| Industry | Automobile Components (Steering Systems) |
The company’s P/E ratio of 86.08 reflects market expectations that Shibao will become a key supplier to OEMs as L3 and higher autonomy levels roll out worldwide. The current price sits near the 52‑week high, signalling that the market has already priced in a significant share of the upside.
3. Outlook for 2026 and Beyond
The commercialization of Level‑3 autonomous vehicles is expected to accelerate through 2026, driven by regulatory approvals and OEM commitments in both China and export markets. Shibao’s established production lines and its portfolio of hydraulic steering solutions position it to capture a meaningful share of the aftermarket and new‑vehicle segments.
Key drivers include:
- OEM Partnerships – Shibao’s existing contracts with several mid‑tier Chinese automakers provide a platform for scaling. New agreements with flagship brands are likely to materialise as L3 platforms mature.
- Technology Integration – The company’s steering modules are compatible with advanced driver‑assist systems (ADAS) and upcoming “full‑self‑driving” (FSD) architectures, offering cross‑product synergies.
- Cost Efficiency – With a current P/E of 86, a modest earnings growth of 20–25 % per annum could support a valuation multiple exceeding 150 × in 2028, assuming continued structural demand.
4. Risks to Monitor
- Regulatory Headwinds – Delays in autonomous‑vehicle approvals or stricter safety mandates could compress the expected demand curve.
- Supply‑Chain Constraints – The steering‑component sector is sensitive to raw‑material price swings and geopolitical tensions that could disrupt component supply.
- Competitive Pressure – Larger automotive suppliers are expanding their steering‑system offerings; Shibao will need to maintain cost competitiveness and innovation momentum.
5. Conclusion
Zhejiang Shibao Co Ltd has transitioned from a specialized steering‑system manufacturer to a pivotal player in the autonomous‑vehicle supply chain. Its recent 8‑day, 5‑board rally reflects strong institutional confidence and a macro‑environment favouring autonomous technology. With a solid product base, robust institutional interest, and a clear pathway to OEM integration, Shibao is well‑positioned to ride the wave of L3 autonomous‑driving commercialization over the next several years.
