The allure of humanoid robots has intensified, capturing growing interest in both markets and public discourseRecent statistics reveal a nearly 35% surge in humanoid robotics indices over the month leading to February 12, 2025, indicating a burgeoning fascination with this technologyInvestors are particularly captivated by related companies, with some stock prices reflecting exuberant expectationsYet, as profitability remains an uncertain metric for many companies in this space, concerns about potential market bubbles loom large.

Since the rally that started around September 24, 2024, the A-share market in China has witnessed a remarkable rise in the humanoid robot sector, with the index showing an increase of more than 90%. Among the companies attracting capital's keen gaze is Zhejiang Fengli Intelligent Technology Co., Ltd., a prominent supplier of precise reduction gearsBy February 12, 2025, Fengli Intelligent's market capitalization soared to 7.9 billion RMB, boasting a rolling price-to-earnings ratio exceeding 770—numbers that exemplify both the potential and speculative fervor within this evolving industry.

Bai Wenxi, the vice-chairman of the China Enterprise Capital Alliance, expressed caution regarding Fengli Intelligent's high valuationHe noted that while the humanoid robotics industry is poised for significant expansion, the market excitement might be detached from current realities, particularly as investor interest seems low when assessing company performanceShould future growth fall short of optimistic projections or if companies fail to deliver results, volatility could ensue, leading to sizable declines in stock prices and potential issues for investors.

2025 is anticipated to be a pivotal year for global humanoid robotics, marking a major transition from concept to realityWith technological advancements spurred by enterprises like Tesla and Figure, and breakthroughs in artificial intelligence and biomimetic materials, the commercial viability of humanoid robots is accelerating

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In China, the robot market is continuously growing, prompting a marked increase in competition as more players enter this landscape.

A notable cultural event that galvanized public interest was the 2025 CCTV Spring Festival Gala's "Yang BOT" performance, featuring 16 humanoid robots showcasing their dance and musical abilitiesThis spectacle reignited conversations surrounding humanoid robots, catapulting the concept into mainstream discussion and trending topics online.

Forecasts suggest that by 2029, the Chinese market for humanoid robots could balloon to 75 billion RMB, and by 2035, this figure may further swell to 300 billion RMB, projecting a staggering compound annual growth rate of 53.15% from 2025 to 2035. Bai Wenxi emphasizes that the humanoid robot industry is experiencing rapid growthThe anticipated mass production year of 2025 is seen as a critical milestone for the prevalence of humanoid robots in industrial and commercial settings.

The industry landscape reveals a rich tapestry of technological components essential to humanoid robotsThe supply chain includes core parts like motors, sensors, reducers, and lead screws, which play integral roles in the functionality of these machinesCurrently, the cost structure reflects that these components, particularly reducers, account for significant proportions of total manufacturing expenses.

Within the production chain, upstream operations encompass crucial components such as servo systems, gear reducers, sensors, controllers, and software system developmentIn debating the types of reducers, they can be categorized into planetary, harmonic, and RV types, each with distinct technical applications and principles of operationAccording to Eastern Fortune Securities, the global market for precise reducers could reach around 150 billion RMB by 2030, with compound annual growth rates projected at 29% from 2024 to 2030. As it stands, reducers constitute approximately 15% of the costs associated with humanoid robots, with both planetary and harmonic types emerging as leading solutions in the construction of these innovative machines.

Within this nurturing ecosystem, Fengli Intelligent has captured investor admiration due to its strategic investments in the production of precise reducers since 2022—a sector that has propelled the company's stock price nearly 140% over the past year

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The exponential interest in its stock mirrors its pivotal positioning within the rapidly evolving industry.

As Fengli Intelligent hastened its foray into the reducer segment, it witnessed a notable shift in revenue distributionOnce a nascent addition to their operations at just a 9% share, the precise reducer business has now burgeoned into a vital contributor, accounting for 25% of total revenue streams.

When queried recently regarding future directions for the company, Fengli Intelligent’s vice-general manager, Yu Lingjuan, detailed how the current trends lean heavily towards miniaturization, lightweight design, and increased intelligence—all pivotal to advancements in the modern eraProducts such as small modulus gears and precise reducers cater directly to the burgeoning needs of intelligent sectors like smart automotive, home automation, and healthcare innovationsThe company has earmarked its 2023-2024 investments towards the dual realms of robotics and new energy vehicles, indicating a targeted forward-thinking approach.

However, beneath the surface of Fengli Intelligent’s meteoric rise lies a troubling narrative regarding its operational performanceOfficial reports reveal a concerning decline in profits for the company, which first surfaced in 2021. In the years spanning 2021 to 2023, net profits plummeted from 61 million RMB to 24 million RMB, evidencing a troubling downward trajectoryNotably, during the first three quarters of 2024, net profits dropped by 46.56%, totaling approximately 15 million RMB, while the gross profit margin sank to an alarming 14.9%, representing a 21.24% decrease compared to the previous year.

By mid-2024, Fengli Intelligent's revenue streams comprised gears (47.92%), pneumatic tools (25.11%), and precise reducers (24.81%), but the margins associated with precise reducer operations displayed extreme volatilityThe gross profit margin for this segment plummeted from 5.66% in 2022 to a striking -0.12% in 2024, underscoring volatility and potential operational weakness.

Yu Lingjuan addressed the challenges facing Fengli Intelligent, asserting that the company had secured a robust order intake in the fourth quarter due to a 17.16% year-on-year increase in revenue for the third quarter

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