The field of humanoid robots has witnessed remarkable advancements in recent years, marking what many industry experts believe could be a pivotal moment in technological historyAs we approach 2025, the year is anticipated to herald the mass production of humanoid robots, a milestone that could transform various sectors across the globeA compelling case in point is Tesla, which managed to evolve its humanoid robot, known as Optimus, from its first generation to its second in a mere nine monthsThis rapid iteration not only highlights the speed of innovation but also underscores the burgeoning potential for commercial applications of humanoid robotics.

According to market projections, the global humanoid robot market is expected to grow exponentially, with estimates suggesting it could reach approximately $28.66 billion by 2032. This translates to an impressive compound annual growth rate (CAGR) of 33.28% over the next decadeWhile opinions may vary regarding the future of humanoid robots, it is undeniable that they represent a captivating narrative of technological progressionThis dynamic domain is likely to unveil a continuous stream of investment opportunities, offering fresh prospects for companies within the supply chain.

At the heart of achieving complex movements in humanoid robots lies the actuator, a critical component responsible for facilitating articulationNotably, actuators constitute the lion's share of the overall value in humanoid robots, accounting for an astounding 78% of their total worthTo break it down further, rotary actuators alone account for 42%, while linear actuators make up 36%. Key players in the actuator market include top-tier companies focusing on motors, reducers, sensors, and rolling ball screws—elements crucial for the functionality of these robots.

Among these components, the planetary rolling screw standouts as the most essential, efficiently converting rotational motion into linear movementHowever, the production of such intricate machinery presents formidable technological challenges and entry barriers that have limited competition

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In China, only a handful of companies, including Best and Beite Technology, have managed to make headway in this highly specialized field.

Best, in particular, has established itself as a core supplier for major players such as Tesla and Huawei with its advanced planetary rolling screw productsThe company, originally rooted in the manufacturing of tooling fixtures, has successfully pivoted towards the burgeoning sphere of new energy vehicles since 2022, diligently forging a second growth curve.

As of the first half of 2024, automotive parts comprised 90.2% of Best's revenue, showcasing its deep integration into the auto sectorThe company has diversified its offerings across electric, hydrogen, and hybrid energy technologies, which has enabled sustainable and impressive growth metricsFrom 2019 to 2023, Best’s revenue rose from approximately 802 million yuan to 1.343 billion yuan, while its net profit grew from 168 million yuan to 264 million yuan, primarily driven by the sales increase of automotive parts.

Remarkably, Best not only exhibits high profitability but also impressive stability in its earningsThe company maintains a gross margin of around 35%, indicative of the technical superiority of its productsEven more extraordinary is its net profit margin, hovering around 20%, a rarity in the manufacturing industryAdditionally, Best’s discernibly robust cash flow quality further reinforces its financial healthFrom 2019 to the first three quarters of 2024, the company showed a liquidity ratio and quick ratio minimums of 2.7 and 2.03 respectively, indicating a reliable ability to cover short-term liabilities.

Moreover, Best's operating cash flow has consistently surpassed net profit, affirming that the company is not merely generating "paper profits." Its net cash ratio has remained above 1 during this time frame, setting it apart as an exceptional enterpriseThis suggests that not only is Best realizing profit, but that these profits are firmly backed by actual cash inflow, providing substantial financial leverage for future transformations.

While the company has successfully navigated its second growth curve in new energy, Best remains ambitious and is intent on pursuing a third growth avenue

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By leveraging its advanced processing technologies, it seeks to expand into planetary rolling screws, which have significant applications in industrial machinery and humanoid robots.

In an exciting development shared with investors on December 11, Best outlined plans to comprehensively develop linear rolling functional components aimed at sectors such as industrial machinery and humanoid roboticsThe firm is poised to make substantial strides in these areas.

Currently, Best has secured initial orders for its C0-level screw assemblies, projecting to have a supply capability for its planetary rolling screws by 2025. In the industrial mother machine sector, the company has successfully signed mass rolling delivery contracts with renowned machine tool manufacturers in the third quarter of 2024, marking the achievement of their first batch orders.

In the realm of new energy vehicles, Best has completed preliminary customer sampling for its ball screw assemblies utilized in EMB brake systemsNoteworthy, in the humanoid robotics division, ongoing enhancements to the planetary rolling screw technology are on track, and collaborative efforts in developing domestically produced equipment are progressing efficiently, laying a solid foundation for next year's mass production capabilities.

Significantly, Best established a wholly-owned subsidiary, Yuhua Precision Machinery, in 2022 to focus on ball screw business, importing about 300 sets of advanced equipment—making it the only publicly listed company in China with such a vast stockpile of screw-making machinery.

Looking towards the future, the prospects for Yuhua Precision Machinery in the industrial mother machine and humanoid robot sectors are promisingThis positions Best favorably for its medium- to long-term third growth curveMoreover, a strategic collaboration with Sanhua Intelligent Control to supply rolling screw products further solidifies Best’s competitive stance within the humanoid robotics supply chain.

Interestingly, a seldom-highlighted player in the rolling screw space is Hengli Hydraulic, known for its hydraulic cylinders

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