Analysis of Net Profit Growth Drivers for Leo Group (002131.SZ)

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Based on the latest data, Leo Group achieved a net profit attributable to shareholders of

in the first three quarters of 2025, representing a year-on-year surge of [0][1]. The company’s stock price also performed strongly, rising by over 180% since the start of the year, with its total market capitalization exceeding RMB 70 billion[2].

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Time Period	Li Auto Investment Gains	Impact on Net Profit Attributable to Shareholders
First Half of 2024	Negative fair value change gains	-RMB 952 million
First Half of 2025	Gains recognized from holding and disposal	+RMB 207 million
Year-on-Year Change	Approximately RMB 1.16 billion improvement	Approximately +RMB 1.1 billion impact on net profit

Leo Group invested a total of

in Li Auto’s Series A financing in 2016, acquiring a 11.745% equity stake[3][4]. In 2025, as Li Auto’s stock price rose, the company recognized substantial fair value change gains, directly driving a significant improvement in its performance.

As of the end of the third quarter of 2025, the company’s balance of other non-current financial assets reached

, and financial assets measured at fair value with changes recognized in current profit or loss amounted to [5].

In the first half of 2025, the company’s digital marketing business achieved significant improvements in operational quality:

• Optimized customer structure
  : Continuously phased out low-quality customers and increased the proportion of high-quality customers
• Strengthened credit control system
  : Enhanced accounts receivable management capabilities and improved cash flow
• Improved profitability
  : Transformed from a traditional “traffic intermediary” to an “intelligent solution provider”

The company independently developed the AIGC platform “LEOAIAD” and a full-link AI agent framework, and has completed the construction of a four-tier technology product system consisting of “AI Infrastructure - AI Agent Framework - AI Agent Applications - AI Application Interaction”[6].

The machinery manufacturing business is the company’s “profit-making powerhouse”:

Indicator	Value
First Half of 2025 Revenue	RMB 2.022 billion
Proportion of Total Revenue	20.98%
Gross Profit Margin	25.65%
Product and Service Network	Over 160 countries and regions

The company’s “RPC Series Liquid-cooled Shielded Pumps”, specifically targeted at the intelligent computing center market, combined with AI intelligent transformation, have continuously enhanced product competitiveness[7].

The company’s strategic layout in the AI and liquid cooling sectors is emerging as a new growth engine:

• Liquid cooling business
  : Became a core supplier of liquid cooling pumps for Huawei, holding a 70%-80% market share; products have obtained NVIDIA certification
• Nuclear power business
  : Cooperated with China Nuclear Energy Research Institute to develop large flow-adjustable circulating water pumps for nuclear power plants
• Increased gross profit margin
  : The gross profit margin of liquid cooling pump products exceeds 50% (traditional water pumps only have 10-20%)

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1. Improved cash flow
   : Achieved a net operating cash flow of
   RMB 205 million
   in the first half of 2025, turning from negative to positive[8]
2. Reduced debt burden
   : Interest-bearing liabilities decreased from RMB 3.635 billion to RMB 2.984 billion, a reduction of 17.90%
3. Dividend to boost confidence
   : Proposes to distribute a cash dividend of RMB 0.05 per 10 shares, demonstrating stable operational quality

1. High performance volatility
   : Net profit has shown a “rollercoaster” trend over the past five years – RMB 4.772 billion in 2020 → -RMB 1.019 billion in 2021 → -RMB 440 million in 2022 → RMB 1.966 billion in 2023 → -RMB 259 million in 2024[9]
2. High reliance on investments
   : A significant proportion of net profit comes from investment gains
3. Cash flow pressure
   : Net operating cash flow was negative for three consecutive years from 2022 to 2024
4. High proportion of short-term debt
   : Short-term debt accounted for 89.84% of total debt at the end of 2024

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Indicator	Value
Current Stock Price	RMB 10.40
Market Capitalization	RMB 70.43 billion
P/E (TTM)	138.06x
P/B	5.10x
ROE	3.74%
12-Month Gain	173.68%

The company currently has a high valuation, with a P/E ratio of 138x, mainly driven by expectations for AI concepts and its liquid cooling business[10].

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The main drivers of Leo Group’s 469% net profit growth are:

1. Reversal of investment gains from Li Auto
   (the largest contributor, with a year-on-year improvement of approximately RMB 1.1 billion)
2. Improved profitability of the digital marketing business
   (structural improvements brought by AI transformation)
3. Stable contributions from the machinery manufacturing business
   (supported by high gross profit margin businesses)
4. New growth driver from the liquid cooling business
   (high-margin products bring growth potential)

The company’s performance is highly dependent on fair value changes of investments, and the profitability of its core businesses still needs further verification. Investors need to pay attention to:

• The impact of Li Auto’s stock price fluctuations on the company’s performance
• Whether the AI transformation can be converted into sustained business growth
• The progress of order fulfillment for the liquid cooling business

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[0] Jinling AI Brokerage API Data
[1] Securities Times Network - “Leo Group: Net Profit Attributable to Shareholders Turns Profitable in First Three Quarters” (https://stcn.com/article/detail/3427215.html)
[2] Fukai Finance - “Leo Group Creates New History” (https://caifuhao.eastmoney.com/news/20260116075530197786040)
[3] Sina Finance - “Leo Group’s AI Application Concept Soars” (https://finance.sina.com.cn/wm/2026-01-14/doc-inhhhtei4869030.shtml)
[4] Futu News - “Leo Group Boldly Enters GEO” (https://news.futunn.com/post/67391372)
[5] Eastmoney - Daily Announcements (https://finance.eastmoney.com/a/202601153620855973.html)
[6] Shanghai Securities News - Leo Group Semi-Annual Performance Forecast (https://paper.cnstock.com/html/2025-07/15/content_2094343.htm)
[7] Caifuhao - “Leo Group Focuses on Liquid Cooling + AI + SpaceX” (https://caifuhao.eastmoney.com/news/20260118000428393764890)
[8] Securities Times Network - “Net Profit Attributable to Shareholders Rises 164% and Turns Profitable” (https://www.stcn.com/article/detail/3295334.html)
[9] 21st Century Business Herald - Important Evening Announcements (https://www.21jingji.com/article/20260115/herald/c4d453ad09708507c41e57403621452b.html)
[10] Jinling AI Company Profile Data