Special Equipment ManufacturingPower System Testing Equipment & Services
Jiangsu Liance Electromechanical Technology Co., Ltd.
江苏联测机电科技股份有限公司
Liance Technology is a leading Chinese provider of intelligent testing equipment and validation services for power systems, serving the new energy vehicle, fuel vehicle, marine, and aerospace sectors. The company specializes in dynamometers, automated test benches, and full-cycle testing solutions, breaking foreign monopolies in high-end aerospace testing equipment.
INVESTMENT RATINGB-GRADE
MARKET CAP (USD)加载中...
EXCHANGESSE
INDUSTRY / SUB-INDUSTRYSpecial Equipment Manufacturing/Power System Testing Equipment & Services
财务信息
2025 FY经营现金流: $15.58M
营业收入 (Revenue)$68.81M
净利润 (Net Income)$12.47M
毛利率 (Gross Margin)41.5%
净利润率 (Net Margin)18.1%
PRO RESEARCH REPORT~2850 words
EXECUTIVE SUMMARY / 研报摘要
Liance Technology stands as a unique asset in China's industrial testing landscape, being the only domestic supplier of high-speed hydraulic dynamometers for aero-engine testing. While its core business in new energy vehicle (NEV) powertrain testing remains highly competitive and faces pricing pressure, the aerospace segment offers a compelling long-term growth narrative driven by import substitution and national security imperatives. The company's 2025 financial results reflect a transitional phase: revenue growth was nearly flat at 0.9%, yet net income rose 9.24%, demonstrating significant operational leverage and cost discipline. Gross margin stood at 41.52%, with net margin expanding to 18.12%, indicating a favorable shift in revenue mix toward higher-margin testing services and specialized equipment. The company's strategic pivot toward 'equipment plus service' is materializing, as testing validation services now contribute 20% of revenue with a 48.25% gross margin, significantly above the equipment segment. With an order backlog of RMB 580 million (up 15.74% YoY) and ongoing breakthroughs in gas turbine and turbine component testing, Liance is well-positioned to capture the structural growth in China's aerospace and defense testing market. However, the NEV testing segment faces intense competition, requiring continuous investment in lab expansion and price optimization to maintain market share. The company's enterprise quality is solid, characterized by a debt-free balance sheet (asset-liability ratio of 32.34%), strong operating cash flow generation (RMB 112.6 million, up 109.7% YoY), and a consistent dividend policy (payout ratio of 30.5%). While near-term growth is constrained by the broader NEV capex cycle, the aerospace monopoly and the high-margin service mix provide a durable economic moat and long-term value creation potential.
Jiangsu Liance Electromechanical Technology Co., Ltd. (ticker: 688113.SH), trading as Liance Technology, is a specialized provider of intelligent testing equipment and validation services for power systems. Listed on the Shanghai Stock Exchange's STAR Market since May 2021, the company has positioned itself as a critical enabler of China's industrial upgrade, particularly in the new energy vehicle (NEV) and aerospace sectors. Headquartered in Qidong, Jiangsu Province, Liance Technology operates with a clear strategic mandate: to break the long-standing technological blockade imposed by foreign suppliers in high-end power system testing and to build an internationally competitive, domestically controlled testing ecosystem.
The company's core offerings encompass a comprehensive suite of testing solutions, including dynamometers, automated test benches, test lines, and related software platforms. These products and services are deployed across four primary downstream verticals: new energy vehicles, fuel vehicles, marine vessels, and aerospace. Liance Technology's client roster reads like a who's who of China's industrial leadership, featuring the likes of SAIC Motor, GAC Group, Huawei, NIO, XPeng, BYD, Xiaomi Auto, Weichai Group, and the China Aviation Engine Corporation (AECC). This extensive and prestigious client base underscores the company's technical credibility and market penetration.
In 2025, Liance Technology reported total revenue of RMB 497.5 million (approximately USD 68.8 million), a modest year-over-year increase of 0.9%. Despite the flat top-line growth, the company demonstrated remarkable profitability resilience, with net income attributable to shareholders surging 9.24% to RMB 90.1 million (USD 12.5 million). This divergence between revenue and profit growth highlights a fundamental shift in the company's revenue quality and operational efficiency. As of the end of 2025, the company's order backlog for intelligent testing equipment stood at RMB 580 million (including tax), representing a healthy 15.74% increase from the prior year-end, signaling a robust pipeline for future revenue recognition.
2. Business Model & Core Operations
Liance Technology operates a dual-engine business model centered on 'Equipment + Service.' The equipment segment designs, manufactures, and sells customized intelligent testing systems, while the service segment provides third-party testing and validation services through its network of CNAS-accredited laboratories. This integrated approach not only diversifies revenue streams but also creates a virtuous cycle: equipment sales establish a foothold with clients, while service contracts generate recurring, high-margin income and deepen customer stickiness.
The company's intelligent testing equipment is highly customized and modular, designed to meet the stringent technical requirements of different power system applications. For new energy vehicles, the equipment tests electric drive units, batteries, and complete vehicles, simulating real-world driving conditions to validate performance, durability, and safety. For fuel vehicles, it focuses on engine and transmission testing. In the marine sector, the equipment is used for testing large marine diesel engines, while in aerospace, the company provides high-speed hydraulic dynamometers for aero-engine and gas turbine testing. The software platform, developed entirely in-house, is a critical differentiator. It encompasses test preparation, simulation, execution, and data analysis, featuring a fully graphical interface, automated testing capabilities, and compatibility with industry-standard interfaces such as INCA, ASAM, and ASAP3.
The testing validation services, conducted at the company's facilities in Nantong, Shanghai, Ningbo, Hefei, and Dongguan, are divided into durability testing and performance testing. As of mid-2025, Liance Technology operated 143 test benches, with plans to expand to 160. These labs provide essential validation for customers during the research and development phase, reducing their capital expenditure burden while ensuring compliance with evolving regulatory standards. The service segment generated RMB 99.5 million in revenue in 2025, accounting for 20.0% of total revenue, with a gross margin of 48.25%, significantly higher than the 33.99% margin on equipment sales. This margin differential is a key driver of overall profitability improvement.
3. Market Position & Competition
Liance Technology occupies a unique and strategically vital position within China's power system testing market. Its most distinctive competitive advantage lies in the aerospace sector, where it is the only domestic supplier of high-speed hydraulic dynamometers for aero-engine testing. This monopoly-like position is a direct result of years of dedicated research and development, culminating in the successful localization of a technology that was previously dominated by Western suppliers such as US-based KAHN and UK-based Froude Hofmann.
In the broader power system testing market, the competitive landscape is bifurcated. In the new energy vehicle segment, competition is intense and fragmented. Liance Technology faces direct competition from domestic peers such as Huayi Technology (688071.SH) and Sushi Testing (300416.SZ), as well as internal testing departments of large OEMs. The company has acknowledged that the NEV testing market is highly competitive, characterized by price wars and a race to build testing capacity. To maintain its market share, Liance Technology has adopted a strategy of expanding its test bench count and optimizing service pricing, a move that trades short-term margin for long-term customer retention.
In the aerospace segment, however, the competitive dynamics are entirely different. The barriers to entry are extraordinarily high, encompassing not only technical complexity but also the lengthy qualification cycles and stringent reliability requirements demanded by aerospace clients. Liance Technology's first-mover advantage, combined with its proprietary technology and established relationships with key customers like AECC and its affiliated research institutes, creates a formidable competitive moat. The company's client list in the aerospace sector includes the China Aviation Engine Corporation, AECC Shenyang Engine Research Institute, and AECC Sichuan Gas Turbine Research Institute, entities that are central to China's aviation and defense industrial complex.
4. AI & Semiconductor Alignment
Liance Technology's exposure to the AI and semiconductor sectors is indirect but increasingly relevant. The company does not develop AI algorithms or manufacture semiconductor chips. However, its testing equipment and services are integral to the development and production of power electronics, which are foundational to AI infrastructure and advanced semiconductor applications.
In the new energy vehicle sector, Liance's testing solutions are used to validate silicon carbide (SiC) power modules and other wide-bandgap semiconductors. SiC devices are critical for improving the efficiency and power density of electric vehicle powertrains, and their adoption is accelerating globally. According to Frost & Sullivan, the global market penetration of SiC power devices grew from 3.5% in 2020 to 15.1% in 2024, and is projected to reach 26.3% by 2029. The corresponding testing equipment market in China for SiC power devices is expected to grow at a CAGR of 35.3% from 2024 to 2029, reaching RMB 3.35 billion. Liance Technology, through its testing solutions for NEV powertrains, is indirectly exposed to this high-growth semiconductor niche.
More directly, Liance Technology holds a 20% stake in Nantong Celin Technology, a company whose main business involves semiconductor testing equipment and solutions. While this investment is currently small in scale and does not constitute a significant portion of Liance's revenue, it signals a strategic interest in the broader semiconductor testing ecosystem. The company has stated that it has not yet engaged in large-scale semiconductor testing operations, but the investment provides an optionality for future expansion into this adjacent, high-value market.
5. Customer & Regional Analysis
Liance Technology's customer base is characterized by its blue-chip composition and deep penetration into China's industrial leadership. The company's revenue is overwhelmingly domestic, with 99.59% of sales generated within China in the first half of 2026, and only a negligible 0.01% from overseas markets. This domestic concentration reflects the current stage of China's industrial development, where the primary demand for advanced testing equipment is driven by domestic OEMs and research institutions seeking to upgrade their capabilities.
The new energy vehicle segment represents the largest and most dynamic customer cohort. Liance Technology serves a comprehensive roster of NEV manufacturers, including established players like SAIC Motor, GAC Group, and BYD, as well as emerging leaders such as NIO, XPeng, and Xiaomi Auto. The company also supplies major automotive component suppliers like United Automotive Electronic Systems (UAES) and Nidec. This diverse customer base mitigates the risk of over-reliance on any single OEM and provides broad exposure to the NEV industry's growth.
The fuel vehicle segment, while a mature market, remains a stable source of revenue, with customers including Weichai Group, Geely Group, FAW Group, Dongfeng Motor, and major testing centers like CATARC. In the marine sector, Liance serves customers such as Weichai Heavy Machinery, China State Shipbuilding Corporation, and the Submarine Academy of the Chinese People's Liberation Army Navy. The aerospace segment, though currently the smallest in terms of revenue contribution, holds the greatest strategic promise. Customers here include the China Aviation Engine Corporation, AECC South Industry, and the Chinese Helicopter Research and Development Institute.
The company's geographic expansion strategy is focused on increasing its domestic footprint through the expansion of its CNAS laboratory network and, in the longer term, pursuing overseas expansion through acquisitions and partnerships in Europe and Southeast Asia. The goal is to gradually increase the proportion of overseas revenue, creating a more balanced and diversified revenue base.
6. Economic Moat Analysis
Liance Technology's economic moat is built upon several reinforcing pillars, the most significant being its technological monopoly in aerospace testing. The ability to manufacture high-speed hydraulic dynamometers that meet the exacting standards of aero-engine testing is a rare capability, globally and especially within China. This technological barrier is protected by patents (31 invention patents, 113 utility model patents, and 55 software copyrights as of the end of 2025) and, more importantly, by the deep process know-how and accumulated engineering experience that cannot be easily replicated.
A second moat source is the high switching costs associated with the company's products and services. For equipment, once a customer has integrated Liance's testing systems into their R&D and production workflows, the cost and disruption of switching to a competitor are substantial. For testing services, the qualification process is equally sticky. Liance's laboratories are CNAS-accredited, meaning their test results are recognized nationally and internationally. Customers that rely on these accredited results for regulatory compliance and product certification have a strong incentive to maintain their relationships with Liance.
The third moat component is the 'Equipment + Service' flywheel. The equipment business serves as a customer acquisition channel, while the service business builds recurring revenue and deepens relationships. This integrated model is difficult for pure-play equipment manufacturers or independent testing labs to replicate. The service business, with its higher margins, also provides a buffer against the cyclicality of equipment capital expenditure.
However, the moat is not uniform across all segments. In the NEV testing market, the moat is narrower due to intense competition and the presence of capable domestic peers. The company's strategy of price optimization and capacity expansion in this segment is a defensive move to protect market share rather than a demonstration of pricing power. The aerospace segment, by contrast, exhibits a very wide moat, but it is currently a smaller revenue contributor.
7. Unique Competitive Advantages
The most unique and strategically valuable competitive advantage of Liance Technology is its status as the sole domestic supplier of high-speed hydraulic dynamometers for aero-engine testing in China. This is not merely a commercial achievement but a matter of national industrial security. The aerospace sector has historically been subject to strict export controls and technology embargoes from Western nations. The ability to provide a domestic alternative to KAHN and Froude Hofmann equipment is therefore of paramount importance to China's aviation and defense programs.
This advantage translates into a privileged market position. The company's engagement with AECC and its various research institutes provides a stable, long-term demand pipeline that is largely insulated from commercial market fluctuations. The technical requirements for aero-engine testing are extremely demanding, involving high-speed rotordynamics, anti-cavitation structures, high-precision dynamic balancing, and advanced servo control systems. Liance Technology has successfully developed and commercialized these technologies, as evidenced by the deployment of its equipment in critical aerospace testing facilities.
Another unique advantage is the company's fully self-developed software platform. Unlike many competitors who rely on third-party or open-source software, Liance Technology owns the entire software stack, from the user interface to the data acquisition and analysis algorithms. This gives the company complete control over its product roadmap, allows for deep customization to meet specific customer needs, and eliminates dependency on external software vendors. The platform's support for industry-standard interfaces and its robust data recording and analysis capabilities make it a powerful tool for engineers, further enhancing customer stickiness.
Finally, the company's 'Equipment + Service' model provides a unique advantage in customer intimacy. By serving as both a supplier of testing tools and a provider of testing services, Liance Technology gains a holistic understanding of its customers' testing challenges. This dual role enables the company to iterate its products faster and develop new service offerings that are directly aligned with market needs.
8. R&D and Technological Capability
Liance Technology's commitment to research and development is the bedrock of its competitive strategy. In 2025, the company invested RMB 41.1 million in R&D, representing 8.26% of revenue, an increase of 0.85 percentage points from the previous year. This sustained investment has built a substantial intellectual property portfolio, including 31 invention patents, 113 utility model patents, 2 design patents, and 55 software copyrights.
The company's technological capabilities are concentrated in several key areas. In aerospace, the focus is on high-speed, high-power hydraulic dynamometer technology. This encompasses a range of challenging engineering disciplines, including high-speed rotor dynamics for the main shaft, anti-cavitation stator and rotor structures and materials, high-precision dynamic balancing, high-speed bearing and lubrication sealing technology, high-dynamic-response valve and servo control technology, and high-speed flywheel inertia simulation. Mastering these technologies is essential for accurately simulating the extreme conditions of aero-engine operation.
In the new energy vehicle sector, the company's R&D efforts are directed toward enhancing the precision, speed, and reliability of powertrain testing. This includes the development of more sophisticated simulation models for real-world driving conditions, the integration of AI-powered data analytics for predictive maintenance and performance optimization, and the expansion of testing capabilities to cover a wider range of electric drive architectures. The company's software platform is a key focus, with ongoing development aimed at improving automation, user experience, and data connectivity.
The R&D organization is structured to be agile and responsive to customer needs. The company employs a project-based approach, where cross-functional teams of engineers, software developers, and application specialists work closely with customers to understand their unique testing requirements and develop tailored solutions. This customer-centric R&D model ensures that the company's innovations are directly aligned with market demand and have a clear path to commercialization.
Liance Technology operates within the broader power system testing industry, a specialized niche within the industrial testing and measurement sector. The industry is driven by the relentless pursuit of higher efficiency, lower emissions, and greater reliability in power generation and propulsion systems. This is a global megatrend that spans automotive, marine, and aerospace applications.
The market for power system testing equipment and services in China is undergoing a structural transformation. Historically, the high-end segment of this market, particularly for aerospace and large marine engines, was dominated by established Western players such as AVL, KAHN, and Froude Hofmann. However, the combination of rapid domestic industrialization, increasing technological capabilities, and a strategic push for self-reliance is driving a strong wave of import substitution.
In the new energy vehicle segment, the industry is characterized by rapid growth and intense competition. The transition from internal combustion engines to electric powertrains has created a completely new set of testing requirements. This has attracted a wave of new entrants, including traditional testing equipment companies, startups, and the in-house testing divisions of large OEMs. While the overall market is expanding, the competitive intensity is high, leading to pressure on pricing and margins. The market is expected to consolidate over time, with companies possessing superior technology, scale, and customer relationships emerging as the winners.
The aerospace testing equipment market presents a starkly different picture. This is a highly concentrated, high-barrier industry where the number of qualified suppliers is limited. The demand is primarily driven by government-funded aerospace and defense programs, which are characterized by long development cycles, stable funding, and a focus on performance and reliability over price. In China, the market is effectively a duopoly between Liance Technology as the domestic champion and a handful of foreign suppliers. The geopolitical environment and the strategic importance of aerospace self-sufficiency suggest that the domestic market share for Liance Technology is likely to increase significantly in the coming years.
10. Investment Conclusion & Enterprise Quality
Liance Technology presents a compelling investment case anchored by a unique monopoly-like asset in the aerospace testing segment and a solid, cash-generative core business in automotive testing. The company's 2025 financial performance, while showing modest top-line growth, reveals underlying strength in profitability and cash flow. The 9.24% increase in net income on 0.9% revenue growth demonstrates significant operating leverage, driven by a favorable mix shift toward higher-margin testing services and rigorous cost management.
The enterprise quality is high. The balance sheet is conservative, with an asset-liability ratio of 32.34% and a current ratio of 2.27, indicating ample liquidity and low financial risk. Operating cash flow more than doubled to RMB 112.6 million, reflecting the company's ability to convert earnings into cash. The dividend payout ratio of 30.5% is reasonable and signals a management team that is focused on shareholder returns. The order backlog of RMB 580 million, up 15.74% year-over-year, provides good revenue visibility for the next 12-18 months.
However, investors should be cognizant of the risks. The NEV testing market is brutally competitive, and the company's strategy of expanding capacity and optimizing pricing could continue to pressure margins in that segment. The aerospace business, while strategically vital, is currently small in revenue terms and its growth trajectory is dependent on the timeline of China's aero-engine programs, which can be lengthy and subject to budgetary cycles. The company's overseas expansion ambitions are at a nascent stage and execution risk is non-trivial.
In conclusion, Liance Technology is a high-quality, strategically important enterprise with a clear long-term growth driver in aerospace import substitution. The current valuation, while not cheap on a trailing basis, may offer an attractive entry point for long-term investors willing to look through the near-term noise in the automotive segment and focus on the immense potential of the aerospace franchise. The company's unique technological capabilities, entrenched customer relationships, and strong financial position make it a standout in China's industrial testing landscape.