In-depth Analysis of Zhejiang Shibao's Investment Value in Light of L3 Autonomous Driving Access Policies

On December 15, 2025, China’s MIIT approved two domestically produced L3 autonomous driving passenger cars for inclusion in its catalog for the first time, marking a major policy breakthrough in China’s autonomous driving sector [1]. L3-level autonomous driving allows drivers to take their hands off the wheel and eyes off the road under specific conditions, which is a key milestone in the transition from assisted driving to true autonomous driving.

According to Daiwa Securities’ analysis, the penetration rate of L3 functions in China’s passenger car market is expected to reach approximately 1% in 2026, corresponding to sales of around 257,000 units [1]. Although the current penetration rate is low, this policy breakthrough has opened up growth space for the entire intelligent driving industry chain, which is expected to enter a period of rapid growth in the coming years.

Zhejiang Shibao (1057.HK) is a leading domestic supplier of automotive steering systems, with core businesses including R&D, production, and sales of automotive steering gears and accessories [0]. The company has a market capitalization of approximately HK$10.17 billion, and its stock price has performed strongly since the start of 2025, with a cumulative increase of 60.07% [0].

Zhejiang Shibao has laid out several core technology products in the intelligent driving field:

• Intelligent Steering System
  : Suitable for L2+ level autonomous driving
• Steer-by-Wire Technology
  : A key component for L3 and above autonomous driving
• Electrically Adjustable Column
  : An intelligent steering actuator

These products fully meet the technical requirements of L3 autonomous driving, and the company has a first-mover advantage in intelligent steering products.

According to the latest financial analysis, Zhejiang Shibao’s financial situation is generally sound [0]:

• Net Profit Margin
  : 5.60%, indicating good profitability
• Current Ratio
  : 1.62, showing good short-term solvency
• ROE
  : 9.38%, stable return on equity for shareholders
• Debt Risk Rating
  : Low risk

The current stock price is HK$4.45, corresponding to [0]:

• P/E Ratio
  : 61.30x, relatively high valuation
• P/B Ratio
  :5.60x, reflecting market expectations for its growth
• Market Capitalization
  : HK$10.17 billion, which is medium-sized among auto parts suppliers

From the latest financial report, the company’s performance shows a stable growth trend [0]:

• Latest Quarterly Revenue
  : RMB 1.03 billion
• Net Profit
  : RMB 150 million, up 33.7% year-on-year
• Gross Profit Margin and Net Profit Margin
  remain stable

1. Policy Dividend Period Arrives
   : The implementation of the L3 access policy will bring direct order growth for the company’s intelligent products
2. First-Mover Technological Advantage
   : Has mass production capabilities in core technologies such as steer-by-wire
3. Broad Customer Base
   : Has supporting cooperation with both traditional automakers and new power automakers, with diversified customer structure
4. Strong Certainty of Performance Growth
   : The increase in intelligent driving penetration will bring sustained business growth

1. Overvaluation
   : Current P/E ratio exceeds 60x, with potential valuation correction risk
2. Technology Iteration Risk
   : Autonomous driving technology is developing rapidly, requiring continuous large-scale R&D investment
3. Intensified Market Competition
   : Domestic and foreign competitors are accelerating their layout in the intelligent steering field
4. Policy Progress Uncertainty
   : Large-scale commercialization of L3 autonomous driving still faces many technical and regulatory challenges

Compared with other intelligent steering suppliers in the same industry, Zhejiang Shibao has certain advantages. As a leading enterprise in the steering system industry, Nexteer (1316.HK) has MotionIQ™ designed based on mature algorithms from over 120 million vehicles worldwide [4], with deeper technical accumulation. However, Zhejiang Shibao has cost advantages and localized service advantages in the domestic market.

Against the backdrop of the just-implemented L3 policy, Zhejiang Shibao will benefit from the following in the next 1-2 years:

• Order growth from mass production of L3 models
• Increased penetration rate of intelligent products
• Continuous market attention to intelligent driving concepts

In the long run, the company’s value depends on:

• Whether its technological innovation capabilities can remain leading
• Whether it can transform from a component supplier to a system solution provider
• International market expansion capabilities

1. Existing Holders
   : It is recommended to continue holding and pay attention to the fulfillment of orders after policy implementation
2. Potential Investors
   : Wait for the stock price to retrace to a reasonable range (P/E ratio of 40-50x) before considering building a position
3. Risk Control
   : It is recommended to pay attention to the progress of L3 commercialization, the company’s R&D investment, and changes in the competitive landscape of the industry

The implementation of the L3 autonomous driving access policy constitutes a substantial positive for Zhejiang Shibao, and as an intelligent steering system supplier, the company will directly benefit from this policy dividend. From the perspective of investment value, the company has good fundamentals and growth potential, but is currently overvalued. Investors are advised to rationally view short-term theme speculation and pay more attention to the company’s long-term technical accumulation and order fulfillment capabilities.

With the continuous maturity of intelligent driving technology and the sustained advancement of policies, Zhejiang Shibao is expected to gain important development opportunities in the wave of intelligent transformation, but investors need to balance growth expectations with valuation risks and make prudent investment decisions.

[0] 金灵API数据 - 浙江世宝(1057.HK)股价、财务数据及市场信息
[1] Yahoo财经 - “大和:明年中國乘用車L3級滲透率約1%銷量25.7萬輛 料3股受惠”
[4] Yahoo财经 - “耐世特榮獲2025年汽車技術突破獎年度汽車軟件解決方案獎”