Key takeaway

The company recorded revenue of RMB2.44bn in 2Q26, up 19.5% YoY and 9.1% QoQ; net profit attributable to shareholders of the parent company was RMB192mn, up 386.3% YoY and 168.8% QoQ. The intelligent suspension business generated revenue of RMB1. 11bn in 1H26, up 74.4% YoY, making it the key growth driver. Gross margin improved significantly YoY in 2Q26, reflecting substantial benefits from economies of scale and lean cost reduction. Intelligent suspension is scaling up rapidly, with active suspension carrying an ASP of RMB3,000–5,000, further increasing content value per vehicle. Looking ahead to 2H26, the company is concurrently advancing its global capacity footprint in the US, Hungary, Thailand, and Morocco, among other markets. We are optimistic about the future growth potential of the company’s businesses, including intelligent suspension.

Event

The company recorded revenue of RMB2.44bn in 2Q26, up 19.5% YoY and 9.1% QoQ; net profit attributable to shareholders of the parent company was RMB192mn, up 386.3% YoY and 168.8% QoQ.

Quick Take

Revenue rose 19.5% YoY in 2Q26, with the air suspension business serving as the key growth driver. The company recorded revenue of RMB2.44bn in 2Q26, up 19.5% YoY and 9.1% QoQ; net profit attributable to shareholders of the parent company was RMB192mn, up 386.3% YoY and 168.8% QoQ, including a fair value gain of RMB140mn following the listing of an associate in 2Q26; net profit attributable to shareholders of the parent company excluding non-recurring gains and losses was RMB47mn, also recording strong growth of 187.0% YoY.

Revenue from principal operations totaled RMB4.57bn in 1H26, up 18.4% YoY. Revenue from TPMS, intelligent suspension, automotive metal tubing, tire valves, sensors, and other products was RMB1.25bn/RMB1.11bn/RMB790mn/RMB390mn/RMB390mn/RMB640mn, respectively, up 3.3%/74.4%/6.4%/-2.9%/4.7%/28.5% YoY. Intelligent suspension contributed approximately two-thirds of the increase in revenue from principal operations. Its revenue contribution rose from 16.5% to 24.3%, making it the second-largest product line after TPMS.

Gross margin improved significantly YoY in 2Q26, reflecting substantial benefits from economies of scale and lean cost reduction. Gross margin was 22.8% in 2Q26, up 2.3 pcts YoY and 0.7 pct QoQ. The company continued to scale up intelligent suspension and other businesses in 1H26 while advancing lean cost reduction, effectively offsetting the impact of upstream raw material prices. The total expense ratio was approximately 16.9% in 2Q26, up 0.8 pct YoY. The selling expense, administrative expense, R&D expense, and financing expense ratios were approximately 3.0%/4.8%/7.1%/2.1%, respectively, down 0.2 pct/broadly flat/down 0.6 pct/up 1.7 pcts YoY. The increase in financing expense was mainly due to foreign exchange losses caused by RMB appreciation. The combined selling expense, administrative expense, and R&D expense ratio declined by approximately 0.9 pct YoY.

Intelligent suspension systems are ramping up rapidly, and active suspension systems have an ASP of RMB3,000-5,000, further increasing content value per vehicle. In 1H26, intelligent suspension revenue reached RMB1.11bn, up 74.4% YoY. The company has ample orders on hand for designated air suspension projects in 2026. Volume ramp-up at major customers such as NIO, Chery, and BYD (002594.SZ) is expected to sustain high growth for the full year. In active suspension, the company secured a designated MPU project from a global premium automaker in April. The project covers one PHEV model and one BEV model, demonstrating recognition of the company’s capabilities by an overseas premium brand. Fully active suspension systems deliver a comfortable and intelligent driving experience. They are mainly used in luxury models, and ASP per vehicle is expected to rise to around RMB3,000-5,000.

Looking ahead to 2H26, the company is advancing its global capacity expansion, while intelligent suspension remains the core growth driver. The company is developing manufacturing parks in the US, Hungary, Thailand, and Morocco. It continues to expand its global business footprint and has joined BMW’s preferred supplier network. In terms of capacity, the fundraising project for annual production capacity of 4.82mn air suspension units continues to advance. Phase II of the Hungary manufacturing park has been completed, and the air suspension production line has been installed and commissioned, further strengthening localized overseas supply capabilities. Air suspension maintains a high growth trajectory and has a clear competitive landscape. With continued mass production of air suspension systems and further breakthroughs in designated active suspension projects in 2H26, the company has ample room for growth.

Investment recommendation: We forecast the company’s net profit attributable to shareholders of the parent company at RMB445mn/RMB473mn/RMB575mn in 2026-2028, corresponding to PE multiples of 14.25x/13.42x/11.04x, respectively. We assign a “Buy” rating.

Risks: Lower-than-expected industry demand, deterioration in the industry’s competitive landscape, sharp fluctuations in raw material prices, and slower-than-expected new customer acquisition and capacity ramp-up.