Key takeaway

In 1H26, the company recorded revenue of RMB3.921bn, up 16.24% YoY; net profit attributable to shareholders of the parent company was RMB492mn, up 3.01% YoY. The company accelerated its transition from standalone equipment to whole-factory solutions, with revenue from digital turnkey solutions reaching RMB528mn, up 38.95% YoY, while joint innovation with key customers and the replication of benchmark factories in China and overseas continued to advance. The company launched its “Smart Chain Master” rapidresponse whole-factory solution overseas, further improving its global distribution channels and localized service system; meanwhile, the Shengtai & JACK AI Digital Turnkey Smart Manufacturing Research Institute officially commenced operations, and the company is collaborating with several partners on humanoid robot development, with the product expected to launch in October 2026, which should continue to expand the scope of its smart garment manufacturing business.

Event

The company released its 1H26 results. In 1H26, it recorded revenue of RMB3.921bn, up 16.24% YoY; net profit attributable to shareholders of the parent company of RMB492mn, up 3.01% YoY; and net profit attributable to shareholders of the parent company excluding nonrecurring gains and losses of RMB444mn, up 1.06% YoY.

In 2Q26, the company recorded revenue of RMB1.897bn, up 20.08% YoY; net profit attributable to shareholders of the parent company of RMB235mn, up 1.46% YoY; and net profit attributable to shareholders of the parent company excluding non-recurring gains and losses of RMB213mn, down 0.55% YoY.

Quick Take

Rapid domestic market growth, with double-digit revenue growth across all product lines

In 1H26, the company recorded core business revenue of RMB3.910bn, up 16.16% YoY. By product, smart industrial sewing machines generated revenue of RMB3.393bn, up 15.80% YoY and accounting for 86.79% of core business revenue; smart fabric cutting and spreading machines generated revenue of RMB402mn, up 16.74% YoY; and smart automated sewing equipment for shirts and denim products generated revenue of RMB115mn, up 25.26% YoY. By region, domestic revenue reached RMB1.998bn, up 26.40% YoY; overseas revenue reached RMB1.912bn, up 7.08% YoY and accounting for 48.90% of core business revenue. The company continued to deepen its global market presence, while domestic revenue grew markedly faster than overseas revenue, driving sustained rapid growth in overall sales.

Cost and exchange rate factors weigh on profitability, while improved management efficiency offsets some pressure

In 1H26, the company’s overall gross margin was 32.42%, down 1.65 pcts YoY. Specifically, the gross margin of intelligent industrial sewing machines was 31.04%, down 1.92 pcts YoY, mainly due to the combined impact of RMB appreciation, rising costs, changes in product mix, and product price adjustments; the gross margin of intelligent cutting and fabric-spreading machines was 41.50%, up 1.01 pcts YoY, mainly driven by sales growth at overseas companies and lower fixed costs; the gross margin of intelligent automated sewing equipment for shirts and denim garments was 35.24%, down 6.71 pcts YoY. The period expense ratio was 19.45%, up 0.87 pcts YoY. The selling expense, administrative expense, R&D expense, and financing expense ratios were 7.23%, 3.68%, 7.47%, and 1.07%, respectively. Administrative expense decreased by 9.50% YoY, mainly driven by AI-enabled efficiency improvements and organizational restructuring. However, due to exchange rate fluctuations, the company’s financing expense increased from RMB-31mn in the same period last year to RMB42mn. This included an exchange loss of RMB40mn, compared with an exchange gain of RMB34mn in the same period last year, and was a key factor causing profit growth to lag revenue growth.

Integrated digital solutions accelerate growth as the business model expands from standalone machine sales to whole-factory solutions

In 1H26, the company’s integrated digital solutions business generated revenue of RMB528mn, up 38.95% from RMB380mn in the same period last year, with the expansion of integrated solutions for key accounts gradually delivering results. The company strengthened its company-wide key account initiative and executive sponsor mechanism. Through joint innovation with key accounts, it developed benchmark digital whole-factory projects in China and overseas. In June, the company held its first overseas global launch event in Vietnam, whe re it introduced the “Smart Link Master” whole-factory quick-response solution, Quick Response Star, the M6 template machine requiring no mold preparation, and other products. It also signed agreements with several garment manufacturers at the event, advancing its blockbuster product strategy from standalone machines to whole-factory solutions. In 1H26, the company held more than 500 product launch events and over 10,000 competitions. It also advanced channel flattening, regional resource optimization, and dealer empowerment, continuously improving the market reach and delivery capabilities of its integrated solutions.

Benchmark AI-powered integrated digital solutions are implemented, while humanoid robot commercialization continues to advance

In 1H26, the company’s R&D expense was RMB293mn, up 13.92% YoY, mainly due to increased investment in R&D projects for AI-powered integrated digital solutions and humanoid robots. In April 2026, the “Shengtai & Jack AI digital complete-set intelligent manufacturing research institute” was officially established and launched an AI-powered digital complete-set solution covering the entire process of cutting, cut-piece sorting, and sewing. The company established a robotics business division and has developed automation technologies for the entire process of separating, picking, placing, and aligning cut pieces. It has also established joint ventures with AgiBot, Zhejiang Humanoid Robot Innovation Center, and X Square Robot. As of the end of June 2026, the company held 3,909 valid intellectual property rights, including 478 patent applications related to humanoid robots and AI-powered digital technologies. The company’s humanoid robots mainly target product categories such as shirts, jeans, polo shirts, and women’s apparel and are expected to be officially launched in October 2026. Subsequent progress in product commercialization and synergies with its existing complete -set equipment warrants attention.

Investment recommendation : The company’s traditional businesses, including intelligent industrial sewing machines and cutting machines, maintain double-digit growth. Its digital complete-set business has entered a phase of accelerated volume growth, while standalone products, intelligent complete-set software, and humanoid robots are gradually forming a synergistic portfolio. The company is expected to achieve operating revenue of RMB7.425bn, RMB8.358bn, and RMB9.568bn in 2026–2028, representing YoY growth of 12.72%, 12.56%, and 14.48%, respectively; net profit attributable to shareholders of the parent company is expected to reach RMB991mn, RMB1.179bn, and RMB1.427bn, representing YoY growth of 15.77%, 19.01%, and 21.04%, respectively, corresponding to PE multiples of 17.32x, 14.55x, and 12.02x, respectively. A “Buy” rating is a ssigned.

Risks

1. Risks related to downstream demand and industry competition: The sewing machinery industry is cyclical and seasonal. If capital expenditure by apparel manufacturers slows or market competition intensifies further, the company’s product sales and profitability may be affected.

2. Risks related to exchange rate and raw material price fluctuations: The company derives a relatively high proportion of its revenue from overseas markets. Fluctuations in the exchange rates of the US dollar and euro against the RMB may affect revenue translation and foreign exchange gains or losses. Higher prices for raw materials such as pig iron, outsourced components, motors, and electronic control systems may also put pressure on gross margin.

3. Risk that the adoption of digital complete-set solutions and humanoid robots falls short of expectations: Digital complete-set solutions and humanoid robots still require continuous product iteration, customer validation, and application scenario expansion. If commercialization progress or customer acceptance falls short of expectations, the growth of new businesses may be affected.