Key takeaway

In 1H26, the company’s revenue and net profit attributable to shareholders of the parent company increased by 15.84% and 22.97% YoY, respectively. Growing domestic demand for high-power thick-plate cutting and the expansion of overseas application scenarios drove steady growth in the core business. Changes in the product mix put temporary pressure on the overall gross margin. However, higher interest income from an increase in maturing time deposits boosted profit, while adjusted net profit attributable to shareholders of the parent company still increased by 20.20% YoY. The company continues to advance software-hardware integration and develop intelligent cutting heads around its core laser cutting business. It is also actively expanding its intelligent welding and precision micromachining businesses, sustaining its medium- to long-term horizontal and vertical expansion strategy.

Event

The company released its 1H26 results. In 1H26, it recorded revenue of RMB1.278bn, up 15.84% YoY; net profit attributable to shareholders of the parent company of RMB787mn, up 22.97% YoY; and adjusted net profit attributable to shareholders of the parent company of RMB714mn, up 20.20% YoY.

In 2Q26 alone, the company recorded revenue of RMB730mn, up 20.17% YoY; net profit attributable to shareholders of the parent company of RMB471mn, up 22.37% YoY; and adjusted net profit attributable to shareholders of the parent company of RMB423mn, up 19.74% YoY.

Quick Take

High-power demand and expanding overseas application scenarios drive steady revenue and earnings growth in 1H26

Revenue maintained steady growth. In 1H26, the company recorded revenue of RMB1.278bn, up 15.84% YoY. The company continued to increase R&D investment, expand downstream applications, and enrich and optimize its product solutions. Benefiting from continued growth in domestic demand for high-power thick-plate cutting and the ongoing expansion of overseas application scenarios, its core business maintained steady growth.

Risks

1) Risk of changes in downstream industrial policies: The company’s business is highly correlated with China's manufacturing industrial policies. If relevant industrial policies undergo significant adverse changes, it will have a negative impact on the company’s operating performance.

2) Risk of losing key technical talent: In the laser control system industry, the cultivation and retention of key technical personnel is a primary source of competitive advantage. Technical talent in this sector requires long-term accumulation of practical application experience in downstream industries to enha nce R&D and technological innovation capabilities. As the industry evolves, the competition for technical talent will become increasingly fierce. If the company fails to provide effective reward mechanisms in terms of compensation, benefits, and work environment, it will lack attractiveness to technical talent. Furthermore, existing core technical personnel may leave, which would have a significant adverse impact on the company's production and operations.

3) Risk of new business development falling short of expectations: The company has continuously invested in intelligent welding and precision machining businesses in recent years. If these businesses fail to develop as expected, it will adversely affect the company's profitability.

4) Risk of declining profitability: The laser cutting control system field has maintained high profit margins in recent years, attracting companies from other industrial control system sectors. If industry competition intensifies, it may affect the profitability of the company’s core laser cutting control system business.