Key takeaway

The company’s revenue grew steadily to RMB1.451bn in 1H26. Revenue growth was lower than order growth due to the timing of revenue recognition for certain orders. However, customer validation and commercialization progressed in core segments such as industrial AI and optical communications. On the earnings side, profitability benefited from product mix upgrades driven by “vision + AI,” overseas integration following the consolidation of JAI, and fair value gains on the company’s equity interest in Zhipu Huazhang. Gross margin rose 4.96 ppts YoY to 40.67%. The company secured sales orders of RMB2.176bn in 1H26. It continued to focus on three strategic areas: Industrial AI, embodied AI, and optical communications. Its AI infrastructure, next-generation optical interconnects, and global expansion advanced steadily.

Event

The company released its 1H26 report. In 1H26, the company recorded operating revenue of RMB1.451bn, up 6.09% YoY; net profit attributable to shareholders of the parent company of RMB656mn, up 583.26% YoY; and net profit attributable to shareholders of the parent company excluding non-recurring gains and losses of RMB126mn, up 54.54% YoY.

In 2Q26, the company recorded revenue of RMB854mn, up 13.32% YoY; net profit attributable to shareholders of the parent company of RMB457mn, up 463.17% YoY; and net profit attributable to shareholders of the parent company excluding non-recurring gains and losses of RMB79mn, up 6.50% YoY.

Quick Take

Revenue maintains steady growth as the share of overseas revenue continues to rise

In 1H26, the company recorded operating revenue of RMB1.451bn, up 6.09% YoY. Among the key businesses disclosed in the interim report, consumer electronics generated revenue of RMB532mn, up 3.69% YoY, and remained the company’s primary revenue source; the new energy business generated revenue of RMB103mn, up 120.11% YoY, driven by growing energy storage demand and capacity expansion by leading battery manufacturers; the printing and packaging business generated revenue of RMB189mn, up 13.48% YoY; and the optical communications business generated revenue of RMB314mn, up 14.51% YoY, with nextgeneration products gradually emerging as a growth driver. Overseas revenue reached RMB212mn, up 29.07% YoY. Following the consolidation of JAI, the company significantly expanded its overseas channel s and gained access to advanced imaging technologies and global distribution resources, accelerating overseas business growth.

Core business profitability improves significantly, with three factors jointly driving profit growth

In 1H26, the company’s overall gross margin was 40.67%, up 4.96 pcts YoY. The selling expense, administrative expense, R&D expense, and finance expense ratios were 10.07%, 6.73%, 16.23%, and 0.66%, respectively, changing by +0.57 pct, -1.36 pcts, +1.31 pcts, and +2.04 pcts YoY. The increase in selling expense was mainly due to greater investment in market expansion. The decline in administrative expense benefited from improved internal management efficiency. The increase in finance expense was mainly due to lower interest income from bank deposits and higher foreign exchange losses. Net cash flow from operating activities was -RMB126mn, broadly unchanged from -RMB121mn in the same period last year. In 1H26, the company recorded net profit attributable to shareholders of the parent company of RMB656mn, up 583.26% YoY, mainly driven by three factors: (1) Its core “vision + AI” capabilities drove product mix upgrades and business mix optimization, significantly improving the gross margin of its core business; (2) the overseas integration strategy following the acquisition of JAI continued to advance, accelerating the global expansion of standard products; and (3) the company’s equity interest in Zhipu Huazhang generated a fair value gain of RMB589mn, significantly boosting profit for the period.

Orders maintain rapid growth, with strong performance in optical communications and displays

In 1H26, the company secured sales orders of RMB2.176bn, including tax, with order growth outpacing revenue growth. In optical communications, the company generated revenue of RMB314mn, up 14.51% YoY, while orders for next-generation products increased by more than 60% YoY. Its optical circuit switches (OCSs) have achieved small-scale adoption in automated optical module testing in China. The company is a lso conducting technical coordination and validation with several AI computing center customers. In advanced displays, orders in the display panel segment increased by 35% YoY in 1H26. Display lighting inspection equipment continued to address leading customers’ demand for new production lines and production line upgrades. Appearance inspection equipment for display modules entered the large-scale commercialization stage. In new energy, the electrode sheet inspection system secured bulk orders from leading customers for critical process stages and achieved large-scale delivery. The battery cell appearance inspection equipment also received large-scale purchase orders from multiple customers.

Breakthroughs in next-generation optical communications products accelerate, while deployment in embodied intelligence and new AI infrastructure deepens

The company continued to expand its next-generation optical communications products for AI computing infrastructure, focusing on OCS, OIO high-speed optical interconnects, 800G/1.6T optical modules, and advanced packaging. The OIO chip has completed tape-out and entered the testing and validation stage, while the PWB (photonic wire bonding) and TGV (through-glass via) products have both secured their first domestic orders. In embodied intelligence, the company has developed three major solutions: Multimodal data collection, robot motion performance evaluation, and robot cerebellum training. Revenue from its core product, the FZMotion optical motion capture system, grew by more than 80% YoY in 1H26, and the company partnered with Huawei Cloud on full-stack data collection for the CloudRobo platform. As AI infrastructure inspection and nextgeneration optical communications products gradually begin contributing revenue, emerging businesses are expected to further expand the company’s growth potential.

Investment recommendation: The company’s core machine vision business remains solid, with revenue continuing to grow in 1H26. Overseas expansion accelerated after JAI was consolidated into the company’s financial statements. “Vision + AI” is driving upgrades to the product mix and optimization of the business mix, significantly improving the profitability and gross margin of the core business. Meanwhile, the company’s orders are growing rapidly, with continued breakthroughs in optical communications, new displays, new energy, and other fields. Its new business initiatives are also progressing steadily. The company is expected to generate revenue of RMB3.562bn, RMB4.406bn, and RMB5.417bn in 2026-2028, representing YoY growth of 22.34%, 23.69%, and 22.94%, respectively. Net profit attributable to shareholders of the parent company is expected to reach RMB452mn, RMB382mn, and RMB504mn, representing YoY growth of 180.27%, -15.50%, and 31.81%, respectively. The corresponding PE multiples are 47.84x, 56.61x, and 42.95x. We assign a “Buy” rating.

Risks

(1) Risk of slower-than-expected new business progress and order conversion: The company is accelerating its expansion into next-generation optical communication products, AI infrastructure, embodied intelligence, and other areas. If customer validation, product adoption, or order conversion progresses more slowly than expected, growth in the relevant businesses may be affected.

(2) Risks related to JAI integration and goodwill impairment: The company continues to integrate JAI’s global resources. If business synergies, overseas market expansion, or operating performance fall short of expectations, the integration results may be affected, and goodwill impairment may occur.

(3) Risks related to market competition and exchange rate fluctuations: Competition is relatively intense in the machine vision and optical communications industries, while the company continues to expand its overseas business. Fluctuations in downstream demand, intensifying industry competition, or significant exchange rate volatility may adversely affect the company’s operating results.