Key takeaway

In 1H26, the company recorded operating revenue of RMB815mn, up 32.02% YoY, and net profit attributable to shareholders of the parent company of RMB140mn, up 42.82% YoY. Growth in North American orders, coupled with the full ramp-up of Vietnam capacity, drove overseas revenue up 51.08% YoY, while the gross margin of core products increased by 2.71 pcts. High-end oscilloscopes saw faster volume shipments, while the radio-frequency testing product portfolio continued to expand; the acquisition of XinCe Communications further extended the company’s presence in optical communications testing and electromagnetic environment monitoring. Looking ahead, overseas channel expansion, economies of scale at the Vietnam base, and upgrades to high-end testing instruments are expected to jointly support the company’s sustained growth.

Event

The company released its 1H26 earnings results. In 1H26, the company recorded operating revenue of RMB815mn, up 32.02% YoY, and net profit attributable to shareholders of the parent company of RMB140mn, up 42.82% YoY. In 2Q26, the company recorded operating revenue of RMB420mn, up 37.14% YoY, and net profit attributable to shareholders of the parent company of RMB67mn, up 57.13% YoY.

Quick Take

Overseas markets drive rapid revenue growth, with all product lines recording positive growth

In 1H26, the company recorded core business revenue of RMB808mn, up 31.54% YoY. By region, overseas revenue reached RMB471mn, up 51.08% YoY, with its share of core business revenue rising to 58.23%; domestic revenue reached RMB338mn, up 11.45% YoY. Growth in overseas operations was mainly driven by the rampup of Vietnam capacity and a significant increase in orders from North America. By product, revenue from general-purpose meters reached RMB473mn, up 36.92% YoY; revenue from temperature and environmental testing meters reached RMB159mn, up 34.40% YoY; revenue from testing instruments reached RMB106mn, up 20.93% YoY; and revenue from professional meters reached RMB70mn, up 11.37% YoY. All four major product lines maintained growth.

Economies of scale at the Vietnam base boost the gross margin of core products

In 1H26, the gross margin of the company's core products was 45.41%, up 2.71 pcts YoY, mainly because scaled production at the Vietnam production base diluted unit manufacturing costs. The selling expense, administrative expense, R&D expense and financing expense ratios were 9.00%, 6.19%, 8.75% and 1.40%, respectively, changing by -0.46 pct, -0.90 pct, -1.35 pcts and +2.67 pcts YoY, respectively. In particular, financing expense swung from income of RMB7.83mn in the same period last year to an expense of RMB11.40mn, mainly due to an increase in net foreign exchange losses arising from fluctuations in the RMB/USD exchange rate. Despite the drag from foreign exchange losses, the company's net profit attributable to shareholders of the parent company still grew by 42.82%, demonstrating strong profit support from revenue expansion, gross margin improvement and expense dilution.

Continued breakthroughs in high-end oscilloscopes and RF instruments, with the product mix rapidly shifting toward the mid-to-high end

The company's MSO8000HD and MSO8000HDP series oscilloscopes with 8 GHz bandwidth and MSO6000HDP series oscilloscopes with 2 GHz bandwidth have all achieved volume shipments. The company also plans to launch oscilloscopes with bandwidth above 13 GHz in 2026. Three proprietary front-end chips for oscilloscopes have entered volume application, helping reduce supply chain risks for key components. Meanwhile, the company established a Tianjin R&D center and launched the VNA3000 series vector network analyzers. Together with the Chengdu R&D center, it is gradually building an RF testing product portfolio covering laboratory R&D, production-line quality inspection, and on-site engineering operations and maintenance. In 1H26, the company's R&D expense was RMB71mn, up 14.36% YoY. Its R&D headcount increased to 424, up 19.77% YoY, continuing to support product iteration.

Vietnam capacity fully ramped up, while the acquisition of Xince Communications expands business scope

After completing its mass-production ramp-up in 2025, the Vietnam production base fully unlocked scaled delivery capacity in 1H26. Together with the Heyuan and Songshan Lake bases, it has formed a coordinated production network across three locations, helping diversify international trade, geopolitical and tariff risks while shortening delivery lead times for overseas orders. In terms of industrial acquisitions, the company plans to acquire a 51% equity interest in Xince Communications for RMB81.60mn. As of the report's disclosure date, the company had secured 51% of its voting rights through direct shareholdings and entrusted voting rights. Xince Communications primarily focuses on optical network construction and maintenance as well as electromagnetic environment safety monitoring. Its operations are synergistic with the company's professional meters and test instruments business. Going forward, it is expected to leverage the company's supply chain, manufacturing and channel resources to further enhance its integrated testing and measurement solutions.

Investment recommendation: The company’s traditional instrument business remains solid. Its Vietnam production base has fully ramped up large-scale deliveries, while orders from the North American market are growing rapidly, driving simultaneous improvements in overseas revenue and profitability. The company acquired Xince Communications, further expanding into optical communications testing and electromagnetic environment monitoring. The acquisition is expected to generate synergies in R&D, supply chains, manufacturing, and sales channels. The company is expected to achieve operating revenue of RMB1.537bn, RMB1.890bn, and RMB2.237bn in 2026-2028, representing YoY growth of 25.90%, 23.00%, and 18.34%, respectively; net profit attributable to shareholders of the parent company is expected to reach RMB237mn, RMB308mn, and RMB389mn, representing YoY growth of 56.58%, 29.99%, and 26.51%, respectively, corresponding to PE multiples of 33.15x, 25.50x, and 20.16x, respectively. A “buy” rating is assigned.

Risks

(1) Risk of overseas market expansion falling short of expectations: If overseas demand slows or trade policies change, the company’s overseas orders and revenue growth may be affected.

(2) Risk of new product R&D and promotion falling short of expectations: If the R&D, customer validation, or marketing of new products such as high-end oscilloscopes and RF test instruments falls short of expectations, the company’s product mix upgrade may be affected.

(3) Foreign exchange fluctuation risk: The company derives a relatively high proportion of its revenue from overseas markets. Significant fluctuations in the RMB against the USD and other major currencies may result in foreign exchange losses.

(4) Risk of M&A integration falling short of expectations: If the integration of Xince Communications or the resulting synergies fall short of expectations, the company’s industry positioning and investment returns may be affected.