Key takeaway

In 2Q26, the company recorded revenue/net profit attributable to shareholders of the parent company of RMB2.705bn/RMB315mn, up 35.32%/64.68% YoY, respectively. The company’s 2Q results were in line with expectations. Lithium batteries: The ramp-up of full-tab products and growing demand from emerging applications significantly improved the profitability of small cylindrical batteries. The metal logistics business maintained steady growth. The LED business faced short-term pressure, but continued to move upmarket. Looking ahead, the lithium battery business is expected to deliver growth in both volume and profit as the company further ramps up full-tab product capacity and demand from emerging applications remains strong. Meanwhile, the LED business is expected to see a recovery in profitability as high-end LED products account for a larger share of shipments.

Event

The company released its interim report. In 1H26, the company recorded revenue/net profit attributable to shareholders of the parent company/net profit attributable to shareholders of the parent company excluding non-recurring gains and losses of RMB4.858bn/RMB511mn/RMB503mn, up 30.35%/53.39%/41.25% YoY, respectively. Of this, in 2Q26, the company recorded revenue/net profit attributable to shareholders of the parent company/net profit attributable to shareholders of the parent company excluding non-recurring gains and losses of RMB2.705bn/RMB315mn/RMB307mn, up 35.32%/64.68%/47.55% YoY and 25.63%/60.98%/57.42% QoQ, respectively. Quick Take

The company’s 2Q results were in line with expectations. In 2Q26, the company recorded revenue/net profit attributable to shareholders of the parent company/net profit attributable to shareholders of the parent company excluding non-recurring gains and losses of RMB2.705bn/RMB315mn/RMB307mn, up 35.32%/64.68%/47.55% YoY, respectively. The company’s 2Q results were in line with expectations.

Risks

Risks from raw material price fluctuations and market competition : Significant fluctuations in upstream raw material prices for lithium batteries, combined with intensifying competition arising from industry capacity expansion, may squeeze the gross margin of products. Foreign exchange fluctuation risk : Overseas revenue now accounts for 21.52% of the total, but financial expenses surged 204% YoY due to foreign exchange losses, making foreign currency exposure more difficult to manage. Risk of slower-than-expected expansion into emerging applications : Emerging applications such as battery backup units (BBUs), AI robots/robotic dogs, and electric vertical takeoff and landing aircraft (eVTOLs) remain at an early stage of volume ramp-up. Customer validation and order sustainability remain uncertain. Risk of deterioration in operating cash flow : Net operating cash flow fell 27.33% YoY in 1H. Cash flow pressure may intensify if collections from downstream customers continue to slow or inventories accumulate further.