Key takeaway

In 1H26, the company achieved revenue of RMB276.9bn, net profit attributable to the parent company of RMB43.3bn, and net profit excluding non-recurring items of RMB39.0bn, up 55%, 42%, and 43% YoY respectively; specifically, in 2Q26, it achieved revenue of RMB147.8bn, net profit attributable to the parent of RMB22.5bn, and net profit excluding non-recurring items of RMB20.9bn, up 57%, 36%, and 36% YoY, and 14%, 9%, and 16% QoQ, respectively. On the volume front: In 1H26, the company saw inventory build-up ahead of peakseason supply tightness. We project its 1H26 production and sales volumes to reach 498 GWh and 435 GWh, respectively, representing YoY growth of 61% for both, with ESS accounting for nearly 25% of total sales. The company generated approximately 63 GWh of inventory additions in 1H26, bringing estimated total finished-goods inventory to around 250 GWh as of end-June, up 71% YoY. The increment is primarily reflected in finished goods, as we expect the company to ramp up pre-production in 2H26 to secure inventory ahead of anticipated capacity constraints. On the earnings front: In 1H26, overall GPM stood at 23.9%, down 1.1 pcts YoY, while net margin attributable to the parent was 15.6%, down 1.4 pcts YoY. The earnings decline in 1H26 was primarily attributable to: (1) a shift in product mix, with a higher proportion of ESS shipments; (2) the impact of export tax rebate adjustments on existing order books; (3) less mature pricing pass-through mechanisms in certain segments such as commercial vehicles compared to passenger vehicles, forcing the company to absorb part of the raw material cost pressure; and (4) other financial items, particularly non-operating income, which affected attributable net profit. After adjusting for these items, 2Q26 attributable net profit per unit reached Rmb0.104/Wh, representing an improvement of Rmb0.006/Wh.

Event

The Company released its 2026 interim results, reporting revenue / attributable net profit /attributable net profit after deducting non-recurring items of RMB276.917bn / RMB43.284bn / RMB39.013bn for 1H26, representing YoY growth of 54.8% / 42.0% / 43.4%, respectively.

For 2Q26 specifically, the company posted revenue / attributable net profit / attributable net profit after deducting non-recurring items of RMB147.786bn / RMB22.546bn / RMB20.921bn, representing YoY growth of 56.9% / 36.5% / 36.1% and QoQ growth of 14.5% / 8.7% / 15.6%, respectively.

Risks

1) Lower-than-expected production and sales of downstream new energy vehicles: Lower-than-expected sales due to impacts like sluggish demand; lower-than-expected production due to sharp fluctuations in upstream raw material prices, power cuts, etc., which will further affect the shipment and profitability the company's related business.

2) The raw material prices may rise faster than expected: Since 2021, the prices of raw materials have shown high periodical volatility. The high upstream prices, combined with its volatility will affect terminal demand, and disrupt companies' performance in the short run.

3) Slower-than-expected progress of the company's key projects: For the company as a participant in the new energy sector, the progress of major projects is the key to supporting the revenue and profits, and is also a reflection of the company's growth potential. The slower-than-expected progress of major projects will affect its current and long-term performance.