Key takeaway The company released its 1H26 report, posting revenue of RMB5.821bn, up 50.92% YoY. Net profit attributable to shareholders of the parent company reached RMB431mn, up 56.90% YoY. Revenue and profit delivered strong growth, while the contributions from the NAS business and overseas markets increased significantly, accompanied by improvements in gross margin and profitability. The company continues to increase investment in technology R&D, reinforce the competitive barriers of strategic product categories, and build a high-quality ecosystem. The gradual launch and sale of AI NAS products, along with crowdfunding for the Home Agent and the progressive development of its ecosystem, are expected to support the company's steady medium- to long-term growth.

Event

The company released its 1H26 report, posting revenue of RMB5.821bn, up 50.92% YoY. Net profit attributable to shareholders of the parent company reached RMB431mn, up 56.90% YoY.

Quick Take

Strong revenue and profit growth, with significantly higher contributions from the NAS business and overseas markets In 1H26, net profit attributable to shareholders of the parent company excluding non-recurring gains and losses reached RMB420mn, up 62.59% YoY. Net cash flow from operating activities was -RMB70mn; in 2Q26 alone, operating revenue reached RMB3.022bn, up 48.67% YoY. Net profit attributable to shareholders of the parent company reached RMB193mn, up 55.41% YoY. Net profit attributable to shareholders of the parent company excluding non-recurring gains and losses reached RMB188mn, up 62.42% YoY. Net cash flow from operating activities was RMB122mn, up 205.05% YoY and turning markedly positive from -RMB192mn in 1Q26; in terms of gross margin and expense ratios, gross margin in 1H26 was 39.18%, up 2.20 pcts YoY. The selling expense ratio was 19.79%, down 0.71 pct YoY. The administrative expense ratio decreased by 0.19 pct YoY. The R&D expense ratio increased by 1.50 pcts YoY; in 2Q26 alone, gross margin was 39.11%, up 3.05 pcts YoY. The selling expense ratio was 20.56%, down 0.50 pct YoY. The administrative expense ratio decreased by 0.09 pct YoY. The R&D expense ratio increased by 1.69 pcts YoY; by product and channel, revenue from principal operations reached RMB5.814bn in 1H26, up 50.82% YoY. Of this, charging and innovative products generated revenue of RMB2.667bn, up 50.02% YoY, with a gross margin of 38.31%, up 2.24 pcts; smart office products generated RMB1.500bn, up 45.35% YoY, with a gross margin of 42.26%, up 2.24 pcts; smart audio-visual products generated RMB877mn, up 39.20% YoY, with a gross margin of 42.32%, up 1.50 pcts; and smart storage products generated RMB770mn, up 85.53% YoY, with a gross margin of 33.12%, up 5.45 pcts. Smart storage products accounted for 13.22% of total revenue, up 2.47 pcts YoY; online channel revenue reached RMB4.147bn, up 45.69% YoY, with a gross margin of 43.31%, up 3.36 pcts. Of this, Amazon revenue reached RMB2.280bn, up 71.78% YoY, accounting for 39.22% of revenue from principal operations, up 4.79 pcts from the same period last year; offline channel revenue reached RMB1.667bn, up 65.31% YoY, with a gross margin of 29.14%, up 0.47 pct. Offline channels accounted for 28.67% of revenue, up 2.52 pcts YoY; overseas revenue reached RMB3.888bn, up 69.42% YoY, accounting for 66.79% of operating revenue, up 7.29 pcts YoY. Gross margin was 44.08%, up 0.59 pcts; Domestic revenue reached RMB1.926bn, up 23.46% YoY, with a gross margin of 29.49%, up 2.04 pcts.

Continue strengthening the competitive barriers of strategic product categories and build a high-quality ecosystem

The company continued to increase investment in technology R&D, focusing on breakthroughs in core consumer electronics technologies. The company also actively expanded and strengthened its offline channels through strategic partnerships with major supermarket chains, specialized retailers, and leading regional distributors. Overseas, it has successfully entered the retail networks of Walmart, Costco, Best Buy, B&H, and Micro Center in the US, MediaMarkt in Europe, and Bic Camera and Yodobashi Camera in Japan. AI NAS products are expected to gradually enter various sales channels, further driving the growth of the NAS business. Crowdfunding for Home Agent-related products is expected to begin in 4Q26. This will enhance the role of NAS products as home AI data and computing centers and support the continued development of a whole-home smart ecosystem. The company’s medium- to long-term development strategy and objectives are becoming clearer, with favorable long-term growth prospects.

Investment recommendation: We forecast net profit attributable to shareholders of the parent company of RMB1.001bn, RMB1.326bn, and RMB1.754bn in 2026, 2027, and 2028, respectively. The current share price implies P/E ratios of 20x, 15x, and 12x, respectively. We maintain our “Overweight” rating.

Risks

1. During the reshaping of the global trade landscape, potential risks such as trade barriers may create uncertainty over future export costs and markets. Overseas demand may also experience cyclical fluctuations. These factors could affect demand for the company s products; 2. The overseas digital product mar ket remains relatively fragmented. The company s products still face competition from established domestic and overseas brands, which may challenge its market share in niche segments; 3. Some of the company s promising new products, including portable outd oor energy storage products and NAS products, remain in the iterative development and market cultivation stage. Their brand influence has yet to mature, while established brands are already competing in these markets. Uncertainty therefore remains over the subsequent market development of these products; 4. Other risks include global trade security, the evolving tariff environment, and the effectiveness of product R&D.