KEDALI((002850)：High aluminum prices weigh on profitability;profitability recovery and robotics business ramp-up remain promising

Key takeaway


Benefiting from sustained strong downstream demand, the company recorded revenue of RMB5.066bn in 2Q26, up 39.8% YoY, and net profit attributable to shareholders of the parent company of RMB482mn, up 26.1% YoY. The company’s profit growth lagged revenue growth in 2Q26, mainly because persistently high aluminum prices put pressure on costs. In its core business, the company is steadily advancing its global production footprint, supporting future revenue growth. Aluminum prices have declined from their highs in 1H26, and the company’s profitability is expected to recover in 2H26. In the robotics business, construction of the Thailand plant is progressing smoothly, with volume production expected to ramp up in 2027. We remain optimistic about the company’s profitability recovery in 2H26 and the continued delivery of its robotics business.


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 RMB9.208bn/RMB943mn/RMB917mn, up 38.6%/22.6%/27.4% YoY. 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 RMB5.066bn/RMB482mn/RMB468mn, up 39.8%/26.1%/27.5% YoY and 22.3%/4.5%/4.3% QoQ.


Thesis


Strong YoY revenue growth in 2Q26, while high aluminum prices weigh on earnings. Driven by strong downstream demand, the company recorded revenue of RMB5.066bn in 2Q26, up 39.8% YoY. Growth in net profit attributable to shareholders of the parent company lagged revenue growth, mainly due to the following factors: ① Prices of aluminum and other commodity raw materials remained high, and the company absorbed most of the cost pressure, resulting in a lower gross margin. The company’s gross margin was 20.4% in 2Q26, down 3.1 pcts YoY and 0.8 pct QoQ. ② Expenses and impairment provisions increased. The company continued to increase R&D investment. In 2Q26, R&D expense reached RMB320mn, up RMB120mn YoY and RMB70mn QoQ; the company also recognized credit impairment losses of RMB50mn in 2Q26, further weighing on earnings.


Deeper global footprint, with lower costs expected to support a profitability recovery Amid strong downstream demand, the company steadily advanced its global operations strategy. During the reporting period, the phase IV expansion projects in Jiangsu and Sichuan progressed smoothly, further strengthening the company’s domestic production footprint; overseas, its plants in Germany, Sweden, and Hungary have commenced production, while preparations are underway for new projects in the US and Thailand. In terms of profitability, aluminum prices have declined from their 2Q26 peak. The company's cost pressures are expected to ease in 2H26, supporting a recovery in profitability. Robotics business creates a new growth driver and is expected to contribute to earnings in 2027. The company has established a coordinated product portfolio comprising three major categories: Rotary joints centered on reducers, linear joints centered on lead screws, and dexterous hands. In terms of capacity, the company operates two production bases in Jiangmen and Taiwan. Construction of its ha rmonic reducer production base in Thailand is progressing smoothly, laying a solid foundation for the rapid ramp-up of new businesses in 2027.


We are optimistic about the company's earnings recovery in 2H26 and the contribution potential of its robotics business. As a leader in lithium battery structural components, the company will fully benefit from robust downstream demand. Meanwhile, the new business has reached a key milestone. The company officially launched its strategic expansion into robotics in 2026. Supported by the smooth progress of its Thailand plant, the business is expected to achieve rapid revenue growth in 2027. We expect the company to generate net profit of RMB2.25bn/RMB3.02bn in 2026/2027, implying current P/E multiples of approximately 23.3x/17.4x. We maintain our Buy rating.


Risks


1. Macroeconomic environment and policy risks. Macroeconomic fluctuations and adjustments to relevant industry policies may cause volatility in the downstream power lithium-ion battery and new energy vehicle industries, which could adversely affect the company's operating results and financial position. 2. Risk of raw material price fluctuations. Significant price fluctuations in commodity raw materials such as aluminum and copper would directly increase the company's production costs, squeeze profit margins, and create uncertainty for profitability. 3. Less-than-expected downstream demand. A slowdown in new energy vehicle sales growth or weaker-than-expected overall industry demand would directly affect the company's product shipments and constrain revenue growth. 4. Risk of new business expansion falling short of expectations. The robotics and related components business remains at an early stage of development. If mass production, market expansion, or construction of the Thailand plant progresses more slowly than expected, the contribution from new businesses to earnings will be limited.

□.X.U. .L.i.n./.X.U.E. .L.u    .中.信.建.投.证.券.股.份.有.限.公.司