On August 24, Luxshare Precision Industry Co.,Ltd. released its semi-annual financial report for 2026. In the first half of the year, the company achieved operating revenue of RMB 174.504 billion, a year-on-year increase of 40.16%; net profit attributable to the parent company was RMB 7.843 billion, up 18.04% year-on-year; basic earnings per share reached RMB 1.0774, compared to RMB 0.9175 in the same period last year.

While revenue maintained rapid growth, the company's profitability also continued to expand, though profit growth lagged notably behind revenue growth. In the first half, the company's net profit stood at RMB 8.526 billion, up 16.83% year-on-year, and operating profit reached RMB 9.492 billion, up 16.00% year-on-year, while net profit attributable to the parent rose at a slightly faster pace of 18.04%.

On the expense side, the company continued to ramp up research and development investment. R&D expenses for the first half reached RMB 6.573 billion, up 43.09% year-on-year, while administrative expenses totaled RMB 5.538 billion, a 75.49% increase. Meanwhile, financial expenses swung from a net income of RMB 160 million in the year-ago period to an expense of RMB 2.240 billion, weighing on profitability.

Cash flow and capital expenditure, however, showed stronger expansion characteristics. Net cash flow from operating activities was negative RMB 2.446 billion in the first half, while net cash outflow from investing activities was RMB 29.393 billion, which included RMB 10.270 billion paid for fixed assets, intangible assets, and other long-term assets. During the same period, net cash inflow from financing activities reached RMB 44.939 billion.

Revenue growth accelerates, profit growth remains moderate

Looking at the income statement, Luxshare Precision Industry Co.,Ltd. recorded first-half operating revenue of RMB 174.504 billion, up from RMB 124.503 billion in the year-ago period, an increase of approximately RMB 50 billion. Operating costs were RMB 153.950 billion, up 39.89% year-on-year, broadly in line with the revenue growth rate.

As a result, the company's gross profit for the first half was approximately RMB 20.554 billion, with a gross margin of about 11.78%, slightly up 0.17 percentage points from 11.61% in the same period last year.

However, period expenses grew faster. Selling expenses were RMB 866 million, up 53.59% year-on-year; administrative expenses were RMB 5.538 billion, up 75.49%; and R&D expenses were RMB 6.573 billion, up 43.09%. The combined total of these three expense items reached RMB 12.977 billion, higher than the RMB 8.313 billion in the same period last year.

Of particular note is the financial expense line. In the first half, financial expenses were RMB 2.240 billion, compared to a negative RMB 160 million in the year-ago period; this included interest expenses of RMB 1.0996 billion and interest income of RMB 876.1 million.

Ultimately, the company's operating profit was RMB 9.492 billion, up 16.02% year-on-year; net profit was RMB 8.526 billion, up 16.83%; and net profit attributable to the parent was RMB 7.843 billion, up 18.04%. Basic earnings per share improved from RMB 0.9175 in the year-ago period to RMB 1.0774.

R&D investment continues to climb, administrative expenses rise sharply

Luxshare Precision Industry Co.,Ltd. spent RMB 6.573 billion on R&D in the first half, accounting for approximately 3.76% of operating revenue, slightly up from 3.69% in the same period last year.

In absolute terms, R&D investment increased by nearly RMB 2 billion year-on-year, a growth rate of 43.09% that clearly outpaced revenue growth, indicating the company remains committed to investing in technology and product development. Administrative expenses, meanwhile, rose from RMB 3.156 billion in the same period last year to RMB 5.538 billion, a 75.49% increase, significantly higher than both revenue and R&D expense growth.

At the same time, investment income from associates increased notably. First-half investment income reached RMB 4.289 billion, up 42.11% year-on-year, of which investment income from associates and joint ventures was RMB 2.747 billion, surging approximately 103% year-on-year.

This also implies that, apart from operating profit, investment income's contribution to the company's overall profitability has further increased.

Inventory climbs to RMB 50.4 billion, asset base continues to expand

As of the end of June, Luxshare Precision Industry Co.,Ltd. had total assets of RMB 349.890 billion, up approximately RMB 43.352 billion from RMB 306.538 billion at the end of 2025.

Among these, monetary funds stood at RMB 71.812 billion, up RMB 10.653 billion from RMB 61.159 billion at the beginning of the year; accounts receivable were RMB 47.666 billion, roughly flat with the start of the year; and inventory rose from RMB 42.333 billion to RMB 50.367 billion, an increase of about RMB 8.035 billion.

The growth in inventory aligns with the company's revenue expansion, though the growth rate is slightly higher than that of revenue. Additionally, prepayments increased from RMB 1.441 billion to RMB 3.351 billion, reflecting increased working capital requirements due to the expansion of business scale.

Liabilities also expanded significantly. As of the end of June, total liabilities were RMB 235.964 billion, up RMB 33.446 billion from RMB 202.517 billion at the beginning of the year. Short-term borrowings rose to RMB 93.569 billion from RMB 60.138 billion at the start of the year, an increase of RMB 33.432 billion, while long-term borrowings increased by RMB 8.101 billion to RMB 24.543 billion from RMB 16.442 billion.

The company's total owners' equity at the end of the period was RMB 113.926 billion, up RMB 9.906 billion from RMB 104.020 billion at the beginning of the year.

Capital expenditure remains elevated, M&A activity continues

The cash flow statement shows that Luxshare Precision Industry Co.,Ltd. had a net cash outflow of RMB 29.393 billion from investing activities in the first half, significantly wider than the RMB 15.832 billion in the same period last year.

Of this, RMB 10.270 billion was paid for fixed assets, intangible assets, and other long-term assets, higher than the RMB 9.528 billion in the year-ago period; cash paid for investments reached RMB 57.185 billion.

At the same time, the company continued to support business expansion through financing. In the first half, cash inflows from financing activities totaled RMB 112.853 billion, including RMB 100.337 billion from borrowings; debt repayments amounted to RMB 62.314 billion, resulting in a net financing inflow of RMB 44.939 billion.

On the M&A front, a subsidiary of Luxshare Precision Industry Co.,Ltd. acquired a 24.8% stake in LEONI AG on April 29 for EUR 186 million, equivalent to RMB 1.496 billion. Following the transaction, its shareholding increased from 50.1% to 74.9%, and the company maintains control over LEONI AG.

Operating cash flow remains negative, cash reserves stay ample

In the first half, the company's net cash flow from operating activities was negative RMB 2.446 billion, compared to negative RMB 1.658 billion in the same period last year.

Looking at the composition of operating cash flow, cash received from sales of goods and rendering of services reached RMB 174.669 billion, up 37.93% year-on-year; however, cash paid for goods and services totaled RMB 158.037 billion, and cash paid to and on behalf of employees reached RMB 20.877 billion, ultimately leaving operating cash flow in net outflow territory.

Despite the pressure on operating cash flow, the combined effects of financing and investing activities left the company with cash and cash equivalents of RMB 71.041 billion at the end of the period, up from RMB 56.485 billion in the year-ago period; on the balance sheet, monetary funds stood at RMB 71.812 billion.

Regarding dividends, the company plans to distribute a cash dividend of RMB 1.1 per 10 shares, based on its total share capital of 772 million shares as of the disclosure date, amounting to a total dividend payout of approximately RMB 849 million.