Xinchen China Power Holdings Limited (POWER XINCHEN, 01148) reported unaudited interim results for the six months ended 30 June 2026, highlighting a sharp revenue contraction alongside a rebound in profitability.
Financial Highlights • Revenue fell 56.39% year on year (YoY) to RMB1.22 billion (H1 2025: RMB2.80 billion), primarily due to a slump in trading of extended-range gasoline engines. • Gross profit declined 35.74% to RMB85.10 million; gross margin improved to 6.96% from 4.72% a year earlier, reflecting a more favourable mix of traditional gasoline and diesel engines. • Profit for the period rose 27.70% to RMB21.05 million (H1 2025: RMB16.49 million), aided by a RMB58.13 million net gain in “other gains and losses”, which included a RMB51.99 million gain on lease modification and a RMB7.42 million bargain-purchase gain from a newly acquired subsidiary. • Profit attributable to equity holders increased 9.64% to RMB18.08 million; basic and diluted EPS edged up to RMB0.014 (H1 2025: RMB0.013). • Administrative expenses dropped 21.12% to RMB70.88 million, offsetting weaker revenue, while finance costs rose 8.43% to RMB21.44 million following additional borrowings tied to the recent acquisition.
Segment Performance • Gasoline engines: Revenue RMB641.72 million, down 73.13% YoY; segment profit RMB15.54 million. • Diesel engines: Revenue RMB56.30 million, up 4.59%; segment profit RMB11.05 million. • Engine components: Revenue RMB249.53 million, down 30.99%; segment profit RMB30.76 million. • Special vehicle components (new segment following January 2026 acquisition): Revenue RMB275.35 million; segment profit RMB27.75 million.
Operational Metrics • Engine sales volume dropped 71.53% to 67,200 units, reflecting lower demand for extended-range models. • Crankshaft sales fell 14.14% to 164,000 units; connecting-rod sales declined 17.05% to 321,000 units.
Balance Sheet & Liquidity • Cash and bank balances stood at RMB132.68 million, down 51.30% from end-2025; pledged deposits totalled RMB37.49 million. • Net current assets improved to RMB185.87 million (31 Dec 2025: net current liabilities of RMB72.99 million) after a sharp reduction in amounts due to an associate. • Total borrowings increased to RMB1.13 billion (31 Dec 2025: RMB659.51 million), lifting the gearing ratio to 63.52% (31 Dec 2025: 37.41%). • Debt-to-equity ratio eased to 1.09 from 1.19, supported by higher equity following the consolidation of a newly-acquired subsidiary. • Capital commitments contracted but not provided amounted to RMB48.06 million, mainly for plant upgrades and further capital injection into the acquired unit.
Key Events • Completed acquisition of a 60% stake in Shanxi Xinchen Lantian Equipment Manufacturing Co., Ltd. in January 2026, establishing the “special vehicle components” segment and broadening exposure to mining and off-road vehicle markets. • Recognised gain on lease modification linked to the 2022 sale-and-leaseback of assets to BMW Brilliance Automotive Ltd. • No interim dividend declared for H1 2026 (H1 2025: nil).
Management Commentary Management attributes the revenue contraction to weaker demand for extended-range gasoline engines, while profitability benefited from a richer product mix and one-off gains. The company remains focused on expanding its customer base in new-energy vehicle applications, leveraging its joint venture with Li Auto for range-extended engines, and integrating its newly acquired special-purpose vehicle subsidiary to diversify revenue streams.
Compliance & Governance The board confirmed full adherence to the Hong Kong Stock Exchange’s Corporate Governance Code during the period, and the audit committee reviewed the interim financial statements without qualification.