[Changjiang Electric New] Hongfa Co., Ltd. 2026 Interim Report Analysis: Multiple Downstream Sectors Prosper, Gross Margin Gradually Recovers

English summary

1. The company released its 2026 interim report: 2026H1 revenue was RMB 11.0B, +32% YoY; net profit attributable to parent was RMB 1.156B, +20% YoY. Among them, 2026Q2 revenue was RMB 5.9B, +35.5% YoY; net profit attributable to parent was RMB 670M, +21% YoY; non-GAAP net profit was RMB 650M, +19% YoY. 2. Revenue side: Q2 revenue grew 36% YoY, accelerating from Q1. We believe this is mainly due to raw material cost pass-through price increases and continued market share gains. By product, all downstream segments achieved growth. Among them, high-voltage DC, industrial control, power, and power relays are expected to maintain rapid growth, while new products such as low-voltage complete sets, fuses, film capacitors, and connectors are expected to achieve high growth. 3. Profit side: 2026Q2 gross margin was 33.2%, -1.5pct YoY, +1.1pct QoQ. The YoY decline is mainly due to rising copper and silver commodity prices, but as new prices are implemented and commodity prices fall, Q2 gross margin improved sequentially.