Guangdong Xinbao Electrical (002705.SZ): 2Q prelim results miss on demand weakness, cost inflation and FX

研报英文原文证据摘录

Guangdong Xinbao Electrical (002705.SZ): 2Q prelim results miss on demand weakness, cost inflation and FX

Equity Research

15 July 2026 | 4:38PM CST

Guangdong Xinbao Electrical (002705.SZ): 2Q prelim results miss on

demand weakness, cost inflation and FX

Xinbao reported below-expectation 2Q preliminary results post market close on July Nicolas Yi

+86(21)2401-8922 |

14, 2026. In the announcement, management estimates the company’s 1H26 profits nicolas.yi@goldmansachs.cn

Goldman Sachs (China) Securities

to be in the range of Rmb125mn - Rmb155mn, indicating a 71.4%-77.0% yoy Company Limited

decline. If using the mid-point (Rmb140mn) of the above range, we calculate Cecilia Tang

Xinbao’s net profits in 2Q26 to be c. Rmb60mn, indicating a 70%+ yoy decline. In the +86(21)2401-8738cecilia.tang@goldmansachs.cn|

announcement, management attributes the profits decline to a combination of weak GoldmanCompany SachsLimited(China) Securities

overseas demand, cost inflation, and USD depreciation against CNY, and mentioned

that they have already taken measures including increasing product prices and

improving manufacturing efficiency, yet the effects remain to be seen in the coming

quarters.

In light of the above, we expect the margin pressure to continue in the near term but

gradually ease as the price hike takes effect and FX volatility decreases. In the

meantime, we stay cautious on the overseas demand trend but continue to view

Xinbao as one of the leading OEM players for traditional small appliances considering

its manufacturing efficiency and client base. In all, we think most of the margin

pressure come from cyclical factors (cost inflation, FX) and should ease in 2027E,

assuming Xinbao’s competitive edge as a leading traditional small appliance OEM

player remains intact.