How much did third-quarter results beat expectations by?

  • Yihe's third-quarter 2026 revenue was 1.116 billion yuan, up 52% year on year. Net profit rose 48% to 201 million yuan, 25% above the Visible Alpha consensus of 161 million yuan.
  • Revenue grew faster than profit: the third-quarter gross margin was 39.6%, down 0.7 percentage points year on year; the net margin was 18.0%, down 0.4 percentage points. In the first three quarters, revenue rose 35% and net profit rose 24%, while the net margin fell from 19.0% to 17.5%.

Which businesses drove growth, and which began to slow?

  • Management said third-quarter semiconductor revenue rose more than 100% year on year, while electronics revenue rose more than 40%; electronics growth accelerated from 25% for the first three quarters. Semiconductor revenue rose 102% year on year in the first three quarters, but accounted for only 9% of total revenue.
  • Batteries remained a relatively large source of revenue, accounting for 24% of revenue in the first three quarters and growing 42% year on year; growth slowed to 20%–30% in the third quarter. Management expects battery demand may slow in the future as the current upcycle, which began in the fourth quarter of 2024, progresses.
  • Management is optimistic about the electronics business, citing hinge assembly and heat-dissipation plate manufacturing in Apple's supply chain, as well as AI-related demand for optical modules and liquid cooling. In semiconductors, it sees opportunities in inspection and metrology applications.

Why does Citi see room to raise its full-year forecast?

  • Net profit for the first three quarters was 519 million yuan, reaching 84% of Citi's full-year 2026 forecast, slightly above the 82% average share of full-year profit recorded in the same period in 2022–2025. On this basis, Citi sees room to raise its full-year earnings forecast.
  • Citi maintained its buy rating and 32 yuan target price, corresponding to 33 times expected 2026 earnings. The valuation is set 0.5 standard deviations below the company's five-year average to reflect higher operating expenses and slight pressure on gross margin.