Original source：Goldman Sachs (China) Securities Company LimitedFirst published on Unhidea：Original source date：
Key takeaway
Hangzhou Robam Appliances’ third-quarter operating performance was better than Goldman Sachs expected, but rising costs and declining revenue continued to weigh on profit. Overseas expansion is starting from a low base, and Goldman Sachs has lowered its earnings forecasts for the next three years.
Which third-quarter results beat expectations, and which fell short?
In the third quarter of 2026, revenue was 2.289 billion yuan and operating profit was 250 million yuan, down 15% and 40% year on year, respectively, but 2% and 6% above Goldman Sachs’ previous forecasts.
Net profit was 260 million yuan, down 42% year on year and 11% below Goldman Sachs’ forecast, mainly because of lower investment income.
Gross margin and operating margin were 51.6% and 10.6%, respectively, down 2.5 and 4.4 percentage points year on year, but both were better than Goldman Sachs expected. Rising costs and weaker operating leverage resulting from lower revenue continued to squeeze profit.
Which products and channels accounted for the revenue decline?
Third-quarter revenue fell across major categories, including range hoods and gas stoves. Cabinet revenue grew by a percentage in the teens, supported by a low base.
Management said revenue from both online and offline retail channels fell by nearly one-fifth year on year, with the online decline widening from the second quarter.
Revenue from the engineering channel fell by a low-single-digit percentage year on year, a substantially narrower decline than in the second quarter, partly helped by growth in cabinet revenue. Property completions remained weak.
Why did costs and expenses continue to weigh on profit?
Third-quarter selling, general and administrative expenses fell 11% year on year, but revenue fell more sharply, so these expenses as a share of revenue rose by 2 percentage points.
Management continues to expect full-year 2026 revenue to decline and profit to fall more sharply because of rising costs and weaker operating leverage. It expects fourth-quarter operating conditions to be broadly similar to those in the third quarter.
Looking ahead to 2027, management still expects a challenging overall operating environment but sees opportunities for relatively faster growth in niche categories such as integrated ovens.
What could overseas expansion bring, and how has Goldman Sachs revised its assessment?
Third-quarter overseas revenue grew 50% to 100% year on year, but from a very low base. The company has announced the acquisition of US kitchen thermometer company iTronics. The transaction remains subject to approval by the relevant government authorities, and management expects consolidation to be completed in early 2027.
After the transaction closes, the company plans to expand iTronics’ offline presence in the US; iTronics currently relies mainly on online channels. Management said it will continue to explore small acquisitions and seek a balance between cash dividends and potential acquisitions.
Goldman Sachs cut its earnings-per-share forecasts for 2026–2028 by 5% to 12% and lowered its 12-month target price from 18.2 yuan to 17.6 yuan, while maintaining its Buy rating. The target price is based on a multiple of 14 times forecast 2028 earnings per share, discounted to 2027 at a cost of equity of 9.5%.
