TGOOD’s third-quarter revenue growth accelerates as profit growth slows: Can recovering orders drive a profit rebound?
Third-quarter 2026 revenue rose 18% year on year, but growth in net profit attributable to shareholders fell to less than 7%. JPMorgan expects improving grid, data-center and overseas orders to drive a quarter-by-quarter recovery in earnings momentum.
Original source：J.P. MorganFirst published on Unhidea：Original source date：
Key takeaway
The absence of high-margin Saudi orders and rising expenses weighed on TGOOD’s third-quarter profit, but JPMorgan expects subsequent improvement from growth in grid, data-center and overseas orders.
Why did profit growth slow as revenue growth accelerated?
TGOOD’s revenue grew 18% year on year in the third quarter of 2026, above the 6% recorded in the first half. Net profit attributable to shareholders was 382 million yuan, up less than 7% year on year and well below the first-half growth rate of more than 30%.
Third-quarter gross margin fell by more than 1.4 percentage points year on year to 26.3%. Management attributed the decline to the absence this year of high-margin Saudi orders recognized in the same period last year; those orders had a gross margin of approximately 35%.
Over the same period, administrative and R&D expenses rose 15% and 32% year on year, respectively, limiting operating profit growth to approximately 12%. JPMorgan believes the increase in expenses may be partly related to overseas expansion and R&D for new data-center products. Lower investment income also weighed on results.
Which new orders are supporting future growth?
Domestic grid orders reached 2 billion yuan in the first nine months of 2026, up 40% year on year and accelerating from 30% growth in the first half. Management attributed the growth to increased grid purchases of prefabricated products, equipment replacement, strong demand for substations and gains in the company’s market share.
Data-center orders reached 1.5 billion yuan in the first nine months, a year-on-year increase of 3 times; the figure for the first eight months was 1 billion yuan. Management said data-center customers showed strong demand for prefabricated substations rated at 110 kilovolts and above.
New-energy demand remains weak, but management believes stronger grid, data-center and overseas orders will be sufficient to offset this pressure.
Can overseas business improve margins?
New overseas orders reached 1.3 billion yuan in the first nine months, up approximately 30% year on year. Management said growth would be approximately 200%–300% excluding the large Saudi order won last year.
Management expects a rising share of overseas revenue to drive a quarter-by-quarter recovery in gross margin: overseas products have an average gross margin of approximately 30%, compared with less than 25% for the power-equipment business in 2025. The company aims for overseas revenue to account for more than 30% of power-equipment revenue within the next two to three years.
JPMorgan expects earnings momentum to recover quarter by quarter and maintains its Overweight rating and June 2027 price target of 42 yuan per share. The next catalyst is progress on the Saudi prefabricated-substation tender; management said the tender is moving forward but gave no specific timing. The company secured approximately 50% of the previous tender, and the bank believes it could win a substantial share in the next round.
