Where did third-quarter results exceed expectations?

  • The company's third-quarter revenue in 2026 was 913 million yuan, up 25% year on year and 3% above Goldman Sachs' original forecast. Net profit was 63 million yuan, up 175% year on year from a low base and 52% above Goldman Sachs' forecast.
  • Gross margin for the period was 39%, up 1 percentage point year on year. Operating margin was 8%, up 5 percentage points year on year and 4 percentage points above Goldman Sachs' forecast. The profit beat was considerably larger than the revenue beat.

What drove revenue growth and profit improvement, respectively?

  • Goldman Sachs believes solid demand for industrial automation and robotics supported revenue, with growth in semiconductor and humanoid robot end markets providing additional support.
  • Third-quarter gross margin was broadly stable compared with the second quarter. The net profit beat came mainly from selling, general and administrative expenses being lower than Goldman Sachs had expected, which the bank believes may be related to better cost control.
  • Profit pressures have not disappeared as a result. Goldman Sachs noted that higher research and development and marketing expenses, rising raw material prices, and limited economies of scale as new businesses remain in their initial investment phase could all weigh on near-term margins. The bank expects limited near-term margin upside.

Why is the humanoid robotics opportunity not yet enough to change the rating?

  • Goldman Sachs expects the company to become an important participant in the humanoid robot coreless motor supply chain, thanks to its strengths in coreless motors and broader motion control capabilities.
  • However, the bank remains cautious about the size and profitability of the opportunity: technological approaches to dexterous hands are still evolving, adoption of coreless motors may be lower than previously expected, and supply chain competition is intensifying. Conversely, faster humanoid robot development, or adoption rates or company market share above expectations, would present upside risks.

How did Goldman Sachs adjust its forecasts and target price?

  • Taking into account the third-quarter earnings beat and better cost control, Goldman Sachs raised its 2026–2030 revenue forecasts by 2% and its net profit forecasts by 4%–6%.
  • Goldman Sachs raised its 12-month target price from 35.5 yuan to 37 yuan, still based on a 2030 forecast price-to-earnings multiple of 37 times, discounted to 2027 at a cost of equity of 9.5%. The bank considers the valuation high and maintains its Sell rating; the target price is approximately 32.8% below the closing price of 55.04 yuan on 27 October 2026.