Original source：野村东方国际证券First published on Unhidea：Original source date：
Key takeaway
Leadshine Technology’s third-quarter revenue met Nomura’s expectations. Expense control made up for the gross margin shortfall, prompting the firm to raise its earnings forecasts, although cost pressure and cash tied up in operations limit the extent of the improvement.
Why did third-quarter profit beat expectations?
In the third quarter of 2026, Leadshine Technology reported revenue of 661 million yuan, up 61.7% year on year, and net profit of 106 million yuan, up 156.1% year on year. Revenue met Nomura’s expectations, while net profit exceeded them.
The profit beat came mainly from expense control: the selling and administrative expense ratio for the first three quarters was 24.3%, down 3.4 percentage points year on year, offsetting the effect of a lower-than-expected gross margin.
The third-quarter gross margin was 39.3%, broadly unchanged from the previous quarter but below Nomura’s expectations; the firm attributed this mainly to upstream cost pressure.
What supported revenue growth, and why did it fall quarter on quarter?
Servo systems were the main source of growth: revenue for the first three quarters was 1.01 billion yuan, up 58.6% year on year, including third-quarter revenue of 347 million yuan, up 66.5% year on year.
Nomura believes a recovery in demand for manufacturing automation and import substitution will benefit the company’s motion-control business; the company is also expanding into applications including semiconductors, optical communications and high-end machine tools.
Despite rapid year-on-year growth, total revenue and net profit fell 8.4% and 13.1%, respectively, from the previous quarter, which Nomura attributed mainly to seasonal factors.
Earnings forecasts raised: what is the cash-flow outlook?
Nomura left its revenue forecasts for 2026–2028 unchanged, lowered its gross margin forecasts for each year, and made larger cuts to its selling and administrative expense ratio forecasts. Together, the two adjustments led the firm to raise its net profit forecasts for the three years by 6.4%, 5.1% and 6.4%, respectively, to 389 million yuan, 522 million yuan and 666 million yuan.
Profit growth and cash-flow improvement are not moving in step: Nomura forecasts operating cash flow of 69 million yuan in 2026, below the 285 million yuan recorded in 2025; changes in working capital in its model tie up 380 million yuan.
What do the robotics business and valuation assessment depend on?
The company is developing core robotics components, including frameless torque motors, dexterous hands and joint modules. Nomura is optimistic about the incremental opportunity from humanoid robots over the medium to long term, but the scale of their earnings contribution depends on subsequent order execution and revenue realization.
Nomura maintained its Buy rating and raised its target price from 69.40 yuan to 74.39 yuan, implying 37.4% upside from the closing price of 54.15 yuan on 23 October 2026. The valuation base was rolled forward from 2026 to 2027, using a target price-to-earnings multiple of 45 times, above the peer average of approximately 35 times, because the firm expects the company’s earnings to grow faster.
