J.P. Morgan: Yingliu’s third-quarter revenue growth accelerates and profit hits a record, while capacity expansion continues to weigh on gross margin

Where did third-quarter growth come from?

Yingliu’s third-quarter revenue was 1.113 billion yuan, up 51% year over year and 18% quarter over quarter; year-over-year growth accelerated markedly from 30% in the second quarter. JPMorgan attributed this to a rapid ramp-up in the gas turbine business.
The bank believes the company’s production for gas turbine customers including Siemens Energy, Baker Hughes, Ansaldo and Doosan is translating into meaningful revenue. The company added three furnaces in the third quarter to support further capacity expansion.
Capacity ramp-up in the first half was slower than expected, resulting in low investor expectations; JPMorgan believes the third-quarter performance exceeded expectations and supports its view of gas turbines and aircraft engines as twin growth engines.

Third-quarter net profit attributable to shareholders reached 150 million yuan, up 42% year over year and a quarterly record; recurring net profit rose 54% year over year.
Gross margin fell 3.6 percentage points year over year to 34.4% during capacity expansion. The combined management and selling expense ratio fell by about 2.4 percentage points, exceeding the 1.2 percentage-point rise in the R&D expense ratio, keeping net margin at 13.5%.
Cash flow was weaker than profit performance: third-quarter operating cash flow was 31 million yuan, below 92 million yuan a year earlier; operating cash flow was a net outflow of 115 million yuan in the first nine months, versus a net outflow of 59 million yuan a year earlier.
JPMorgan expects further improvements in yields and capacity utilization to support margin expansion from 2026 to 2028; if yields, pricing or the product mix are weaker than expected, gross margin improvement may fall short of expectations.

JPMorgan expects global gas turbine demand to exceed 100 gigawatts annually from 2026 to 2035, while manufacturing capacity in 2026 is only 64 gigawatts. The bank believes data center electricity demand and insufficient industry supply will support gas turbines as the company’s near-term growth engine.
Downstream equipment maker GE Vernova has signed agreements for 52 gigawatts of new gas equipment during the year and raised its combined target for order backlog and capacity slot reservation agreements at the end of 2026 from more than 125 gigawatts to at least 130 gigawatts; pricing for its third-quarter orders was more than 20% above the fourth quarter of 2025.
Yingliu’s gas turbine revenue in 2025 was 1 billion yuan. On that basis, JPMorgan estimates its global blade market share at about 2% and expects it to rise to 10% by 2030 as equipment makers diversify their suppliers. The pace of customers’ capacity expansion and competition from alternative power solutions will affect this growth trajectory.

Aircraft engines are the second growth engine favored by JPMorgan. The bank says Yingliu is the only Chinese supplier of hot-section components to GE Aerospace, Safran and Rolls-Royce, with long-term contracts extending to 2030–2032.
As of 29 October, the company’s share price was 31.74 yuan, down approximately 48% since July, while the CSI 300 Index fell 19% over the same period. JPMorgan maintained its overweight rating and December 2027 target price of 85 yuan; the target is based on a price-to-earnings multiple of 40 times its forecast earnings per share for 2028.