Shuanghuan Driveline’s third-quarter revenue rises 14%, with robot gears emerging as a new growth opportunity

Why was third-quarter growth not matched by net profit?

Shuanghuan Driveline reported third-quarter 2026 revenue of 2.559 billion yuan, up 14% year on year and broadly in line with Goldman Sachs’ expectations. Net profit was 333 million yuan, up 4% year on year and 3% below Goldman Sachs’ forecast.
Gross margin and operating margin were 27% and 15%, respectively, broadly unchanged year on year; net margin was 13%, down 1 percentage point. Quarterly R&D expenses rose 17% year on year, faster than revenue, while net profit was also affected by foreign exchange losses of approximately 8 million yuan.
Operating cash flow was equivalent to 94% of net profit, with cash flow remaining solid.

Third-quarter revenue from new-energy vehicle gears was approximately 1.3 billion yuan, up 25% year on year, supported by overseas projects and coaxial products. Goldman Sachs expects revenue from the business to grow 16% in 2027, above the 9% growth in new-energy vehicle production forecast by its China auto team.
Goldman Sachs breaks the 7-percentage-point outperformance versus the industry into two parts: overseas sales growth and capacity ramp-up contribute 4 percentage points, while higher product value per vehicle and increased penetration of coaxial gearboxes contribute 3 percentage points. Monthly shipments of coaxial products currently exceed 80 thousand sets; the company expects them to reach 100 thousand sets by year-end and continue rising quarter by quarter in 2027.
Gear and differential products for a North American new-energy vehicle customer are expected to be sent for sampling in the first quarter of 2027. Supply will initially come from China in the second and third quarters, before gradually shifting to overseas production. The company has also supplied differential assemblies to a European customer, with a value of approximately 400 yuan per vehicle.
The traditional combustion-engine vehicle business continues to contract: third-quarter revenue was approximately 390 million yuan, down 14% year on year, and the company expects a year-on-year decline of more than 10% in the fourth quarter.

AI robot gear revenue was approximately 70 million yuan in the first three quarters of 2026. The company expects approximately 150 million yuan for the full year and 400 million to 500 million yuan in 2027, including 100 million to 200 million yuan from overseas customers. Goldman Sachs says revenue in the latter year is expected to account for approximately 4% of the company’s total revenue.
The company plans to cover integrated control modules, reducers and other gear components. Its reducer products include harmonic, planetary and single-stage cycloidal reducers, as well as micro joints. Meanwhile, industrial robot reducer revenue grew more than 20% year on year in both the third quarter and the first three quarters.

Goldman Sachs expects compound annual growth rates of 15% for revenue and 16% for net profit over 2026–2030. This assessment assumes improved internal operating efficiency to offset the impact of lower margins at the Hungarian and potential Vietnamese factories.
Goldman Sachs revised its 2026–2030 earnings-per-share forecasts by amounts ranging from a 5% cut to a 3% increase. It maintained its Buy rating and raised its 12-month target price slightly from 45.5 yuan to 45.7 yuan, still based on 25 times forecast 2027 earnings.