Citi: Leader Drive’s third-quarter revenue growth rises to 56%, while gross margin remains under pressure year over year

How much did accelerating revenue improve results?

In the third quarter of 2026, Leader Drive’s revenue rose 56% year over year, accelerating from 36% in the second quarter. Citi believes this came from both market share gains in industrial robotics and faster growth in components for humanoid robots and physical AI.
Third-quarter net profit was 52 million yuan, up 29% year over year and 2% above the Visible Alpha market consensus. While profit grew more slowly than revenue, the company’s overall gross margin fell 6.2 percentage points year over year.

Although third-quarter gross margin contracted year over year, it rose 2.0 percentage points from the previous quarter. Citi attributed the sequential improvement to higher volumes of humanoid robot products, which brought better product economies of scale.
During the same period, the operating expense ratio fell to 11.6%, down 5.5 percentage points year over year and 3.3 percentage points quarter over quarter. As revenue expanded, expenses declined as a proportion of revenue, supporting profit growth.

To meet demand for humanoid robot components, the company will continue to expand harmonic reducer capacity, planning to increase it from the current 90 thousand units per month to 120 thousand units per month by the end of 2026.
Citi maintained its Buy rating and target price of 496 yuan per share, based on a forecast price-to-earnings ratio of 322 times for 2027, reflecting the bank’s assessment that the humanoid and industrial robotics businesses have greater visibility.
Citi expects Leader Drive to have the highest revenue contribution from humanoid robotics and physical AI among the companies it covers, but ranks it below Shuanghuan Driveline and Hengli Hydraulics among component companies because of its high valuation.