Shuanghuan Driveline’s third-quarter revenue and profit growth diverge as Nomura bets on robot reducers and coaxial gearboxes
In the third quarter of 2026, Shuanghuan Driveline’s revenue rose 14.4% year on year, while net profit grew just 3.8%. Nomura lowered its earnings forecasts but raised its target price from 50 yuan to 55 yuan, citing synergies in the robotics business and expanded coaxial gearbox capacity.
Original source：Nomura International (Hong Kong) Ltd.First published on Unhidea：Original source date：
Key takeaway
Nomura believes the integration of Shuanghuan Driveline’s robotics business and expanded coaxial gearbox capacity could open up room for growth, but third-quarter R&D and foreign-exchange pressures have already left profit growth well behind revenue growth.
Why did revenue grow 14% while profit rose only 4%?
In the third quarter of 2026, Shuanghuan Driveline reported revenue of 2.56 billion yuan, up 14.4% year on year; net profit of 333 million yuan, up 3.8%; and net profit excluding non-recurring items of 311 million yuan, up 6.5%. Both profit measures grew more slowly than revenue.
Nomura attributed the gap to a year-on-year increase of approximately 16 million–18 million yuan in R&D expenses and approximately 7 million–8 million yuan in foreign-exchange losses. Based on slower earnings-per-share growth in the third quarter, the bank lowered its earnings forecasts for the next two years.
Which businesses are driving growth, and which are declining?
Nomura estimates that new-energy vehicle gears accounted for 51%–52% of third-quarter revenue, rising approximately 26% year on year and 18% quarter on quarter. Demand from overseas customers and rising coaxial gearbox volumes were the main drivers.
Gears for internal-combustion vehicles accounted for approximately 15% of revenue, falling approximately 14% year on year and remaining flat quarter on quarter. Nomura expects demand for new-energy vehicles to remain strong in the fourth quarter, but revenue from internal-combustion vehicle gears to continue falling by more than 10% year on year.
Third-quarter revenue from smart actuators grew approximately 31%–32% year on year and was roughly flat quarter on quarter; revenue from RV and harmonic reducers for industrial robots grew more than 20% year on year. The construction machinery business grew approximately 15% year on year but declined slightly quarter on quarter due to seasonality.
What comes next for robotics and coaxial gearboxes?
After discounting customer forecasts, management guided for embodied-AI reducer revenue of 150 million–200 million yuan in 2026 and 400 million–500 million yuan in 2027. Separately, Nomura expects industrial robot reducer revenue to exceed 500 million yuan in 2026.
Following the termination of the Huandong spin-off, Nomura believes the group can integrate sales and R&D across its robotics businesses to generate synergies. Whether embodied-AI reducers can scale up in 2027 is one reason for its positive view on the valuation.
For coaxial gearboxes, the company aims to reach monthly production capacity of 100 thousand units by the end of 2026 and continue adding capacity each quarter in 2027. Nomura expects monthly shipments to exceed 80 thousand units over the long term. The bank believes the use of a coaxial gearbox in the Tesla Roadster 2 could validate its power density, but is unlikely to drive sales in the near term.
Why raise the target price while cutting earnings forecasts?
Nomura cut its earnings-per-share forecasts for 2026 and 2027 from 1.61 yuan and 1.86 yuan to 1.56 yuan and 1.78 yuan, respectively. It maintained its buy rating and raised its target price from 50 yuan to 55 yuan.
The target price implies a 2027 forward price-to-earnings multiple of 31 times, up from 27 times previously. Nomura’s reasons for assigning a higher valuation are robotics business synergies following the termination of the spin-off, potential volume growth in embodied-AI reducers, and expanded coaxial gearbox capacity.
The main downside risks listed by Nomura include weaker-than-expected gear demand in China and slower growth in the reducer business.
