CICC: Lowering the target price of Sanhua Intelligent Control (02050) by 12.5% to HK$35 to maintain the “outperforming industry” rating for AH shares

The Zhitong Finance App learned that CICC released a research report stating that it maintains the Sanhua Intelligent Control (02050) AH share “outperforms the industry” rating, and that the target price for H shares was lowered by 12.5% from HK$40 to HK$35. Based on the slowdown in automotive business growth, the bank lowered Sanhua Intelligent Control's profit forecasts for 2026 and 2027 by 8.7% and 4.0% to RMB 4.397 billion and RMB 5.422 billion, respectively. Currently, the price-earnings ratio of A-shares is 34.6 times and 28 times the 2026 and 2027 price-earnings ratios, respectively; the price of H shares corresponds to 21.6 times and 17 times the price-earnings ratio.

CICC pointed out that in the first half of 2026, Sanhua Intelligent Control's revenue reached 16.9 billion yuan, up 4% year on year; net profit attributable to shareholders was 2,044 billion yuan, down 3% year on year. Among them, revenue for the second quarter was RMB 9.126 billion, up 6% year on year and up 17% from quarter to quarter; net profit attributable to shareholders was RMB 1,116 billion, down 7% year on year and up 20% from quarter to quarter. The company's second-quarter results were in line with market expectations.

On the business side, the company's revenue grew steadily in the first half of 2026, mainly due to the upgrading of refrigeration component product structure and active expansion of emerging fields such as liquid cooling in data centers. At the same time, the overseas expansion of new energy vehicles led to a rise in demand for thermal management, driving the auto parts business revenue to increase 9.9% year-on-year to 6.46 billion yuan. In terms of data centers, products have been extended to application scenarios such as primary side equipment, CDU (cooling distribution units), and server cabinets; in the field of bionic robots, mechatronic actuator products have entered the batch delivery stage, and the production line is progressing smoothly. CICC is optimistic that the company's diversified growth curve will gradually take shape, which will jointly drive future revenue growth.

In terms of profitability, the company's gross margin for the first half of 2026 was 28.1%, a slight decrease of 0.1 percentage points year on year; gross margin for the second quarter was 28.3%, down 1.0 percentage point year on year, but increased 0.5 percentage points from quarter to quarter. The total sales, management and R&D expenses rate in the second quarter was 11.0%, down 0.1 and 0.7 percentage points year-on-year and quarterly, respectively. Net profit performance was dragged down by exchange losses. Exchange losses of RMB 293 million were recorded in the first half of the year, leading to a decline in net profit attributable to shareholders. Excluding related effects, net profit after deducting non-recurring profit and loss increased 7% year-on-year to RMB 2.15 billion, reflecting the steady profit performance of the main business. In addition, net operating cash flow for the second quarter reached RMB 1.39 billion, up 73% and 26% year-on-year and quarterly respectively. Cash flow performance was impressive.