China Merchants Securities: The machine tool sector's revenue and profit are growing steadily, and inventory and contract liabilities are improving overall

The Zhitong Finance App learned that China Merchants Securities released a research report saying that China's machine tool industry is developing steadily, and demand for high-end manufacturing such as new energy vehicles, AI hardware (liquid cooling, optical communication, etc.), and humanoid robots is gradually increasing, structurally boosting the profitability of the industry. The overall growth of the industry is relatively benign. There has been no concession sales behavior, and overall demand is more in line with supply. If the industry's order revenue continues to grow, the net interest rate level is also expected to gradually improve. The main reason for the growth in the 2026H1 tool sector is that the 2026H1 tungsten price rose significantly, and the growth rate of net profit to mother was higher than the revenue growth rate. The bargaining power on the supply side has been further strengthened, and the overall demand of the industry is relatively good.

The main views of China Merchants Securities are as follows:

Machine tool sector: steady increase in revenue and profit, improved profitability

Revenue and profit side: The sample company achieved total revenue of 11.595 billion yuan in 2026H1, an increase of 25.18% over the previous year; the sample company achieved a total net profit of 992 million yuan to mother in 2026H1, the highest value in half a year since 2022H1; at the same time, net profit growth rate to mother reached 33.72%. The bank believes that the main reason for the increase in revenue in the machine tool sector in 2026H1 is mainly due to strong procurement demand for downstream equipment such as general equipment, automobile and motorcycle parts, consumer electronics, communications, liquid cooling and cooling, etc., sales orders have increased significantly, and revenue has increased accordingly. At the same time, China's machine tool industry is developing steadily, and demand for high-end manufacturing such as new energy vehicles, AI hardware (liquid cooling, optical communication, etc.), and humanoid robots is gradually increasing, structurally boosting the profitability of the industry.

Profitability: 2026H1, the average gross margin of the sample company reached 26.68%, up 0.93 pct from the same period last year. The gross margin level and increase were all new highs since 2022H1; in 2026H1, the average net interest rate of the sample company was 10.53%, up 0.22pct from the 2025H1 average net interest rate of 10.31%, and the profit level increased. The bank believes that this means that the overall growth of the industry is relatively benign, the industry has not made concessions, and overall demand is more in line with supply. If the industry's order revenue continues to grow, the net interest rate level is also expected to gradually improve.

Asset quality: The total inventory of the 2026H1 sample company was 10.858 billion yuan, an increase of 15.82% over the previous year. At the same time, the amount was a new high since 2022H1. The bank believes that the current machine tool sector's revenue growth rate is high, and the combined inventory level is high. This may mean that the sample company players are optimistic about industry trends and are therefore actively preparing goods to meet subsequent demand. At the same time, considering that inventory also includes some “issued products,” the current high inventory level may provide some support for the performance confidence in the subsequent reporting period. At the level of contract debt, the 2026H1 sample company's contract debt was 2,985 billion yuan, an increase of 27.76% over the same period last year. At the same time, the amount and growth rate were also new highs since 2022H1. The bank believes that, when combined with the overall inventory level, the machine tool sector's subsequent performance is more certain, and the subsequent quarter of 2026 is expected to continue the growth trend.

Tool sector: revenue and profit increased rapidly, inventory and contract liabilities increased significantly

Revenue and profit side: The sample company achieved total revenue of $3,885 billion in 2026H1, an increase of 71.69% over the previous year. In terms of total revenue, the sample company hit a semi-annual high since 2021, and the growth rate also increased markedly. The bank believes that the main reason for the increase in this sector is the significant increase in the 2026H1 tungsten price. The main raw material for industrial tools is tungsten metal, so price adjustments by corresponding companies in the industry have driven revenue growth. On the profit side, the sample company achieved a total net profit of 1,174 billion yuan in 2026H1, which is the highest value for half a year since 2021 H1. At the same time, the growth rate of net profit to mother is higher than the revenue growth rate. The bank believes, first, that the scale effect of industrial tools is obvious. In the context of high capacity utilization, marginal costs are falling faster; second, tungsten prices are rising faster in 2026, and the sample company will use a portion of the low price inventory before the price increase for production, thus obtaining a certain amount of profit.

Profitability: 2026H1. The average gross margin of the sample company reached 50.32%, up 21.99 pct from the same period last year. The gross margin level and increase were both new highs since 2021 H1, higher than the high of 2021 H1. The bank believes that this means that the overall growth of the industry has entered an upward cycle. The industry has seen price increases, there is a certain mismatch between overall demand and supply, and the supply side has strong bargaining power. 2026H1, the average net interest rate of the sample company was 32.54%, up 23.65pct from the 2025H1 average net interest rate of 8.89%, and the profit level increased significantly. The bank believes that if the price of tungsten fluctuates later, then the net interest rate of the industry will also be affected, and the direction of fluctuation will often be in the same direction as the trend of tungsten prices. Therefore, with regard to the development trend of net interest rates in the tool sector, it is necessary to observe the trend of tungsten prices.

Asset quality: The total inventory of the 2026H1 sample company was 4.191 billion yuan, an increase of 107.28% over the previous year. At the same time, the amount was a new high since 2022H1. The bank believes that the inventory value in the tool sector has increased dramatically, first because the price of tungsten has risen, and the amount has increased due to the repricing of the company's corresponding products; at the same time, the company has strategically increased its inventory reserves to cope with fluctuations in raw material prices. At the level of contract debt, the 2026H1 sample company's contract debt was 84 million yuan, an increase of 185.72% over the same period last year. At the same time, the amount and growth rate were also new highs since 2022H1. In terms of the year-on-year growth rate, the bank observed a significant increase in contract debt in 2026H1, and the willingness to prepay for products to be purchased was also increasing. This may mean that the supply-side bargaining power of the 2026H1 tool sector has further increased, and the overall demand for the industry is better.

Risk warning: downstream industrial production demand falls short of expectations; fluctuations in raw materials greatly affect downstream procurement