Wuxi Lihu Corporation Limited. (300694.SZ) released its 2026 semi-annual report on August 20. During the first half of 2026, the company recorded operating revenue of RMB 621 million, a year-on-year decline of 7.80%. Net profit attributable to shareholders reached RMB 27.42 million, surging 99.30% year-on-year, while non-GAAP net profit climbed 103.59% to RMB 27.00 million. Net cash flow from operating activities turned negative at RMB -5.74 million, reversing from a net inflow of RMB 176 million in the same period last year. R&D investment totaled RMB 26.04 million, down 12.14% year-on-year, and selling expenses fell 17.12% to RMB 3.56 million.

Profit quality improved notably, with structural optimization driving gross margin gains. The 103.59% growth in non-GAAP net profit outpaced the 99.30% rise in reported net profit, primarily due to minimal non-recurring items. During the reporting period, total non-recurring gains amounted to RMB 424,500, accounting for just 1.56% of net profit, including RMB 244,100 from supplier compensation and penalties and RMB 219,900 in government subsidies. Despite the revenue decline, gross margin expanded by 3.23 percentage points to 18.72%, driven by a higher share of products with stronger margins in the sales mix. By business segment, traditional fuel vehicle compressor housing and assembly revenue totaled RMB 342 million, representing 55.09% of total revenue, while turbocharger housing and assembly revenue reached RMB 207 million, accounting for 33.32%. Together, these two segments contributed 88.41% of total revenue. Although demand for traditional fuel vehicle components remains under pressure, the ramp-up of high-margin products lifted overall profitability. Net margin improved to 4.41% from 2.04% in the prior-year period, reflecting the combined effects of cost control and an optimized product mix. The decline in selling expenses (17.12%) outpaced the revenue contraction (7.80%), further amplifying profit-side elasticity. While R&D spending dipped 12.14% year-on-year, it remained at 4.19% of revenue, indicating no material weakening in investment intensity.

Cash flow faced interim pressure, while capital initiatives progressed steadily. Net cash flow from operating activities stood at RMB -5.74 million, a year-on-year decrease of 103.25%, swinging from a net inflow of RMB 176 million a year earlier. According to the report, the shift was primarily due to reduced bank acceptance bill discounting and payment of prior-year income tax liabilities. The contrast between cash flow performance and the sharp growth in non-GAAP net profit suggests a temporary weakening in the ability to convert earnings into cash. From a geographic perspective, domestic sales accounted for 50.93% of revenue and overseas sales 49.07%, remaining nearly balanced with no signs of a shift in market focus. In terms of shareholder structure, controlling shareholder Quanzhou Water Group Dingsheng maintained its 28.77% stake unchanged. Individual shareholder Chen Yibiao had 24,000 restricted shares released upon retirement, reducing his restricted share count from 286,500 to 262,500 shares. Regarding dividends, the company decided not to distribute cash dividends, issue bonus shares, or convert capital reserves into share capital for the first half of 2026. No new use of raised funds was reported during the period. On the capital operations front, wholly-owned subsidiary Lihu Xinzhi and controlled subsidiary Haida Qingneng both completed business registration changes. The company's investment in Quanzhou Liyue Xinhai Equity Investment Partnership (Limited Partnership) was fully funded and registered as a private fund, with the accounting treatment reclassified from 'long-term equity investment' to 'other non-current financial assets'.