Earnings call transcript: Inovance Technology beats Q2 2026 forecasts on strong revenue

Inovance Technology reported stronger-than-expected Q2 2026 results with earnings per share of $0.5591, surpassing the $0.5254 forecast and revenue of $14.5 billion exceeding the $12.81 billion estimate. The stock remained little changed in early trading, dipping 0.31% to $61.86 from $62.05, trailing its 52-week high of $91 and above the year's low of $57.32.

Revenue exceeded forecasts by 13.19%, driven by robust industrial automation demand. EPS beat estimates by 6.41%, a smaller surprise compared to the revenue outperformance. First-half 2026 revenue grew 20% year-over-year to CNY 24.7 billion, while net profit attributable to parent shareholders fell 5% to CNY 2.81 billion, hurt by losses in automotive and additional taxes.

Industrial automation and digitalization revenue jumped 36% in Q2, offsetting automotive weakness. Full-year 2026 guidance remained unchanged, showing management's confidence in Q2 execution. The company's core industrial automation business remained the main growth engine, with demand strong across AI-related investments, domestic equipment localization, and export markets.

Q2 revenue grew 26% year-over-year to CNY 14.5 billion, and net profit attributable to parent shareholders increased 9% to CNY 1.8 billion. Gross margin improved by 0.43 percentage points, and NPAPS excluding non-recurring items rose 3% year-over-year. Net operating cash flow decreased by 35% year-over-year. The company's R&D spending equaled 9% of revenue.

Inovance's dividend yield stood at 0.81%, with a steady dividend payment history for 16 consecutive years.