Hongfa Shares 2026 Interim: Q2 Revenue, Net Profit Hit Record Highs, Gross Margin 33.2%, Orders Covering 2027
Hongfa Shares disclosed its 2026 interim report, with second-quarter revenue and net profit hitting record highs since listing. Gross margin rebounded 1.1 percentage points quarter-on-quarter to 33.2%, supported by price adjustments and lower raw material costs. Headline profit growth lagged revenue growth due to one-off exchange losses and provisions, but excluding these, profit growth was broadly in line with revenue. Orders in hand cover through 2027, and capacity utilization rose above 85%. Core products, including high-voltage DC relays, gained global share. Operating cash flow fell year-on-year, and inventory remained high due to raw material stocking.
Hongfa Shares disclosed its 2026 interim report, with second-quarter standalone revenue and net profit both reaching record highs since the company's listing. The gross margin for the second quarter rebounded 1.1 percentage points quarter-on-quarter to 33.2%, mainly due to the further implementation of price adjustments at the beginning of the year and the alleviation of cost pressure from falling prices of silver, copper, and other raw materials.
In the first half of the year, headline profit growth lagged revenue growth, disturbed by one-off factors such as exchange losses and impairment provisions. After excluding these effects, profit growth was broadly in line with revenue growth.
The company's orders in hand already cover through 2027, and capacity utilization has risen to over 85%, with economies of scale leading to a gradual decline in the operating expense ratio. Core products, including high-voltage DC relays, continued to increase their global market share, effectively offsetting some of the fluctuations in traditional businesses. Operating cash flow in the first half fell year-on-year, and inventory remained at a high level, reflecting the cash flow pressure from increased raw material stocking in the earlier period.