Starting its business with frequency converters, Veichi Electric (688698) has steadily advanced to the forefront of domestic low-voltage frequency converter brands. However, if you visit the company's exhibition hall today, the most eye-catching exhibits might not be those familiar industrial control devices, but rather rows of coreless motors and frameless torque motors repeatedly running on precision test benches—these are precisely the core components in the joints of humanoid robots.
With the 2026 semi-annual report just disclosed, Veichi Electric delivered a performance of CNY 1.066 billion in revenue, representing a year-on-year growth of 18.84%, yet the figures of CNY 110 million in net profit attributable to the parent company and a year-on-year decrease of 21.76% remain striking. Behind the phenomenon of increased revenue without increased profit, this SSE STAR Market company is undergoing a crucial transition from traditional industrial control to emerging tracks.
01. Core Business: Frequency Converters Remain the Ballast, but the Story Goes Beyond Them
To understand Veichi Electric, one must first understand its core business. Since its inception, the company has focused on the fields of electrical drive and industrial control. Its main products include frequency converters, servo systems, and PLC control systems, making it a typical "water seller" in industrial automation. In the first half of 2026, the industrial automation business contributed CNY 933 million in revenue, a year-on-year growth of 10.6%, of which frequency converter revenue was CNY 552 million, and servo system and control system revenue was CNY 381 million.
The frequency converter track may not sound glamorous, but Veichi Electric's strategy in this field is worth examining. The company's frequency converter product line implements a strategy of "full-category attack and full-field coverage," establishing its strongholds in multiple segmented industries ranging from port hoisting and photovoltaic water pumping to textile machinery. According to MIR data cited in brokers' mid-year report reviews, the company's market share in low-voltage frequency converters rose to 3.94% in the second quarter of 2026, a year-on-year increase of 0.25 percentage points; the semi-annual report disclosed that its market share in low-voltage frequency converters for 2025 was 3.40%, ranking fourth among domestic brands. In a market long dominated by foreign brands such as Siemens and ABB, every slight increase in market share signifies substantial room for substitution in real terms.
Overseas business is another dimension worth attention. In the first half of the year, the company's overseas main business revenue reached CNY 259 million, with a gross profit margin as high as 44.17%, far exceeding the 28.94% of domestic business. The localization layout in Italy, India, and Thailand continues to advance, and the overseas market is becoming an important buffer for the company's profits.
02. Sci-Tech Innovation Attributes: 12.5% R&D Investment and 248 Patents
As an SSE STAR Market company, the sci-tech innovation attributes of Veichi Electric cannot be judged solely by the figures of R&D investment. In 2025, the company's R&D investment was CNY 243 million, accounting for 12.50% of revenue, a year-on-year growth of 11.94%; in the first half of 2026, R&D investment accounted for 11.02% of operating revenue. By the end of the first quarter of 2026, the company had cumulatively obtained 248 valid patents, including 72 invention patents; in the second quarter of 2026, the company and its holding subsidiaries additionally obtained 19 patent certificates (including 3 invention patents) and 2 software copyrights. These indicators are at a medium-to-high level among SSE STAR Market companies, but what truly reflects the sci-tech innovation foundation is the company's ability to "reuse" the underlying technologies accumulated in the field of industrial control in new scenarios.
In the first half of 2026, the company achieved substantial commercialization progress in two directions: green energy and embodied intelligence. In terms of green energy, the company has deeply cultivated three lines: photovoltaics, energy storage, and hydrogen energy. The VPS01 series energy storage inverter has completed R&D finalization and been implemented in multiple industrial projects, and the VPM series energy storage converter has also officially launched commercial sales. In the first half of the year, green energy business revenue reached CNY 66.58 million, a year-on-year growth of 219.2%. Although the scale is not large, the breakthrough from zero to one has been completed.
More imaginative is the embodied intelligence business. At the execution end of humanoid robots, the company has formed a full set of motion actuator solution capabilities covering coreless motors, frameless torque motors, axial flux motors, high-power-density drivers, and joint modules. In the first half of the year, this business contributed CNY 32.39 million in revenue, a year-on-year growth of 343.7%. The path of extending servo drive technology from the industrial control field to core robot components is logically sound—essentially, both involve high-precision control of motors, with the application scenario simply shifting from machine tools to robot joints.
03. Investment Logic: The Tension Between Short-Term Pain and Long-Term Story
The core of the current investment logic for Veichi Electric lies in how to view the "profit decline." In the first half of 2026, the gross profit margin was 32.5%, a year-on-year decrease of 5.7 percentage points, and the gross profit margin for the second quarter alone dropped to 30.1%. The rise in raw material costs is the most direct reason: in the first half of the year, the gross profit margin of the frequency converter business was 37.8%, and that of the servo system and control system was 26.9%, down 4.6 and 4.3 percentage points year-on-year respectively, with cost pressures reflected across all product lines. The adjustment of the product structure has amplified this impact—the proportion of servo systems and emerging businesses with relatively lower gross profit margins is increasing (revenue from servo systems and control systems grew by 31% year-on-year, while frequency converter revenue remained basically flat year-on-year), further dragging down the overall profitability.
However, the attitude of institutions is more worth pondering than the performance itself: after the performance disclosure, multiple institutions simultaneously revised down their earnings forecasts, yet the ratings remained basically unchanged. In its semi-annual report review on August 26, Guojin Securities maintained a "Buy" rating but adjusted the net profit attributable to the parent company forecasts for 2026 to 2028 to CNY 250 million, CNY 320 million, and CNY 400 million (year-on-year approximately -5%, +27%, and +25%), corresponding to P/E ratios of 38x, 30x, and 24x respectively. On the same day, Zhongjin Company's semi-annual report review lowered the net profit attributable to the parent company forecasts for 2026 and 2027 by 28.5% and 10.9% to CNY 276 million and CNY 395 million respectively, and cut the target price by 28.4% to CNY 68.00, corresponding to a 2026 P/E ratio of 53.0x, still representing about 53% upside potential compared to the stock price at that time. Revising down forecasts without downgrading ratings indicates that when pricing Veichi Electric, the market no longer treats it as a traditional industrial control company.
The fulcrum of the logic lies in the volume release rhythm of the two "new" businesses. In terms of embodied intelligence, the company has already established a joint venture, Yizhi Lingqiao Drive (in which the company holds a 40% stake), with partners such as Kedali, Yinlun, and Kaipule Robot, and set up Weidali to jointly build an ecosystem with industry chain partners. In terms of green energy, large-scale commercial and industrial energy storage inverters and PCS projects are in the development and verification stage; once verified and entering batch delivery, the revenue elasticity is worth attention. If these two directions can take turns becoming the main growth engines in the next two to three years, the current profit pressure will look more like a phased phenomenon.
04. Risk Warning: Cash Flow is a Mirror
However, beyond the optimistic narrative, there are several risk signals that need to be faced.
The most direct one is the deterioration of operating cash flow. In 2025, the net cash flow from operating activities was only CNY 83.61 million, plummeting 58.40% year-on-year, with a net cash ratio of only 0.32. In the first half of 2026, the net cash outflow from operating activities was CNY 151 million, an additional outflow of CNY 129 million year-on-year. The company explained that this was due to increased procurement payments caused by the maturity of notes payable, but this reflects the company's bargaining position in the industry chain—upstream are strong suppliers of core components such as IGBTs and chips, and downstream are complete machine manufacturers and engineering project parties with stronger voices. Sandwiched in the middle, Veichi Electric needs to use real money to maintain supply chain relationships. If this state of "earning money slower than spending money" continues, once encountering an industry downturn or a tightening financing environment, the pressure will rapidly amplify.
The intensity of industry competition should not be underestimated either. Foreign brands such as Siemens, ABB, and Rockwell still dominate the high-end manufacturing field, and domestic competitors like Inovance (300124) are equally aggressive in their layout in servo systems and new energy. The embodied intelligence track has seen a flood of players since 2025, and from core components to complete machine solutions, the competitive landscape is far from settled. In the "Risk Factors" section of its 2025 annual report, the company warned that foreign brands in the industrial control industry still hold a large share of the high-end market and domestic competition is becoming increasingly fierce; if it fails to maintain its competitive advantages, its market share may be squeezed; if the macroeconomic situation is not optimistic and the investment willingness of downstream manufacturing declines, it will affect product demand, thereby adversely impacting operating performance.
Exchange rate fluctuations and accounts receivable are also worth tracking. The company's export revenue is settled in US dollars. Against the backdrop of the normalized two-way fluctuation of the RMB exchange rate, the disturbance of exchange gains and losses on profits cannot be ignored. As the business scale expands, the amount of accounts receivable is also climbing; if the operating conditions of downstream customers fluctuate, the risk of bad debts needs to be vigilant.
Looking back from the middle of 2026, Veichi Electric is a company "being redefined." The industrial control core business composed of frequency converters and servo systems is still growing steadily, but the market's expectations for it have far exceeded these. Whether embodied intelligence and green energy can move from "proof of concept" to "scale delivery" will determine whether this company continues to enjoy a valuation premium or returns to the pricing logic of an ordinary industrial control enterprise in the next two to three years. The answer does not lie in the earnings forecasts in research reports, but in the motors running day and night on those precision test benches, and the energy storage inverters waiting for verification in the factories.
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