2026年一季度业绩符合预期，毛利率因储能及海外业务反弹

China 1Q26 results in-line as GPM reboundson energy storage & overseas business Wei Huang Research Associate+852-2203-7057Bin Wang Slightly below market expectations,Xusheng's full-year 2025 reported net profit declined12%YoYtoRMB365million.Weattributetheresultsmisstohigher-than-expectedoperatingexpenses,withadministrativeexpensesincreasing18%YoYtoRMB200millionandR&Dexpensesincreasing17%YoYtoRMB224million.Asaresult, operating margin declined 2.4 ppts YoY to 10.1%.We attribute the higheropextohigheremployee compensationand higherR&Dinvestments inkeyupcoming growth drivers such as magnesium alloy products, energy storagebatteryhousingandrobotic structural parts.Whileoverall revenuewasflattishYoY(up1%)atRMB4.5billion,wehighlightenergystorage segmentrevenueincreased96%YoYtoRMB569million,reflectingthestrong rampupofthebusiness. Research Analyst+852-220-35496 Full-year2025GrossMarginStableYoYbut EnergyStorageSegmentOutperformsFull-year2025grossmarginwasflatYoYat20.3%withamargincontraction inthe company'sautomobileandmouldoperationsoffsetbygrowthinXusheng'senergystoragebusiness.Ononehand,automobile/mould segmentgross margindeclined1.4ppts/8.2pptsYoYto16.1%/46.3%,drivenbydownstreamcustomersprice reduction requests and higher depreciation expenses. On the other hand,energy storage segment gross margin improved 11.7ppts YoYto40.3% 1Q2026ResultsInLineasGrossMarginReboundsInlinewithmarketexpectations,Xusheng's1Q2026reportednetprofitincreased 31%YoYand 92%QoQto RMB 125million.Gross margin improved 2.1ppts YoYand 6.0pptsQoQto22.9%,whichweattributeto improvingproductmix,with ahigherproportionofrevenuecontributionfromtherampupofthecompany'shigh-margin energystorage business andhigher overseas contribution (full-year2025overseas gross margin of 29.3%versus domesticgross margin of 13.3%).InJanuary2026,the company secured an 8-year nominationfrom a North AmericanNew Energy Vehicle (NEV)manufacturer forpowertrain,body components,subframes, and battery housing. The contract is valued at ~7.8 billion RMB, withmassproductionscheduledtobeginbytheend of2026.Taking intoaccountthecompany'slatestresults,welowerourfull-year2026netprofitestimatesby11%,butalsolowerourcapexforecastby49%toRMB500millionfortheyear(inlinewith Autos & Auto TechnologyXusheng RMB 13.5 (from RMB 11.8), and we maintain our Sell rating. Ourtarget price is derived from a discounted cashflow (DcF)analysis,which we thinkisthemostappropriatemethodforvaluinganearly-stage,growingcompany.We use a 6-year forecast time horizon for our DcF, which captures the fullmaturation of the two mega trends of China's auto industry-electrification andintelligentization.Weapplyan9.3%WACC (upfrom7.5%)forourequityvaluation.Taking intoaccountthecompany'slatestfull-year2025results,weadjust ourcostof debt,income tax rate and equity to capital ratio assumptions.Our keyassumptions include a 2.8% cost of debt (3% previously), a 2.5% risk-free rate, a6.0%marketriskpremium,betaof1.3,a11.5%incometaxrate(12.7%previously),a 88.0% equity/equity+debt ratio (60.5%previously),and a 0.5%terminal growthrate (TGR),consistentwith ourregional coverage. Key upside risks are:(a) stronger-than-expected downstream customers'salesvolumes,and (b) higher-than-expected selling prices due to a less competitionowing to the government's trade-in subsidy policy. Autos & Auto TechnologyXusheng Reuters:603305.SS Xusheng is a leading aluminum alloy auto parts supplier,mainly for new energy vehicles. in 2022, 34% of Xusheng's revenue came from Tesla global operation. Xusheng alsosupply to other Chinese new energy vehicle makers, likeBYD, NiO, GAC AION, XPeng. Li auto, Leapmotor, etc. Cash Flow (CNYm)Cash flow from operations Balance Sheet (CNYm)Cash and other liquid assets KeyCompanyMetrics Wei Huang+852 2203 7057huang.wei@db.com Appendix 1 *Other information available upon request informationissourcedfromDeutscheBank,subjectcompanies,andothersources.Fordisclosurespertainingtorecommendationsorestimatesmadeonsecuritiesotherthantheprimaryrtant risk and conflict disclosures can also befound at https://research.db.com/Reare strongly encouraged fo review this information before investing.imer.Investors ImportantDisclosuresRequiredbyU.S.RegulatorsDisclosures marked with an asterisk may also be required by at least one jurisdiction in addition to the United States.See Important Disclosures Required by Non-US Regulators and ExplanatoryNotes. ImportantDisclosuresRequiredbyNon-U.S.RegulatorsDisclosuresmarkedwithanasteriskmayalsoberequiredbyatleastone jurisdiction inadditiontotheUnitedStates.See Fordisclosurespertainingtorecommendationsorestimatesmadeonsecuritiesotherthantheprimarysubjectofthisresearch,pleaseseethemostrecentlypublishedcompanyreportorvisitourglobaldisclosure look-uppageonourwebsiteat https://research.db.com/Research/Disclosures/EquityResearchDisclosures.Asidefrom within this report, important riskandconflictdisclosurescanalsobefoundathttps://research.db.com/Research/Disclosures/Disclaimer.