华域汽车2026年上半年财报不及预期，外币损失与国内需求疲软成主因

Autos &Auto Technology 1H26 Results Miss on Forex Losses andDomestic Weakness Wei Huang Research Associate+852-2203-7057 Belowmarketexpectations,Huayu's1H26reportednetprofitdeclined9%YoYto RMB2.65billion,representingonly35%of thefull-year consensusestimate.Thekeydownsidesurprisewasalarger-than-expectedRMB384millionnegativeswinginforeignexchangeimpact,fromagainofRMB187millionin1H25toalossofRMB197millionin1H26.Revenuealsocameinweakerthanexpected,declining1%YoYtoRMB83.94billion,asa4%declineindomesticrevenuetoRMB62.58billionmorethanoffset7%growthin overseas revenuetoRMB17.05billion.We attributethedomesticweaknessprimarilytolowersalesvolumesatkeyautomakercustomers,includingSAICVWandBYD,whosesalesdeclined31%and16%YoY,respectively.Grossmarginexpandedslightlyby0.5pptsYoYto11.9%,which weattributetoanimprovingoverseasmarginprofileasoverseascapacityutilizationandoperationalefficiency continued to ramp up.Inparticular,the company's overseas grossmarginreached~6.2%in1Q26,versus4.1%infull-year2025,indicatingimprovingprofitabilityin its overseas operations.Taking into account the latest results,welower our2026revenueforecastby9%toRMB182.87billionandcutournetprofitforecastby16%.As a result, we lower ourDCF-derived target pricetoRMB20.50from RMB24.00.Maintain Hold. Research Analyst+852-220-35496 2Q26EarningsRecoverSequentiallyonRevenueGrowthHuayu's2Q26reportednetprofitdeclined13%YoYbutincreased13%QoQtoRMB 1.4obillion.Thesequential earningsrecoverywasprimarilydrivenbya9%QoQincrease in revenue toRMB 43.76billion, supported byvolume growth at keycustomers,includingSAICMotor(up6%QoQ)andBYD(up58%QoQ)."Functionalparts"and"electronic and electric parts"were the key segment growth drivers,withrevenueincreasing20%and61%QoQ,respectively.Grossmargincontracted0.4ppts QoQto 11.7%, which we attribute to higher raw material costs, includingmetals and memorychips. OverseasFootprintExpansionOffersRevenueandMarginUpside Huayucontinues to expand its global manufacturingfootprintacross automotiveinteriors,seating,passivesafety,chassissystems,lightingandfueltanksystems,with97manufacturingandR&Dfacilitiesacross18countries,includingtheUnitedStates,Germany,Thailand,Russia,theCzechRepublic,Slovakia,India,Mexico, Autos &Auto TechnologyHuayu Uzbekistan.Overseasmarketscurrentlycontribute21.4%ofcorebusinessrevenue,with further growth potential as the company expands its localizedproduction capabilities. Huayu's overseas gross margin remained significantlybelow its domestic grossmargin in2025,at4.1%versus13.6%,reflectingthepotential for both overseas revenue and gross margin as capacity utilization andoperational efficiency improve,supported bythe overseas localization of ChineseOEMcustomers.ChineseOEMs areincreasinglyestablishinggoverseasmanufacturing capacity amid rising trade barriers and localization requirements,including the EU's proposed Industrial Accelerator Act, potentially creatingadditionalopportunitiesforChinesesupplierstoexpandalongsidetheircustomers.Huayu's largest customer,SAlC group,plans to establish its first EU vehiclemanufacturingplantinGalicia,Spain,withproduction expectedtocommencebylate2028,whileotherkeycustomers,includingBYD,Geely,CheryandXiaomi,arealsopursuing Europeanmarket entryorlocalizedproduction.Asthesecustomersaccelerate their overseas expansion,we believe Huayu can progressivelybroadenitsinternationalfootprintandcaptureincrementaldemandthroughlocalizedR&Dand supply capabilities. ValuationandRisksOurtargetpriceisderivedviaadiscountedcashflow(DCF)analysis,whichwethink is the mostappropriatemethod forvaluing an early-stage,growingcompany.Weuseafive-yearforecasttime horizonforourDCF,which capturesthefull maturationof the two mega trends of China'sauto industry- electrification andintelligentization.We applya 10.6%WAcCfor our equityvaluation.Ourkeyassumptions include a 4.6% cost of debt (after tax), a 2.5% risk-free rate, a 6.0%marketriskpremium,betaof1.5,a20%incometaxrate,an84%eguitylequity+debt ratio, and a 0.5% terminal growth rate (TGR), with our TGR consistent withregional coverage.Our DCF-derived target price implies a 10x 2026EP/E, largelyin-line with Huayu's 10x historical average 12-month forward P/E. While there isHuayu. Key downside risks are: (a) lower-than-expected margin due to the falling sellingpriceinitsinteriortrimbusinessoncompetitionfromlow-costChinesetrimmakers,(b)abigger-than-expectedimpactfromexportstotheUSduetotariffincrease.Keyupside risks are: (a) higher-than-expected penetration of high-value intelligent-R&D,(b)itsautonomous-drive-relatedproducts(MillimeterWave Radar)gainmoreclients, which is a base for future multi-year growth. Autos & Auto TechnologyHuayu Reuters: 600741.SS Huayu Automotive Systems Co. Ltd. Is China's largestauto components maker,focusing on six core business categories: metal forming & die, interior & interior trim,electric & electronics parts, function parts, hot-worked parts,and new energy vehicle parts. Cash Flow (CNYm)Cash flow from operations BalanceShe