Tracking of Better-Than-Expected Earnings Reports — August 26, 2020

Personal view: A mid-chain industry leader in the optical communication module sector—aligned with Tianfu Communications and Lightware Photonics—has delivered steady earnings realization, though its gross margin lags behind Tianfu’s. Its advantage lies in scale and stable customer relationships. Within the AI hardware supply chain, its performance is relatively stable. As noted last night, the broader AI and tech sector remains best approached through monitoring—not active trading—at this stage. After a recent market rebound, AI-related tech stocks collectively declined again today, dragging down the entire sector. Individual stocks cannot escape this sector-wide drag. The current sector characteristics are high volatility and decongestion. Seasoned long-term investors know that when an industry reaches this juncture, investing becomes exceptionally challenging. Avoid overcomplicating things. While AI remains structurally high-growth, the market’s focus since June has centered on near-term earnings. Consequently, the current earnings surprise—or ‘expectation gap’—has diminished. 3. EVE Energy Earnings: The company manufactures power and energy storage lithium-ion batteries; its signature products include large-diameter cylindrical cells and the 628Ah energy storage cell. H1 revenue reached RMB 45.691 billion, up 62.20% year-on-year; non-GAAP net profit attributable to shareholders amounted to RMB 2.451 billion, up 111.89% YoY. Growth drivers: Power battery shipments totaled 35.76 GWh (+66.47%), with its 46-series large-diameter cylindrical cells now mass-produced for BMW’s Neue Klasse platform and covering 90% of China’s top-10 commercial vehicle OEMs; energy storage battery shipments hit 44.46 GWh (+54.88%), with its ultra-high-capacity 628Ah cells achieving scaled delivery, global market share rising, and newly built factories entering mass production—thereby lowering unit costs. Dual growth from energy storage and power batteries drove expansion. Personal view: Among lithium battery manufacturers, EVE is one of the few achieving double-digit+ non-GAAP net profit growth driven by both technological iteration and overseas customers. AI-driven data center (AIDC) energy storage represents a new catalyst. The sole concern remains ongoing price competition across the supply chain; thus, future tracking should focus on whether energy storage gross margins can hold firm. Again, this is a ‘watch-only’ position. 4. Huasheng Lithium Earnings: The company produces vinylene carbonate (VC), an electrolyte additive for lithium-ion batteries, operating upstream in the electrolyte value chain. H1 revenue stood at RMB 792 million, up 126.51% YoY; non-GAAP net profit attributable to shareholders was RMB 223 million, up 437.39% YoY. Growth drivers: Following industry consolidation at the bottom, supply-demand dynamics for electrolyte additives improved; VC/FEC prices rebounded, while the company’s capacity utilization rose and new customers ramped up orders—making it a direct beneficiary of the broader recovery in lithium battery midstream materials. Personal view: As a niche player focused on electrolyte additives, Huasheng exhibits stronger cyclical turnaround attributes than stable growth characteristics. Yet VC industry capacity still needs digesting; the sustainability of its high growth hinges on whether additive prices can stabilize. This earnings surge heavily depends on VC prices holding above RMB 140,000/ton—yet VC itself is a classic cyclical commodity. In H2, new industry capacity—including Huasheng’s own 60,000-ton project in Hubei and peers’ technical upgrades—will gradually come online. Should supply ease in Q4 and VC prices fall back to ~RMB 100,000–110,000/ton, per-ton gross profit would shrink sharply from ~RMB 90,000 downward. Moreover, 99% of the company’s profits rely solely on VC/FEC—rendering its business highly concentrated. Its operating cash flow remained negative at -RMB 44.35 million in H1, and its cash conversion ratio stood at only ~30%, indicating that pricing gains have yet to fully translate into real cash receipts. Near-term, Q3 production schedules may sustain momentum briefly—but maintaining such high quarterly net profits consistently is unlikely. Instead, profitability will likely remain highly volatile—anchored to VC price fluctuations—rather than exhibiting the linear, sustained growth typical of consumer stocks. This model is not personally appealing. 5. Feinan Resources Earnings: The company engages in comprehensive utilization of nonferrous metal resources—including copper, gold, and silver—via hazardous waste recycling, operating within the resource circular economy.

Net Profit of RMB 23.7 Billion in Six Months! Foxconn Industrial Internet’s Earnings Are Explosive—Yet This 'Perfect Earnings Report' Conceals Three Hidden Risks

H1 revenue totaled RMB 557.861 billion, up 54.63% year-on-year; net profit attributable to shareholders reached RMB 23.74 billion, up 95.99% YoY—both figures representing record highs for the same period. Non-GAAP net profit attributable to shareholders stood at RMB 22.984 billion, up 96.99% YoY, remaining robust even after excluding one-off factors. Q2 revenue hit RMB 306.78 billion—the first time exceeding RMB 300 billion; net profit reached RMB 13.146 billion, up 24% quarter-on-quarter, marking the fourth consecutive quarter with net profit exceeding RMB 10 billion. The earnings performance is undeniably explosive. Yet on August 11, Foxconn Industrial Internet’s stock price fell 4.58%, wiping out over RMB 60 billion in market capitalization in a single day. With a half-year net profit of RMB 23.7 billion, why did the market vote with its feet? I. As an AI computing ‘shovel-maker,’ just how profitable is Foxconn Industrial Internet? Foxconn Industrial Internet is the world’s leading ODM provider of AI servers, deeply integrated with core clients including NVIDIA, Microsoft, and Google. The primary driver behind its explosive H1 performance was the surging demand for AI servers: · Cloud service provider AI server revenue grew 2.3x YoY; · GPU-based AI rack shipments surged 3.2x YoY; ASIC-based AI rack shipments rose 3x YoY; ASIC CPU server shipments increased 2.5x YoY; · High-speed data center networking revenue climbed 1x YoY; shipments of 800G+ switches rose 1.4x YoY; · Cloud computing segment revenue jumped 75.7% YoY. More notably, the company has comprehensively covered multiple technical pathways—including Ethernet, InfiniBand, and NVLink Switch—and has already delivered prototype units of its CPO all-optical switches. It has secured a strategic foothold on NVIDIA’s Vera Rubin platform, with delivery capability and supply chain integration depth firmly placing it among the industry’s top tier. A dual-engine growth model—powered by both computing and networking—is now firmly established. From a profitability quality perspective, net profit growth (96%) significantly outpaced revenue growth (54.6%), signaling that high-value-added AI products are progressively replacing lower-margin traditional businesses. Operating cash flow net amounted to RMB 7.391 billion, up 425% YoY. ROE improved to 13.36%, up 5.72 percentage points YoY. II. Yet this ‘perfect earnings report’ conceals three hidden risks: Risk #1: Financial expenses surged 749.91%—H1 financial expenses reached RMB 1.912 billion, primarily driven by foreign exchange losses and higher interest expenses. Against a backdrop of RMB 557.8 billion in revenue and RMB 23.7 billion in profit, RMB 1.9 billion in financial expenses may seem modest—but a 749% YoY increase exposes vulnerabilities in the company’s foreign exchange and interest rate risk management. Risk #2: Inventory ballooned to RMB 192.1 billion—accounting for nearly 40% of total assets—as of end-June. This inventory level is highly dependent on AI server demand. Should downstream cloud providers cut capital expenditures, this massive inventory could trigger impairment charges, directly pressuring profits. Risk #3: Gross margin remains only 7.15%—though up 0.55 percentage points YoY, ending a multi-year declining trend, this 7% gross margin confirms the company remains fundamentally a ‘low-margin, high-volume’ contract manufacturing giant.

E.ON slightly beats forecasts as industrial business drives first-half profit

Aug 11, 2026

E.ON reported first-half core profit of €5.40 billion, exceeding estimates, driven by its division serving big industrial and municipal clients.

reuters

2026-08-11

E.ON slightly beats forecasts as industrial business drives first-half profit

E.ON slightly beats forecasts as industrial business drives first-half profit

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