Morgan Stanley: Sieyuan Electric: FX Losses Slowed 1Q26 Earnings Growth; Core Operations Remain Strong
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Sieyuan Electric reported 1Q26 net profit of RMB 550 million, representing a 23.2% year-on-year increase that lagged the 48.6% EBIT growth rate due to foreign exchange losses. Net revenue surged 41.6% to RMB 4.6 billion, while gross margin came in at 29.0%, down from 30.3% in 1Q25. This margin contraction was driven by a revenue mix shift toward lower-margin domestic energy storage, which recorded an 11.71% margin in 2025. Management anticipates margins will improve throughout the year, supported by an increasing contribution from overseas markets, transformers, and UHV GIS operations.
At the operating level, EBIT reached RMB 719 million, growing 48.6% year-on-year. However, net finance expenses swung from RMB 29 million in income during 1Q25 to RMB 54 million in expenses, slowing operating profit growth to 29.7%. The operating expense ratio continued its downward trajectory, dropping 0.8 percentage points to 14.9%.
Fundamentally, order momentum remained exceptionally robust, with both domestic and overseas new orders exceeding internal expectations. Contract liabilities increased from RMB 3.0 billion at year-end 2025 to RMB 3.2 billion, underscoring a healthy project pipeline. Domestic energy storage contributed roughly RMB 3 billion of the RMB 28.9 billion total new orders secured in 2025.
Morgan Stanley reiterates an Overweight rating with a target price of RMB 286.50, offering 29% upside. The industry rating remains Attractive.