Lingyi (002600) Report Interpretation

Overview

Goldman Sachs reviews Lingyi's 2Q26 earnings miss and maintains a Buy rating. It expects a sharp 3Q26 sequential recovery from smartphone new-model shipments while positioning AI data-center cooling, edge-AI devices and robotics as the main longer-term growth engines.

Core views

Lingyi's near-term results were weak because of soft smartphone demand amid elevated memory costs. Revenue declined 9% QoQ in 1Q26 and 1% QoQ in 2Q26. In 2Q26, revenue of Rmb12.506bn was down 1% QoQ and up 3% YoY, 14% below Goldman Sachs' estimate of Rmb14.537bn. Gross profit of Rmb2.115bn was 16% below estimate, operating profit of Rmb590mn was 26% below estimate, and net income of Rmb372mn was 31% below estimate. The institution attributes the shortfall principally to weaker global smartphone demand. The report nevertheless expects revenue to rebound 34% QoQ in 3Q26 to Rmb16.737bn. Its central catalyst is the launch of new models by Lingyi's major smartphone-brand customer, including a new form factor that Goldman Sachs expects to attract users. This should raise shipments of metal precision parts and increase Lingyi's dollar content per device. The smartphone backdrop remains a constraint: the report forecasts iPhone shipments to fall 4% YoY to 242mn in 2026E from 252mn in FY25 as high memory costs weigh on demand. Goldman Sachs sees the more important earnings opportunity in Lingyi's diversification beyond consumer electronics. It highlights robotics products and services, including precision parts, joint modules, ODM and assembly; AI-server and optical-module liquid-cooling products such as cold plates, UQD, rack and inner manifolds, CDUs and busbars; and AI-server power supplies. It also identifies edge-AI devices—robotics, smart glasses and wearables—as sources of demand for precision metal parts and cooling products such as vapor chambers. The institution argues that AI data centers offer faster market growth, healthier competition and stronger specification upgrades than the company's traditional consumer-electronics exposure. Following the 2Q26 miss, Goldman Sachs lowers its revenue forecasts by 8% to Rmb61.028bn for 2026E, 7% to Rmb76.304bn for 2027E, and 1% to Rmb95.030bn for 2028E. Net-income estimates are revised by -6% to Rmb3.020bn for 2026E, -7% to Rmb4.979bn for 2027E, and +8% to Rmb7.120bn for 2028E. The 2028E increase reflects a smaller revenue reduction as new products ramp and operating efficiency improves, lowering the opex ratio. EPS reductions exceed the net-income reductions because the forecasts incorporate new shares. Goldman Sachs forecasts net income to grow at a 154% CAGR over 2026-28E, with operating margin rising from 7.2% in 2026E to 9.9% in 2028E and net margin from 4.9% to 7.5%. The institution cuts its 12-month target price to Rmb18.10 from Rmb21.20 but maintains Buy. The target uses 29.5x 2027E EPS, up from the prior 29.0x multiple. Goldman Sachs derives that multiple from the refreshed relationship between peers' 2027E P/E and their 2027-28E EPS growth, together with Lingyi's forecast 2027-28E EPS growth of 53%, versus 45% previously. The 29.5x target is between Lingyi's average P/E of 25x and its average plus one standard deviation of 33x, reflecting the institution's positive view of diversification into AI data centers and robotics.

Analysis framework

Goldman Sachs begins with the 2Q26 earnings shortfall and its demand drivers, then updates revenue, profit and EPS forecasts through 2028E. It links the expected 3Q26 recovery to smartphone-model launches and assesses longer-term growth through Lingyi's AI-data-center, liquid-cooling, edge-AI and robotics products. It then values the company using a target forward P/E multiple informed by peer P/E-to-EPS-growth relationships and Lingyi's projected earnings growth.

Methodology notes

• Valuation methodsP/E and PEG Valuation

  Forward P/E valuation calibrated against peers' relationship between 2027E P/E and 2027-28E EPS growth.

  Goldman Sachs applies 29.5x to Lingyi's 2027E EPS to derive its Rmb18.10 target price. The selected multiple is supported by peer growth-versus-valuation comparisons and Lingyi's projected 53% EPS growth over 2027-28E.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Lingyi (002600.SZ)

  Primary covered company; expected to benefit from smartphone new-model ramps, rising component dollar content, and expansion into AI data-center cooling, edge AI and robotics.

  Strengths

  Broadening end-market exposure, liquid-cooling and robotics product opportunities, and projected operating-efficiency improvement.

  Weaknesses

  2Q26 earnings missed Goldman Sachs estimates amid weak smartphone demand and high memory costs.

  Comparison

  The 29.5x target P/E is between the company's 25x average and 33x average plus one standard deviation, and is calibrated using peer P/E-to-EPS-growth correlation.

  Risks

  Slower foldable-phone or AI-terminal penetration, increased supplier competition, and continued macroeconomic weakness affecting demand.

Key data

• 2Q26 revenueRmb12.506bn-1% QoQ, +3% YoY, and 14% below Goldman Sachs' Rmb14.537bn estimate
• 2Q26 net incomeRmb372mn-5% QoQ, +2% YoY, and 31% below Goldman Sachs' Rmb542mn estimate
• 3Q26E revenue growth+34% QoQGoldman Sachs expects Rmb16.737bn of revenue, supported by new smartphone-model launches
• 2026E-28E revenue revisions-8% / -7% / -1%Revised forecasts of Rmb61.028bn, Rmb76.304bn and Rmb95.030bn
• 2026E-28E net-income revisions-6% / -7% / +8%Revised forecasts of Rmb3.020bn, Rmb4.979bn and Rmb7.120bn
• 2026-28E net-income CAGR+154%Driven by new-product growth, edge AI, smartphone dollar-content gains and operating efficiency
• Target price and valuationRmb18.10; 29.5x 2027E P/ETarget price reduced from Rmb21.20; target multiple raised from 29.0x

Impact & implications

Goldman Sachs views the 2Q26 weakness as a near-term demand issue rather than a change in Lingyi's longer-term opportunity. The report argues that smartphone-model launches can restore sequential growth while higher-value AI-data-center cooling, edge-AI and robotics businesses broaden the growth base and support improving profitability through 2028E.

Risks

• Foldable-phone and AI-terminal penetration could be slower than Goldman Sachs expects.
• More suppliers could intensify competition.
• Continued macroeconomic weakness could further drag market demand.

What to watch

• The pace of major smartphone-brand new-model launches and the resulting metal-parts shipment and dollar-content gains.
• Global smartphone demand and the effect of elevated memory costs, including the report's forecast for iPhone shipments to decline 4% YoY in 2026E.
• The ramp-up of robotics, AI-server power-supply and liquid-cooling products.
• Progress in operating efficiency and the opex ratio as new products scale.