Goldman Sachs maintains Buy on Yingliu and cuts target price to Rmb82.4

Overview

This is a Goldman Sachs 2Q26 earnings preview and investment view update on Yingliu (603308.SS). The report maintains a Buy rating, but lowers 2026-2030E EPS forecasts by about 10%-11%, mainly reflecting adjustments to the revenue ramp-up driven by the company's latest capacity expansion schedule, as well as the more limited price increases adopted by management to win strategic customer share. The new 12-month target price is Rmb82.4, still implying substantial upside.

Core views

The core view of the report is that Yingliu remains strong in execution and customer expansion, with 2Q earnings expected to continue growing, while new equipment coming online in 2H26 will drive further increases in output value for the two-engine business; on orders, backlog continues to expand, and deepening cooperation with customers such as Baker Hughes and Siemens Energy provides visibility for order conversion after 2027 and deliveries after 2028. The market is currently concerned about whether global gas turbine order growth has already peaked in 2026. Goldman Sachs believes order growth may slow, but absolute demand will remain strong, especially supported by the early-unit replacement cycle and data center power demand.

Analysis framework

The report uses a bottom-up approach including company earnings forecasting, capacity ramp-up tracking, analysis of orders and customer agreements, assessment of raw material costs and pricing mechanisms, and a valuation method based on discounted forward P/E. Goldman Sachs also compares the company's current valuation with its historical average and historical trough multiples to assess risk-reward after the recent pullback.

Methodology notes

• Valuation methodsDiscounted P/E target price

  2030E P/E discounted to 2027E

  The 12-month target price of Rmb82.4 is based on 30x 2030E P/E, discounted to 2027E at a 10.0% cost of equity.

• fundamental_forecastCapacity ramp-up and order-driven forecast

  Monthly output value of the two-engine business and contribution from new equipment

  The report derives 2Q26 to 4Q26 revenue and two-engine business output value using the monthly output value of the two-engine business from April to June, the commissioning schedule of new equipment, and the approximately Rmb10mn monthly output value contribution per unit.

• factor_frameworkGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factors

  Goldman Sachs states that its factor framework compares a stock's growth, financial returns, valuation multiples, and composite attributes versus the market and industry peers to provide investment context.

Asset mapping & comparison

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

• Yingliu(603308.SS)

  Core covered name

  Strengths

  High-end casting component capabilities, available capacity, lower ASP, comparable quality, strong R&D and customer relationships, and cooperation with customers such as Baker Hughes, Siemens Energy, Ansaldo, and GE Aerospace.

  Weaknesses

  Global share is still below 1%, and it remains a supplementary supplier relative to Western leaders; in the short term it is affected by capacity ramp-up, yield rate, skilled worker hiring, and a moderate pricing strategy.

  Comparison

  Compared with Western suppliers such as PCC and Howmet, Yingliu has a smaller share but has room to absorb demand spillover; Western suppliers are more focused on aviation business and face labor shortages.

  Risks

  Capacity ramp-up below expectations, order growth below expectations, weaker AIDC demand, or hyperscalers canceling gas turbine orders.

• Global gas turbine OEMs

  Source of demand and industry chain customers

  Strengths

  OEMs such as Siemens Energy, GE Vernova, and MHI have long delivery lead times, reflecting tight supply and demand visibility.

  Weaknesses

  Order growth may struggle to maintain the exceptionally high level seen in 2026.

  Comparison

  As an upstream supplier of high-end components, Yingliu benefits from OEM capacity bottlenecks and supply chain diversification.

  Risks

  If global new gas turbine orders peak, supply chain valuations and order expectations may come under pressure.

• AIDC and data center power demand

  Medium- to long-term demand catalyst

  Strengths

  Goldman Sachs expects up to about 60% of U.S. AIDC electricity demand could come from gas turbines, supporting medium- to long-term gas turbine demand.

  Weaknesses

  Visibility on hyperscaler capex after 2026 is limited.

  Comparison

  Data center demand is an incremental driver beyond the traditional replacement cycle.

  Risks

  If hyperscalers cut capex or cancel orders, gas turbine demand expectations would weaken.

Key data

• 2Q26 revenue forecastRmb916mnUp 27% YoY.
• 2Q26 net profit forecastRmb118mnUp 23% YoY.
• 2Q26 gross margin forecast34.5%A modest recovery from 33.7% in 1Q26.
• 2Q26 two-engine business output valueabout Rmb420mnAbout Rmb130-140mn per month in April and May, and about Rmb150mn in June.
• 3Q26E two-engine business output valueabout Rmb450-480mnDriven by ramp-up of new equipment.
• 4Q26E two-engine business output valueabout Rmb480-530mnIf equipment comes online as planned and ramps normally.
• Current backlogmore than Rmb2.2bnAbout Rmb2.1bn at the end of 1Q26, still slightly higher after deducting about Rmb420mn of deliveries in 2Q26.
• 2Q26 new ordersabout Rmb500mnIncluding orders related to Ansaldo, Baker Hughes, Shanghai Electric, Doosan, and Safran.
• Baker Hughes agreement termextended to 2031Broader product coverage, higher committed volumes, and includes a raw material price adjustment mechanism.
• 2026E revenue forecastRmb3,818mnDown 6.0% from the previous forecast.
• 2026E net profit forecastRmb627mnDown 10.1% from the previous forecast.
• 2026E-2030E sales/earnings CAGR28%/41%Based on Goldman Sachs forecasts.
• Target priceRmb82.4Previously Rmb92.0.
• Current price and upsideRmb44.34；85.8%As disclosed in the table.

Impact & implications

The implication for the investment view is that near-term earnings forecasts have been lowered due to revenue ramp-up and pricing strategy, but the medium- to long-term thesis remains supported by tight global gas turbine supply, data center power demand, overseas OEM capacity bottlenecks, and Yingliu's improved customer penetration. If hyperscalers' data center capex visibility improves after 2027, the market may re-rate the stock higher; if visibility remains insufficient, the stock may continue to be priced as a cyclical name.

Risks

• Capacity ramp-up falls short of expectations, possibly due to insufficient yield improvement or weaker-than-expected hiring of skilled technicians.
• Order intake growth is below expectations, possibly due to the long development cycle for new SKUs.
• AIDC demand weakens, and hyperscalers cancel orders to gas turbine manufacturers.
• Raw material price volatility may pressure margins, although some long-term agreements include price adjustment mechanisms.
• If visibility on data center capex after 2027 remains insufficient, the market may continue to value Yingliu within a cyclical-stock framework.

What to watch

• Whether the three new pieces of equipment come online and ramp up as planned in August, September, and October.
• Whether output value from the two-engine business in 2H26 reaches about Rmb450-480mn in 3Q26E and about Rmb480-530mn in 4Q26E.
• The pace at which Baker Hughes' renewed agreement converts into formal orders after 2027.
• Whether Siemens Energy's 4000F prototype parts can enter mass production in 2026, and progress on the 8000H, SGT-450, SGT-700, and SGT-800 projects.
• Whether annual global gas turbine demand can remain around 110-120GW, and whether order growth slows after 2027.
• Whether hyperscalers' data center capex plans for 2027 and beyond become clearer.
• Changes in prices of raw materials such as nickel, cobalt, and tungsten, and execution of long-term agreement repricing mechanisms.