Best (300580) Report Interpretation

Overview

This earnings update reviews Best’s 2Q26 performance and its longer-term positioning in automotive components, machine-tool parts and humanoid-robot transmission components. Goldman Sachs finds the quarter broadly in line operationally but affected by margin pressure, makes a modest earnings and target-price reduction, and maintains Neutral.

Core views

Best reported 2Q26 revenue of Rmb406mn, gross profit of Rmb131mn, EBIT of Rmb71mn and net profit of Rmb73mn. Revenue rose 11% year-on-year and was 3% above Goldman Sachs estimates, while gross profit rose 2% and was 4% above estimates. EBIT and net profit fell 12% and 7% year-on-year, respectively, and were 7% and 8% below Goldman Sachs estimates. For 1H26, revenue reached Rmb792mn, up 11% year-on-year, while net profit was Rmb146mn, down 2%. The institution attributes the weaker profitability primarily to raw-material inflation, FX losses and higher depreciation from new facilities. In 2Q26, gross margin, EBIT margin and net margin were 32%, 17% and 18%, down 3 percentage points, 4 percentage points and 4 percentage points year-on-year. EBIT and net margins were also 2 percentage points below Goldman Sachs estimates. Best plans to increase the share of orders settled in renminbi as part of its FX management response. Operationally, the overseas Thailand Phase I factory is continuing to ramp up during 2026, while Phase II is expected to complete construction by 1H27E. Yuhua Precision, which makes linear guides and roller screws, generated Rmb3mn of revenue in 1H26, mainly from the machine-tool end market. The report says contribution from humanoid-robot customers remains very low because relevant products are mostly still at the sampling stage, although commercialization of machine-tool components is progressing as ballscrews and linear guides have begun adoption by several domestic machine-tool makers. Goldman Sachs retains a constructive long-term view of Best’s ability to become a competitive supplier of planetary roller screws for humanoid robots, supported by stable growth in its internal-combustion-engine and EV auto-parts business, its precision-manufacturing experience in fixtures, and capacity support from equipment procurement. The report forecasts an 80% global shipment CAGR for high-spec humanoid robots in 2024E-35E and expects Best to secure 10% global market share in planetary roller screws used in high-spec humanoids from 2027E onward. Following the results, Goldman Sachs trims its 2026E-30E net-income forecasts by about 1% on average. Its 12-month target price falls to Rmb22.5 from Rmb23.0, based on a 2030E P/E multiple of 32x discounted back to 2026E using a 9.5% cost of equity. With the stock at Rmb22.13 as of 18 August 2026 close, the target implies 1.7% upside. The institution maintains Neutral because it considers the risk-reward fair versus its China Industrial Tech coverage and humanoid-robot supply-chain stocks.

Analysis framework

Goldman Sachs first compares quarterly revenue, profits and margins with prior-year results and its estimates, then identifies the drivers of margin pressure. It assesses factory ramp-up and the maturity of machine-tool and humanoid-robot component commercialization, incorporates the long-term planetary-roller-screw opportunity into earnings expectations, and values the company using a forward P/E multiple discounted back to 2026E.

Methodology notes

• Valuation methodsP/E and PEG Valuation

  Long-term P/E valuation discounted back to the current forecast period

  Goldman Sachs applies a 32x 2030E P/E multiple and discounts the resulting value back to 2026E at a 9.5% cost of equity to derive its Rmb22.5 target price.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Humanoid-robot supply-chain positioning through planetary roller screws

  The report links projected global high-spec humanoid-robot shipment growth to potential demand for planetary roller screws and evaluates Best’s manufacturing experience and capacity as support for gaining market share.

Asset mapping & comparison

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

• Best (300580.SZ)

  Primary covered company; automotive-components base and prospective supplier of planetary roller screws for high-spec humanoid robots.

  Strengths

  Stable auto-parts business growth, precision-manufacturing experience from fixtures products, equipment-supported capacity, and progressing machine-tool component adoption.

  Weaknesses

  2Q26 margin contraction from raw-material inflation, FX losses and higher depreciation; humanoid-robot contribution remains very low while products are in sampling.

  Comparison

  Goldman Sachs judges risk-reward fair relative to its China Industrial Tech coverage and humanoid-robot supply-chain stocks.

  Risks

  Slower turbocharger penetration growth and lower-than-expected margins are stated downside risks.

Key data

• 2Q26 revenueRmb406mn+11% year-on-year; +5% quarter-on-quarter; 3% above Goldman Sachs estimates
• 2Q26 gross profitRmb131mn+2% year-on-year; +1% quarter-on-quarter; 4% above Goldman Sachs estimates
• 2Q26 EBITRmb71mn-12% year-on-year; +4% quarter-on-quarter; 7% below Goldman Sachs estimates
• 2Q26 net profitRmb73mn-7% year-on-year; flat quarter-on-quarter; 8% below Goldman Sachs estimates
• 2Q26 marginsGross 32%; EBIT 17%; net 18%Down 3pp, 4pp and 4pp year-on-year, respectively
• 1H26 revenue and net profitRmb792mn / Rmb146mnRevenue +11% year-on-year; net profit -2% year-on-year
• Yuhua Precision 1H26 revenueRmb3mnMainly from the machine-tool end market
• Humanoid-robot shipment forecast80% global CAGR in 2024E-35EForecast for high-spec humanoid robots
• Planetary roller screw market-share expectation10%Expected global share for Best in high-spec humanoid robots from 2027E onward

Impact & implications

The report indicates that near-term earnings are constrained by margin pressure despite revenue growth, while Thailand expansion and RMB settlement are operational responses to capacity and FX issues. Its longer-term thesis depends on Best converting its precision-manufacturing capabilities into meaningful machine-tool and humanoid-robot component sales; at present, humanoid-robot revenue remains minimal and the rating remains Neutral.

Risks

• Faster transmission-components development could affect the outlook.
• Faster EV-parts capacity ramp-up could affect the outlook.
• Slower turbocharger-penetration growth is a downside risk.
• Lower-than-expected margins are a downside risk.

What to watch

• Progress in scaling transmission components and the conversion of humanoid-robot products beyond the sampling stage.
• Ramp-up of EV-parts capacity and the Thailand Phase I factory, as well as completion of Thailand Phase II by 1H27E.
• Margin recovery, including the effects of raw-material costs, FX management and higher depreciation.
• Adoption of ballscrews and linear guides by domestic machine-tool makers.