Summary of Key Points
Yingshi initially became a global leader in the panoramic camera market, akin to the legendary "Nan Murong" from the novel "Demi-Gods and Semi-Devils." However, its founder, Liu Jingkang, is not satisfied with this status and aims to transform the company from a "panoramic camera expert" into a "comprehensive imaging technology platform" (similar to Murong Fu's ambition to revive the Great Yan dynasty). The company's semi-annual report for 2026 reveals the costs of this expansion: despite a 50% increase in revenue, net profit plummeted by 94% (leaving only just over 30 million yuan), cash flow shifted from a surplus of 240 million yuan to a deficit of 2.76 billion yuan, and inventory soared to 6.2 billion yuan. As a result, the stock price has dropped by nearly 70% from its peak last year. The market is now questioning whether Yingshi's current capabilities are sufficient to support its ambitious vision of becoming a "Great Yan."
1. Yingshi's Rise: How It Achieved Success
Yingshi's success is a classic example of a niche market turnaround. Panoramic cameras were once an overlooked category, but Yingshi seized three critical opportunities:
- Choosing the Right Track: Major players (Sony, Canon, DJI) did not take panoramic cameras seriously, allowing Yingshi to fill a market gap.
- Solving Pain Points: Users struggled with post-shooting editing? Yingshi developed user-friendly editing software. Cameras shook during motion? Yingshi improved image stabilization. Uncertain about which angle to use? Yingshi allowed users to capture the entire scene first and then select the desired view later.
- Efficient and Focused Product Strategy: With a streamlined product line, Yingshi focused its R&D, supply chain, and marketing efforts on a few core products. The profits from hit products were reinvested in new ones, enabling rapid and cost-effective growth.
Just as Murong Fu used his martial arts skills and family background to become "Nan Murong," Yingshi used these strategies to become a global leader in panoramic cameras, selling over 10 million units—a remarkable achievement for most startups.
2. The Costs of Expansion
The challenges of expanding into a comprehensive imaging platform are clearly outlined in the semi-annual report:
- Weakening Profitability: Although revenue increased by 50%, costs rose by 80%, reducing the gross margin from 51% to 41%. This is due to DJI's entry into the panoramic camera market, forcing Yingshi to invest in defense, as well as its expansion into competitive areas like drones and gimbals.
- Declining Profits: Net profit dropped to 30.41 million yuan, nearly matching the cost of its chip R&D (29.33 million yuan), meaning the company barely made enough to cover these expenses. After adjusting for non-recurring items, it even lost over 15 million yuan, with a quarterly loss of 54 million yuan.
- Negative Cash Flow: Cash flow shifted from a surplus of 240 million yuan to a deficit of 276 million yuan, indicating a significant outflow of funds.
- High Inventory: Inventory increased by 112% to 6.2 billion yuan, with 1.7 billion yuan alone for storage chips. While Yingshi claims this was to prepare for price increases and new products, unsold inventory could become dead money, potentially requiring discounts.
This is similar to Murong Fu's efforts to revive the dynasty—no matter his martial arts prowess, he needed to fund military and logistical expenses, which were substantial and ongoing.
3. From a "Successor" to a "Empress": Insufficient Capabilities?
While Yingshi was adept at creating hit products, managing a comprehensive platform requires different skills:
- Increased Complexity: Managing drones, gimbals, action cameras, and AI imaging requires coordinating R&D, supply chains, and marketing for various products across different markets and channels. This is like Murong Fu, who knew martial arts but lacked the skills to govern officials and soldiers.
- New Business Struggles: Its drone subsidiary, Yingling Technology, generated 230 million yuan in revenue but lost 290 million yuan, with a net asset deficit of 540 million yuan. Initial losses in new businesses are common, but the timing is critical: as profits from panoramic cameras declined (due to DJI's competition), new businesses failed to generate revenue, leading to cash shortages.
- Organizational Gap: Managing a platform requires a systematic approach to R&D, supply chain, cash flow, and branding. Yingshi currently lacks this capability, much like Murong Fu lacked the necessary systems to govern the country.
4. The Market's Reevaluation
The stock price plummeted by 70% after Yingshi went public last year, as investors were optimistic about its ability to replicate its success with panoramic cameras. However, the current situation has changed:
- Past Logic: Revenue growth → Profit growth → Investment in R&D → New product success → Expanded market.
- Current Logic: Revenue growth → Profit decline → Increased R&D investment → Inventory buildup → Continuing losses in new businesses.
Investors are no longer willing to support Yingshi's expansion without seeing concrete evidence of new business profitability.
5. Ambition vs. Reality: Staying as a Leader or Pursuing a Greater Goal?
Yingshi faces the same dilemma as Murong Fu:
- Staying in the Comfort Zone: Continuing to dominate the panoramic camera market for stable profits.
- Pursuing a Greater Goal: Expanding into a comprehensive imaging platform, but this requires more investment and greater risk.
Liu Jingkang clearly does not want to stop. However, whether Yingshi's existing capabilities are enough to transform the company into a comprehensive imaging platform remains to be seen.
Yingshi's semi-annual report does not indicate failure; rather, it highlights the challenges of scaling up. Becoming a "Great Yan" (a comprehensive imaging platform) is more demanding than simply creating hit products, requiring significant changes in capabilities, funding, and organizational structure.
In conclusion, Yingshi has proven its potential, but achieving its ambition requires overcoming substantial hurdles in terms of capabilities, funding, and organization.