Summary of Key Points
Qianli Technology’s performance in the first half of 2026 appears impressive (22% revenue growth and a turnaround from losses to profits), but there are underlying issues stemming from “short-term tactics and the effects of business consolidation.” The revenue increase is due to the newly acquired intelligent driving business, while the profit turnaround is partly attributed to the automotive segment’s short-term strategy of shifting away from new energy vehicles in favor of fuel-powered vehicles. However, the high gross margin from the intelligent driving business is almost completely offset by research and development expenses. Additionally, the company’s close relationship with Geely (through shareholder, customer, and supplier ties) poses a risk of being overly dependent on a single customer. The company’s ambitious goal of gaining a 30% market share in the intelligent driving sector requires overcoming these challenges.
I. The “Impressive” Performance: Revenue Growth from Business Consolidation, Profits from Short-Term Tactics
Qianli Technology’s revenue for the first half of the year increased by 22% to 5.12 billion yuan, and its net profit after deducting non-recurring items turned from a loss of 134 million yuan to a profit of 55.7 million yuan. Upon closer inspection, however:
- Revenue Growth is Due to Business Consolidation: The newly added intelligent driving business contributed 1.24 billion yuan, which compensated for the decline in the automotive (12%) and motorcycle (6%) segments, resulting in the 22% growth.
- Profit Turnaround is a Result of Short-Term Decisions: The automotive segment’s gross margin soared from 3.3% to 12.7% due to the reduction in new energy production (85% decline in sales) and an increase in fuel-powered vehicle sales (110%). Although the gross margin from the intelligent driving business was 885 million yuan (higher than the combined total of the automotive and motorcycle segments), it was almost entirely consumed by research and development expenses of 837 million yuan and additional administrative costs, resulting in little actual profit contribution.
In summary, this performance is more a result of strategic moves than a fundamental change in the company’s fundamentals.
II. The “Shift from New Energy to Fuel”: Short-Term Gains May Be Long-Term Burdens
Qianli Technology’s automotive segment’s decision to focus on fuel-powered vehicles has increased gross margins in the short term, but it poses significant long-term risks:
- Industry Trends Are Unfavorable: The penetration of new energy vehicles in China has exceeded 60%, and fuel-powered vehicles are being phased out (with many cities implementing emission restrictions and car manufacturers discontinuing their production). Investing in fuel-powered vehicles now is like seeking short-term gains in a declining industry, potentially leaving the company behind in the future.
- Consequences of Reducing New Energy Production: New energy vehicle sales in the first half of the year were only 2,836 units, a 85% decrease, with monthly sales declining by more than 75%. If the company does not adjust its strategy in time, the automotive segment’s foundation may become unstable as the fuel-powered vehicle market shrinks.
III. The Intelligent Driving Business: A Potential Growth Driver, but Still in a Loss-Spending Phase
The intelligent driving business is Qianli Technology’s key growth area, yet it has not yet reached a profit-making milestone:
- High Revenue Contribution, High Expenses: Although intelligent driving accounts for 24% of total revenue and is the main growth driver, research and development expenses increased by 289% (837 million yuan out of 1.12 billion yuan), and administrative costs also rose by 79% due to business consolidation. This means that most of the profit generated by the intelligent driving business is being absorbed by these expenses.
- Speed of Commercialization is Crucial: The company has installed 500,000 units of intelligent driving systems in 16 vehicle models, but to meet the goal of 1 million units by the end of 2026, it needs to install 100,000 units per month. Whether the gross margin can cover these expenses depends on future scalability and the success of its pricing models (such as subscription-based models).
IV. The Deep Bond with Geely: A Lifeline or a Restricting Factor?
Qianli Technology’s relationship with Geely is very close, with Geely being the former controlling shareholder and now the largest shareholder, customer, and supplier:
- Benefits: This partnership provides a stable source of business, ensuring a steady stream of orders.
- Risks:
1. Overreliance on a Single Customer: Any reduction in cooperation with Geely could severely impact Qianli Technology’s revenue.
2. Listing Challenges: The Hong Kong Stock Exchange is strict about related-party transactions. Previously, Megvii (owned by Qianli Technology’s founder Yin Qi) failed to list due to related-party issues, and Qianli Technology may face similar scrutiny.
3. Difficulty in Expanding Customers: Other car manufacturers may be wary of cooperating with Qianli Technology, fearing data sharing concerns.
V. Ambitious Goals for Intelligent Driving: A Challenging Path to a 30% Market Share
Qianli Technology aims to install 8 million units of intelligent driving systems by 2028 and achieve a 30% market share, but the task is arduous:
- Gap Between Goals and Reality: The company has only installed 500,000 units so far, and it needs to install 100,000 units per month to meet its goal. Geely’s annual sales volume is only 3 million units, which is insufficient to support such a target.
- The “1+N” Strategy: The company plans to use Geely as a foundation to expand into other customers like BAIC and Mercedes-Benz. However, finding another customer with such a deep partnership is difficult, and replicating Huawei’s success with its HarmonyOS model in the existing car market is uncertain, especially given the current market downturn (21% decline in sales).
Despite these challenges, Qianli Technology is attempting to diversify its partnerships. If it can reduce its dependence on Geely, it may open up new opportunities.
Conclusion
Qianli Technology’s performance in the first half of the year is superficially impressive, but the core issues remain: the intelligent driving business has not yet turned profitable, the automotive segment is sacrificing long-term growth for short-term gains, and the company is heavily reliant on Geely. To achieve its ambitious goals, it must address these issues, which will take time and luck. Investors should focus on the actual progress of the intelligent driving business’s commercialization and the company’s ability to become independent of Geely. After all, Qianli Technology’s success cannot be achieved by relying on others; it must stand on its own feet.