Kehua Data Co.,Ltd. has released its 2026 first-half performance forecast, projecting net profit attributable to shareholders of between 3.65 billion and 3.9 billion yuan, representing a year-on-year increase of 50% to 60%. Its non-GAAP net profit, which excludes certain one-time items, is forecast to be between 2.3 billion and 2.54 billion yuan, indicating growth of 2.79% to 13.68%.

Despite this projected high growth, the market's reaction has been notably tepid, with the company's stock price declining around the time of the announcement. As a leading domestic UPS power supply provider, Kehua Data Co.,Ltd. has been viewed as a key player in the "computing-power synergy" theme since 2023, as it fully expanded into AI infrastructure like intelligent computing power distribution and liquid cooling. With the surge in capital expenditure for AI computing power, questions arise about the quality of the company's earnings.

Significant Share of Non-Recurring Items

The high headline profit growth masks a significant reliance on non-recurring gains. A substantial portion of the forecasted net profit for the first half of 2026 stems from the one-time gain on the sale of an 80% stake in Guangdong Keyun Chenhang. After stripping out this non-recurring income, the growth rate of the company's core, or non-GAAP, profit is significantly lower than the headline figure, with second-quarter performance falling short of analyst expectations.

Reasons for Limited Profit Momentum

The lack of robust profit expansion stems from three primary factors. First, the core business's profitability is constrained; the overall gross margin for the data center segment was only 27% in 2025. Second, new business initiatives and overseas expansion are still in the investment phase, with significant upfront costs for R&D and channel development suppressing profit realization. Third, the new energy segment is facing cyclical pressures.

Strain from Heavy-Asset Model and Transition Pains

Influenced by price competition in the domestic UPS market and shifts in the supply-demand dynamics of the IDC industry, Kehua Data Co.,Ltd.'s previously heavy-asset IDC operations continue to face pressure. Since 2020, the company ramped up investments to build a full data center industry chain, leading to a逐年 increase in the book value of fixed assets. Although it began shedding low-margin, heavy-asset businesses in 2025, fixed asset depreciation charges of 4.1 billion yuan in 2024 and 4.29 billion yuan in 2025 have eroded profits.

Concurrently, provisions for credit and asset impairment have risen yearly since 2023, totaling approximately 219 million yuan in 2025, primarily from bad debt losses on receivables and inventory write-downs. By the end of 2025, the balance of accounts receivable and notes reached 38.23 billion yuan, accounting for 47% of annual revenue, with nearly 20% of receivables aged over two years, indicating significant collection risks.

Cash flow has continued to weaken. While 2025 revenue grew 5.2% year-on-year, net cash flow from operating activities fell 23% to 11.62 billion yuan. As the company deepens its strategic focus on intelligent computing, sustained R&D and channel investment remains necessary. Furthermore, the company carried 6.79 billion yuan in goodwill on its books at the end of 2025, posing a risk of further impairment if the performance of related asset groups disappoints.

Profitability Under Pressure from Structural Imbalance

High levels of R&D and sales expenses in recent years have also weighed on profits. In 2025, the overall gross margin was 24.56%, while the total period expense ratio—encompassing sales, management, R&D, and finance costs—reached 17.23%, severely compressing the profit margin.

This pressure on profitability reflects a structural imbalance within the business. Although the new energy segment is large in scale, its gross margin was only 17.87% in 2025, significantly lower than the data center and smart power segments, pressured by a slowdown in domestic energy storage growth and intensified price competition—a trend that continued into Q1 2026. Meanwhile, the traditionally high-margin smart power business has been contracting, with revenue down 19.32% year-on-year in 2025, making it the only segment among the three main businesses to show negative growth and weakening its role in supporting overall profits.

For Kehua Data Co.,Ltd., the intelligent computing center business has become the core growth driver. The key focus now is whether the company can achieve gross margin expansion alongside the rapid scaling of this business to drive an overall improvement in profitability.