MINTH GROUP (00425), the world's largest battery box supplier, saw its revenue and profit both climb in the first half of 2026, yet its stock price has nearly halved from its peak over the past three months. When will the decline stop?

According to the company's interim report, revenue reached RMB 13.408 billion, up 9.1% year-on-year, with gross profit growing 10.57% to RMB 3.84 billion. Net profit attributable to shareholders rose 12.3% to RMB 1.434 billion, while gross and net margins stood at 28.64% and 10.7%, respectively. The dual growth was driven by a diversified product portfolio, with battery boxes, structural parts, and plastic components maintaining solid momentum. Overseas markets were a standout performer, particularly the Americas and Japan-Korea regions, buoyed by new project ramp-ups and increased customer demand.

Additionally, the company is actively exploring new frontiers, including AI, robotics, and low-altitude economy sectors, to build a second growth curve. However, its market performance tells a different story, with a share price decline exceeding 20% this year, accelerating in Q2 and nearly halving from recent highs. So, why is the market unimpressed?

Diversified Products and Overseas Expansion Drive Dual Growth

MINTH GROUP operates two major business segments: automotive components and tooling molds, with four product lines covering plastic parts, aluminum parts, metal and trim strips, and body structures. Its global footprint spans China, the Americas, Europe, the Middle East, and Africa.

In the first half of 2026, the four product lines delivered balanced and steady growth. Revenue from body structures, plastic parts, aluminum parts, and metal and trim strips reached RMB 4.513 billion, RMB 3.231 billion, RMB 2.399 billion, and RMB 2.739 billion, respectively, up 25.96%, 12.73%, down 2.8%, and up 3% year-on-year. Their revenue shares were 33.7%, 24.1%, 17.9%, and 20.4%. Other products contributed RMB 1.72 billion, up 3%, representing 12.8% of total revenue. Clearly, the company has established a well-diversified product matrix.

In terms of markets, China remained resilient despite softer demand, accounting for 31.9% of revenue. Overseas revenue grew 14.36%, representing 68.1%. Notably, China, the Americas, and Europe-Middle East-Africa collectively contributed 94.4% of revenue. Japan and Korea, while smaller, grew rapidly at 48.9%, lifting their share to 5%.

MINTH GROUP serves nearly all major automakers, including overseas brands like Volkswagen, Toyota, and Mercedes-Benz, as well as domestic players such as BYD, Geely, Changan, Great Wall, and Leapmotor. The company adapts its localized strategy to each OEM's performance in different markets. During the period, it secured battery box and chassis structural component business at Toyota's Shanghai plant, broke into Mercedes-Benz's anti-collision beam business for the first time, and won Honda's hybrid battery box orders. It also landed orders for Hyundai-Kia's best-selling European models, becoming their largest battery box supplier in Europe. In smart exterior and traditional products, the company achieved first orders from multiple customers, including ongoing smart interior and exterior component orders from SAIC Volkswagen, SAIC GM, Geely, Great Wall, and Harmony Intelligent Mobility.

Robust Profitability with Cash Reserves of RMB 4.525 Billion

MINTH GROUP maintained solid profitability in the first half of 2026, with gross margin rising 0.3 percentage points to 28.6%. Overall expense ratios stayed stable: selling expenses fell 2 percentage points to 4%, and financial expenses dropped 0.2 points to 1.2%, offset by a 0.2-point rise in administrative expenses to 6.7% and a similar increase in R&D expenses to 6.1%. Net margin improved 0.3 points to 10.7%.

By segment, body structures, plastic parts, aluminum parts, and metal and trim strips posted margins of 22.1%, 29.2%, 32.8%, and 31.2%, respectively, contributing 26%, 24.5%, 20.5%, and 22.3% of segment profit. This balanced revenue and profit structure generated stable, ample cash flow.

As of June 2026, cash and equivalents stood at RMB 4.525 billion, up RMB 773 million from end-2025, meaning over half of profits converted to cash. Receivables and inventories rose by RMB 319 million and RMB 629 million, respectively, underscoring strong collection capability. Of the RMB 5.587 billion in receivables, nearly 90% (RMB 5.016 billion) had aging within three months.

With revenue and profit rising, shareholder returns remained steady. Semi-annual ROE for 2024-2026 was 5.52%, 5.84%, and 6.09%, respectively, with annualized ROE exceeding 10%. The company also pays final dividends each year, distributing HK$0.435 and HK$0.764 per share for 2024 and 2025, representing 18.43% and 27.46% of earnings per share, with a clear upward trend. At the 2025 final dividend, the yield exceeded 3%.

Building a Second Growth Curve with Investment Bank Target Prices Offering Over 70% Premium

Industry-wise, MINTH GROUP concentrates on Europe, the Americas, and China, benefiting from structural opportunities driven by the rapid adoption of new energy vehicles. Data shows that in the first half of the year, pure electric vehicle registrations across 17 European countries reached 1.241 million units, up 33.7%, with penetration exceeding 30% in most markets. France and Finland saw penetration rates of 29.6% and 48.9%, respectively. While China's NEV sales growth has slowed, penetration has hit 50%.

As one of the world's largest battery box suppliers, the company is capitalizing on these opportunities, prioritizing R&D to solidify its leadership. Through independent innovation and deep collaboration with traditional automakers, new EV players, and battery manufacturers, MINTH GROUP is advancing process breakthroughs in battery boxes, chassis structural components, and smart integrated exteriors, while offering multi-material, lightweight solutions to enrich its product matrix and drive balanced growth.

Notably, the company is focusing on AI infrastructure, intelligent robotics, low-altitude economy, and commercial space sectors, targeting high-value, high-barrier niches to accelerate its second growth curve. Key areas include AI server liquid cooling systems, solid oxide fuel cell systems, and solid-state transformer systems. The liquid cooling product line covers cold plates, smart water distributors, coolant distribution units, and immersion cooling cabinets, with orders from a Taiwan client already in mass production during the period. In SOFC, self-developed interconnectors, supports, and cell frames have achieved project breakthroughs in China with small-batch deliveries. In low-altitude economy, the company is deeply engaged with multiple leading flying car/eVTOL OEMs in China, participating in concurrent design and airworthiness certification for several models, with product deliveries already underway for multiple platforms.

Additionally, given the trillion-yuan embodied intelligence trend and policy support, the company is actively entering the intelligent robotics sector, focusing on robotic components, full-machine OEM, and secondary development. It has established partnerships with major domestic robot integrators and completed batch deliveries to several key clients. Its self-developed face mask product secured an order from a mainstream North American robot customer in July 2026. With new businesses progressing steadily, the second growth curve is taking shape.

In summary, MINTH GROUP delivered steady growth with both revenue and profit expanding, driven by its diversified product portfolio and overseas market expansion, supported by structural opportunities from the NEV boom. Its commitment to R&D continues to enrich its offerings, cementing its industry leadership. Profitability is improving, cash collection is strong, and receivables aging is short, boosting ROE and cash returns. The weak share price performance this year is largely attributable to the broader auto parts sector, which fell over 20%, dragging even quality names down. However, over the long term, the company's market value has more than doubled in the past three years, and most investment banks remain bullish post-results.

For instance, CMB International notes the company's counter-trend revenue growth in H1, with overseas revenue outpacing domestic by 14.9 percentage points and net margin hitting a new high since H2 2021, setting a target price of HK$42. Jefferies is optimistic about the new businesses, noting robot ODM production began in June and is expected to contribute around RMB 300 million in H2 revenue, with a target price of HK$47.7. At the current price of HK$23.8, both target prices imply a premium of over 70%.