TSUGAMI CHINA (01651) expects its midterm profit to increase by 48% to over 500 million yuan, and the growth logic is being realized with high quality.

In the midst of a high prosperous cycle, Tsugami China (01651) once again delivered a performance forecast that clearly showcases its growth resilience. During the midday break on October 17, Tsugami China disclosed its interim profit announcement for the first half of the 2026 fiscal year (April-September 2025). The announcement revealed that the company is expected to achieve a net profit attributable to the parent of 502 million yuan during the reporting period, an increase of approximately 48% compared to the same period last year; on a quarter-to-quarter basis, it also increased by 14%. What is particularly noteworthy is that this achievement was made under the high base of last year's performance. Looking back at the company's operating history, Tsugami China's highest recorded half-year net profit attributable to the parent before this was 4.42 billion yuan for the second half of the 2025 fiscal year, followed by 3.8 billion yuan for the first half of the 2022 fiscal year, and then 3.4 billion yuan for the same period last year. From the trend of performance changes, it can be seen that since the 2025 fiscal year, Tsugami China's fundamentals have completely passed through a phase of adjustment and have re-entered a new cycle of growth. GMTEight believes that the machine tool industry can be considered a typical cyclical industry, with demand cycles changing continuously following macroeconomic fluctuations. Placed within it, as a leading machine tool company, Tsugami China's performance trend is highly correlated with the industry cycle. However, unlike traditional cyclical industries, the company's development shows an oscillating upward trend, with the performance scale at each new cyclical peak significantly higher than the previous peak. Looking at the value information released by the company's latest performance forecast, it is obvious that Tsugami China's fundamentals are currently in a new cycle of prosperity. Furthermore, it is intriguing to note that when comparing horizontally with peers, it is not difficult to see that in this new cycle of industry prosperity, Tsugami China's performance is clearly superior to other leading machine tool companies. Taking the most intuitive financial data for comparison, in recent years, Tsugami China's multiple core financial indicators have repeatedly set new historical records, with the company's profit margin being at a leading level within the industry. In the 2025 fiscal year, Tsugami China's comprehensive gross profit margin reached 33.1%, significantly higher than the average gross profit margin level of 15%-25% among A-share leading machine tool companies. Even more impressive is the company's net profit margin of 18.4%, far exceeding the vast majority of domestic and global machine tool manufacturers, undoubtedly making it one of the "most profitable" companies in the machine tool industry. Running at an accelerated pace of growth within the industry prosperity cycle, and further pulling ahead of peers, this may be attributed to Tsugami China's continuous efforts in reducing costs and increasing efficiency, and optimizing operations. To stimulate the company's innovation vitality and better cope with fierce market competition, since 2018, Tsugami China has initiated a company-wide proposal improvement activity for all employees. At the recent 2025 semi-annual proposal improvement commendation conference, the company awarded diamond, gold, silver, bronze, most improvement proposals, and best improvement project awards to outstanding individuals and groups. Through various measures effectively stimulating internal dynamic energy, Tsugami China has made continuous progress in reducing costs, increasing efficiency, strengthening risk resistance, and long-term growth prospects. In addition to the strong internal growth momentum, there are also external positive factors at play. In the profit announcement, the company mentioned that the rapid development of hot industries such as humanoid Siasun Robot & Automation, artificial intelligence, and others has increased demand for the company's high-end CNC machine tools. The author believes that this also indicates that the company's future growth sustainability and resilience are likely to continue to exceed expectations. In fact, secondary market investors have also given positive and timely "positive feedback" on this, with Tsugami China's stock price performance this year outpacing other A-share and H-share machine tool companies. Taking into account that the performance of the first half of the 2026 fiscal year has already set new records, it is highly probable that Tsugami China's performance for the full year will continue to reach new highs, making the company's performance and stock price momentum highly anticipated.