LAUNCH TECH (02488): From a hardware company to an industry AI service provider, the company's value is undergoing change.

The market has long anchored LAUNCH TECH (02488) as an "auto repair equipment manufacturer," applying traditional manufacturing valuation logic. Based on its 2026 interim results, the company has formed a three-business structure of "equipment as the entry point, software as the foundation, and AI and services as the growth engine," and is steadily upgrading toward an AI service provider for the automotive industry, with its enterprise value undergoing fundamental change. Equipment business: a globally deployed terminal entry point Diagnostic equipment is the key hardware carrier and business distribution entry point. As of the end of June 2026, LAUNCH equipment was connected to more than 420 million vehicles worldwide, with nearly 3.9 million installed terminals active, covering 234 countries and regions, firmly ranking in the global industry's top tier. In the first half of 2026, equipment business revenue was approximately RMB900 million, up 3.1% year on year. Unlike the one-time sales logic of traditional hardware manufacturers, installed terminals are the physical touchpoints through which recurring revenue from software, AI and services is realized; the larger the scale, the more solid the foundation for penetration of value-added services. Software business: the core foundation of stable recurring revenue The software business is the mature base of recurring revenue, with revenue derived from fees paid by customers for protocol adaptation for new vehicle models, feature iteration and upgrades, and high-end diagnostic modules. In the first half of 2026, software business revenue was approximately RMB120 million, up 67.9% year on year, rising to 11% of total revenue. Compared with the hardware business, which recognizes revenue on a one-time basis and relies on new shipments for growth, the software business has continuous revenue, stable cash flow, high gross margins and strong customer stickiness, and is the core support for the company's transformation. AI and services: a fast-growing second growth curve AI and services is the fastest-growing business segment in recent years, including AI agents, remote diagnostics and automotive data, providing value-added services to customers across the automotive industry, including repair shops, vehicle owners, parts suppliers, OEMs, insurance companies, used-car dealers, auto finance institutions, environmental testing agencies and vehicle management offices. In the first half of 2026, remote diagnostics orders totaled approximately 1.166 million, with revenue of RMB16.1 million, up 45.7% year on year; automotive data business revenue was RMB15.4 million, up 93.6% year on year, leading all segments in growth. The launch of the "Xiaozheng AI Agent" embeds AI into the entire repair workflow, extending the business from "selling equipment" to "selling services." LAUNCH TECH has built a three-tier differentiated competitive moat: first, the installed-terminal entry barrierits large global installed base forms a unique service and data collection network that new entrants cannot easily replicate in the short term; second, the data closed-loop barrieras of the end of June 2026, cumulative diagnostic reports exceeded 2.3 billion, with Beijing Vastdata Technology continuously feeding back to support model iteration, forming a positive growth flywheel of "installation growth data accumulation model upgrade service value-added driving more installations"; third, the global channel barrierits worldwide dealer network can be reused to push value-added services, significantly reducing market expansion costs. In the past, the market priced the company as a pure hardware enterprise, with its PE long maintained at around 7x, significantly lower than comparable software, AI and services companies. As the revenue share of the software business steadily rises and AI and services continue to scale, the company's recurring revenue structure continues to improve, and its valuation logic is gradually switching from the PE of a hardware manufacturer to a composite valuation system of "equipment business + software business + AI and services"equipment underpins the performance base, software contributes earnings stability, and AI and services unleash long-term growth elasticity, leaving ample room for the company's long-term valuation. Looking ahead, LAUNCH TECH will anchor its positioning as an AI service provider for the automotive industry, deepen synergies across its three businesses, accelerate penetration of AI service terminals, leverage its terminal and data advantages to iterate on-device AI models, consolidate its competitive moat, and its long-term value has clear room for enhancement.