Kehua Data's core profit in the first half of the year was slightly lower than expected, and overseas recovery in the second half is expected to reverse the situation (UBS)

Street Signal | Kehua Data's core profit in the first half of the year was slightly lower than expected, and overseas recovery in the second half is expected to reverse the situation (UBS)

Kehua Data's core profit in the first half of 2026 was slightly lower than market expectations, and its second quarter performance was weak. The reasons are that domestic data center product shipments are lower than expected, raw material costs are rising, and the domestic revenue share is increasing, which lowers gross profit margins.

UBS expects performance to improve in the second half of the year, benefiting from a sufficient order backlog and a recovery in shipments and gross profit margins brought about by overseas (Southeast Asian) market expansion.

However, attention needs to be paid to the expense pressure caused by equity incentives, sales expenses and depreciation of new data centers. The market's previous expectations for H2 recovery have cooled down, but the fulfillment of order backlog and Southeast Asian expansion is expected to create a gap in expectations.

Positive/negative: Positive for Kehua Data (002335). Data center and pan-IDC industry chain. Price in situation: Performance misses and valuation cuts have been digested, and H2 recovery expectations have yet to be verified by data. Catalysts:

1) Verification of overseas (Southeast Asia) market shipments and gross profit margin in the second half of the year; 2) conversion speed of order backlog; 3) impact of new data center depreciation on the income statement.