Weixing New Material’s 2Q26 Profit Beat on One-Off Gains as Demand Challenges Persist: Goldman Sachs
Weixing New Material’s (002372.SZ) attributable net income was RMB 271 million in 2Q26, up 72% year over year and above Goldman Sachs’ forecast.
Weixing New Material’s (002372.SZ) attributable net income was RMB 271 million in 2Q26, up 72% year over year and above Goldman Sachs’ forecast. Excluding one-off items, however, core profit was RMB 128 million, down 17% year over year and 22% below expectations.
Revenue fell 9% year over year in 1H26. Management said it has seen no signs of a recovery from 3Q26 to date. Gross margin for PP-R products deteriorated year over year, although Weixing may be the only major plastic-pipe manufacturer to have raised prices so far this year. Its product premium has widened from 20%-30% to 30%-50%.
Overseas revenue rose to 9% of total revenue, compared with 6% in FY25. The company’s commitment to a full-year payout ratio of 70%-80% remains unchanged.
Goldman Sachs’ conclusion is that Weixing’s 2Q26 net income appeared to beat expectations, but core profit continued to decline, with no improvement in weak demand. It said the company’s high dividend provides a margin of safety.
The note identifies positives including the high dividend, strong overseas growth and Weixing’s position as the only major pipe maker to have raised prices, while citing core-profit declines and persistently weak demand as negatives. At the current share price, the stock corresponds to 17x 2026E P/E and a 5% dividend yield. No demand-bottoming signal has emerged, and the weakness is not yet fully priced in.
Potential catalysts identified by Goldman Sachs are: whether raw-material cost inflation can continue to be passed through via PP-R price increases; a sequential recovery in consumer confidence that lifts retail-channel sales; and faster implementation of government funding that supports a recovery in PE municipal-product volumes.
Revenue fell 9% year over year in 1H26. Management said it has seen no signs of a recovery from 3Q26 to date. Gross margin for PP-R products deteriorated year over year, although Weixing may be the only major plastic-pipe manufacturer to have raised prices so far this year. Its product premium has widened from 20%-30% to 30%-50%.
Overseas revenue rose to 9% of total revenue, compared with 6% in FY25. The company’s commitment to a full-year payout ratio of 70%-80% remains unchanged.
Goldman Sachs’ conclusion is that Weixing’s 2Q26 net income appeared to beat expectations, but core profit continued to decline, with no improvement in weak demand. It said the company’s high dividend provides a margin of safety.
The note identifies positives including the high dividend, strong overseas growth and Weixing’s position as the only major pipe maker to have raised prices, while citing core-profit declines and persistently weak demand as negatives. At the current share price, the stock corresponds to 17x 2026E P/E and a 5% dividend yield. No demand-bottoming signal has emerged, and the weakness is not yet fully priced in.
Potential catalysts identified by Goldman Sachs are: whether raw-material cost inflation can continue to be passed through via PP-R price increases; a sequential recovery in consumer confidence that lifts retail-channel sales; and faster implementation of government funding that supports a recovery in PE municipal-product volumes.