SUNWODA Q1 Revenue Jumps 31%, But Net Profit Attributable to Parent Company Plunges 70% Amid Exchange Losses | Financial Report Insights

SUNWODA Electronics' Q1 2026 financial report reveals significant divergence. During the reporting period, the company achieved operating revenue of 16.116 billion yuan, a 31.14% increase year-over-year, with its power battery business maintaining high growth; however, net profit attributable to the parent company was only 114 million yuan, a sharp 70.49% decline year-over-year; Non-Recurring Net Profit Attributable To Shareholders was -1.27 million yuan, representing a 100.49% drop year-over-year. A surge in financial expenses is the primary reason for profit pressure. Financial expenses reached 491 million yuan in the first quarter, skyrocketing 1072% year-over-year, mainly driven by a significant expansion in exchange losses. Notably, the company recognized over 400 million yuan in non-recurring gains during the same period (primarily from changes in the fair value of derivative financial instruments), providing crucial support to net profit. The Balance Sheet indicates that the company is in a cycle of high-intensity capacity expansion. Total assets reached 115.57 billion yuan at the end of the first quarter, an increase of nearly 7.5 billion yuan quarter-on-quarter; inventory surged 34%, and construction in progress climbed significantly; long-term borrowings jumped 51% quarter-on-quarter to 13.6 billion yuan, with financial leverage continuing to rise. Warning signals were also released on the cash flow front. Net cash flow from operating activities for the first quarter was only 72.35 million yuan, down 95% from 1.527 billion yuan in the same period last year, primarily due to large-scale inventory stocking driving up cash payments for procurement. Electric Vehicle Battery Revenue Drives Revenue Growth, Rising Expenses Erode Profits In the first quarter of 2026, SUNWODA's operating revenue grew 31.14% year-over-year, driven mainly by increased revenue from electric vehicle batteries. Operating costs were 13.221 billion yuan, up 29.4% year-over-year; the growth rate was slightly lower than revenue, leading to an improvement in gross margin. However, R&D, administrative, and sales expenses all rose comprehensively, increasing 28.3%, 20.4%, and 22.7% respectively year-over-year, offsetting the positive impact of improved gross margins. The most significant drag on profits this quarter came from financial expenses. This expenditure spiked from 420 million yuan in the same period last year to 491 million yuan, a massive increase of 1072%. The company explained that this was mainly due to a significant increase in exchange losses. As a battery manufacturer deeply involved in the global supply chain, SUNWODA has a large overseas business scale, and the impact of exchange rate fluctuations on the income statement is intensifying. Profitability is under clear pressure. Net profit attributable to the parent company for the first quarter was 114 million yuan, a 70.49% decline year-over-year. Notably, total non-recurring gains and losses for the period were approximately 115 million yuan, with changes in the fair value of derivative financial instruments contributing 134 million yuan. After excluding this portion, Non-Recurring Net Profit Attributable To Shareholders was -1.27 million yuan, indicating that the main business is on the verge of breaking even. Additionally, income tax expenses appeared as a negative value (-27 million yuan) this period, resulting in income tax benefits, primarily due to a reduction in deferred tax expenses, which buffered the decline in profits to some extent. Inventory Surges, Borrowings Skyrocket: SUNWODA's Aggressive Capacity Expansion From the changes in the Balance Sheet, SUNWODA is embracing strong downstream demand with a posture of major capacity expansion. Regarding inventory, ending inventory reached 14.436 billion yuan, surging 34.18% from the beginning of the year. The company explained this as "stocking based on operational development needs." Prepayments increased 61% to 1.616 billion yuan, indicating large-scale orders have been placed on the procurement side, suggesting that subsequent delivery volumes will likely support continued revenue growth. Contract liabilities (advance payments from customers) surged 133% to 2.868 billion yuan, reflecting strong downstream customer demand and high order visibility. Regarding debt structure, long-term borrowings jumped from 9.015 billion yuan at the beginning of the year to 13.606 billion yuan, an intra-quarter increase of 50.93%. Net cash inflow from financing activities was 4.668 billion yuan, up 125% year-over-year, with cash received from obtaining loans reaching 11.2 billion yuan. Financing funds were mainly directed toward capacity construction, with construction in progress expanding from 10.6 billion yuan to 12.2 billion yuan, and long-term deferred expenses rising to 5.41 billion yuan, placing capacity investment in a period of concentrated release. Overall, the company's Debt to Asset Ratio has risen to approximately 72.8% (liabilities of 84.15 billion yuan / total assets of 115.57 billion yuan), with financial leverage at a high level. Interest expenses for this period reached 227 million yuan, and rigid cost pressures will continue to manifest over the next few quarters. Cash Flow "Bleeding", Financed by Capital Raising A sharp contraction in operating cash flow is the most alarming signal in SUNWODA's Q1 report. Data shows that net cash flow from operating activities for the first quarter was only 72.36 million yuan, a 95.26% decrease from 1.527 billion yuan in the same period last year. Looking at both inflows and outflows: cash received from selling goods was 17.976 billion yuan, up 21.5% year-over-year, with a growth rate lower than revenue (31.14%), indicating a slowdown in collection pace. Accounts receivable at the end of the quarter were 17.695 billion yuan; although this is a slight decrease from 18.887 billion yuan at the beginning of the year, the absolute scale remains enormous. On the expenditure side, cash paid for purchasing goods reached 14.954 billion yuan, a significant 34.5% increase year-over-year. Large-scale inventory stocking directly drove up cash expenditures, becoming the main cause of pressure on operating cash flow. Regarding investment activities, net cash outflow was 2.782 billion yuan, including 2.322 billion yuan spent on purchasing and constructing fixed assets and 2.036 billion yuan spent on external investments, maintaining high capital expenditure intensity. Among the three cash flow categories, only financing activities recorded a positive inflow, with a net amount of 4.668 billion yuan. The company essentially relies on large-scale borrowing to maintain cash balance. Cash and cash equivalents at the end of the period stood at 12.424 billion yuan, with total monetary funds at 22.864 billion yuan, indicating adequate short-term liquidity.