As a leading domestic player in base station antennas, Tongyu Communication Inc. reported a first-quarter performance for 2026 marked by increased revenue but a net loss, with its attributable net profit shifting from a profit in the same period last year to a loss exceeding ten million yuan. This phenomenon of "revenue growth without profit growth" highlights the transitional challenges this communications equipment supplier is encountering within the current industry cycle.
Revenue and Profit Divergence
According to the company's first-quarter report, Tongyu Communication achieved steady year-on-year growth in operating revenue for the quarter, managing an expansion in sales volume despite a backdrop of slowing investment pace from domestic telecom operators. However, this strong performance on the top line did not translate to the bottom line—the company recorded a net loss attributable to shareholders of over ten million yuan, a decline of more than two hundred percentage points from the profitable state of the prior-year period. More notably, the net loss after excluding non-recurring gains and losses was even more pronounced. This indicates that the company's core business operations are themselves under significant pressure.
Profit Margins Squeezed from Both Sides
For the shift from profit to loss in the first quarter, the company primarily attributed the cause to significant exchange rate fluctuations. As the company's overseas business continues to expand, its foreign currency-denominated financial assets and liabilities generated substantial exchange losses due to these fluctuations, directly driving up financial expenses. Beyond the currency factor, underlying pressures are also significant: the increase in operating costs was notably higher than the growth rate of revenue, influenced mainly by factors such as rising logistics and freight costs. This escalation on the cost side has begun to erode the positive effects brought by revenue growth. Concurrently, the combined proportion of the three major expenses—selling, administrative, and financial—relative to revenue showed a clear year-on-year increase. This significant rise in the total expense ratio further compressed profit margins.
Under the combined influence of the above factors, the company's gross profit margin saw a noticeable decline, and its weighted average return on equity turned from positive to negative, directly reflecting a temporary downturn in the profitability of the company's own capital.
Core Business Under Pressure
From a fundamental business perspective, Tongyu Communication's traditional core operations are currently within a cycle of industry structural adjustment. The company's full-year operating revenue for 2025 experienced a year-on-year decline, with intensified competition in domestic telecom operator business and a passive increase in cost ratios putting short-term pressure on the profitability of its mainstay. By product segment, revenue from the core base station antenna business saw a degree of decline, reflecting the temporary slowdown in investment pace by domestic operators as 5G network construction enters its mid-to-late stages.
Faced with fierce competition in the domestic market, Tongyu Communication has proactively adjusted its market strategy, continuously intensifying efforts to expand in overseas markets, focusing on regions such as Southeast Asia, the Middle East, and Latin America. In 2025, the proportion of overseas revenue further increased, and the gross profit margin of overseas business also showed significant year-on-year growth, notably higher than the level of domestic business. This indicates that overseas markets have become a crucial support for stabilizing the company's core business. However, given that the revenue scale of the high-margin overseas business still lags behind the domestic market, it is insufficient in the short term to fully offset the downward pressure from the domestic market.
Strategic Positioning in a New Growth Area
It is worth noting that while the traditional core business faces pressure, Tongyu Communication's satellite communications business is experiencing sustained and rapid growth. In 2025, this segment achieved a year-on-year revenue increase of over twenty percent. Products developed around the three major scenarios of "satellite, ground, and terminal" have entered the small-scale commercial deployment phase. Through capital operations such as taking stakes in satellite core component manufacturers and jointly establishing industry funds, the company has deeply engaged in low Earth orbit satellite constellation projects. Products like satellite-borne phased array antennas have already secured component orders, including for satellite antennas. Furthermore, the company signed a strategic cooperation framework agreement with Zhongtian Hongxin, with both parties set to conduct in-depth cooperation across multiple fields including satellite communication ground systems and terminals, supporting infrastructure and supply chains for LEO constellations, and integrated space-air-ground communication solutions. This strategic positioning has the potential to become the company's future secondary growth curve, although the satellite communications business is still in its early cultivation stage, and its contribution to the profit statement will require time to materialize gradually.
Analysts Maintain Positive Outlook on Transformation
While the first-quarter loss certainly warrants attention, it primarily reflects transitional volatility triggered by external factors like exchange rates, as well as the timing gap between the transformation of traditional business and the cultivation of emerging business. Securities firms generally hold the view that the company is currently in a critical period of strategic transition, where traditional business is under pressure while emerging business is accelerating development. The company's overseas business expansion has shown significant results, and its full-industry-chain layout in satellite communications has successfully secured a strategic position within major domestic constellation plans. With the continued expansion of overseas markets and the gradual deepening of satellite internet industry construction, coupled with the planned advancement of related R&D projects, the company is poised to reach an inflection point in its performance within the year.
For investors, understanding the balance between the pressure on traditional business and the scaling up of emerging business will be a key perspective for observing the future trajectory of this leading communications antenna company.
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