As a cornerstone of industrial modernization, the machine tool industry is continuously reaping new, certain growth dividends, benefiting from the sustained expansion in demand for precision processing from downstream sectors like new energy, humanoid robotics, and AI computing power.
Observing the performance of leading companies provides an accurate gauge of the industry's robust health.
Take TSUGAMI CHINA (01651), which just released its FY2026 annual report; its series of record-breaking financial figures vividly illustrate the combined effect of the high growth in China's CNC machine tool sector and the company's own internal growth momentum.
The financial report from TSUGAMI CHINA shows that for FY2026, the company achieved revenue of RMB 5.184 billion, a year-on-year increase of 21.6%, and net profit attributable to owners of the parent of RMB 1.094 billion, surging 39.9% year-on-year, with both revenue and profit setting new historical records.
The profit growth rate significantly outpaced revenue growth, reflecting the company's continuous efforts to enhance profitability through measures like optimizing operational efficiency and strengthening cost control.
Furthermore, TSUGAMI CHINA's net profit margin of 21.1% stands as a leader in the industry.
Alongside delivering its best-ever performance, TSUGAMI CHINA also maintained its tradition of generous dividends, announcing a final dividend of HK$0.9 per share, which, combined with the interim dividend of HK$0.6 per share, brings the total annual dividend to HK$1.5 per share, highlighting its strong dividend characteristics.
Given the high visibility of TSUGAMI CHINA's growth and its significant growth potential, the certainty of its ability to maintain a high dividend payout in the future is expected to strengthen further.
With the dual advantages of high growth and high dividends, the foundation for a sustained upward trend in TSUGAMI CHINA's share price is anticipated to be continuously solidified.
Comprehensive Acceleration in the Second Half
Looking at the latest report, the company's record-breaking performance in FY2026 is not surprising, but the unexpected aspect is that, building on an outstanding first half, TSUGAMI CHINA achieved all-around accelerated growth in the second half of the fiscal year.
Data shows that in the second half of FY2026, TSUGAMI CHINA's revenue was RMB 2.687 billion, a year-on-year increase of 17.6%, and a sequential increase of 7.6% on top of the record-high first half.
During the same period, net profit attributable to owners of the parent increased by 33.9% year-on-year and 17.9% sequentially, with the net profit margin further improving to approximately 22.0%, significantly higher than the 20.1% in the first half.
The second half contributed about 54% of the full-year profit, demonstrating a clear acceleration in profit release and further validating the company's growth resilience to continue breaking through even from a high base.
Breakdown by Business Segment
The overall performance breakthrough in FY2026 is directly linked to the comprehensive upward momentum across all its business segments.
Precision lathes, the company's core product and stabilizing force, generated revenue of RMB 4.331 billion for the full year, a year-on-year increase of 19.5%, accounting for 83.5% of total revenue.
Revenue from precision machining centers surged 58.3% year-on-year to RMB 386 million, making it the fastest-growing business during the reporting period.
Revenue from precision grinding machines was RMB 227 million, up 8.9% year-on-year, showing relatively moderate growth.
Other businesses, including precision thread rolling machines, parts sales, and after-sales services, collectively generated revenue of RMB 241 million, a year-on-year increase of 30.1%.
From a geographical perspective, the domestic market was the core engine driving TSUGAMI CHINA's accelerated growth.
Data shows that domestic sales reached RMB 4.82 billion during the period, a year-on-year increase of 27.2%, setting a new historical record.
In the second half, the stronger-than-expected performance in several downstream domestic industries directly led to a further 5% sequential increase in TSUGAMI CHINA's revenue from the domestic market.
Specifically, the 3C industry benefited from a recovery in demand for mobile phones and communication terminals, with order volumes in the second half being particularly significant.
Intensive investment in AI computing power and semiconductor infrastructure drove equipment procurement demand for related precision components; by the second half, this segment historically accounted for 50% of TSUGAMI CHINA's domestic revenue.
During the same period, traditional strongholds like pneumatic and hydraulic sectors also maintained steady growth.
The continuous breakthrough on the profitability front is also noteworthy.
The company's overall gross profit margin for FY2026 improved to 34.9%, an increase of 1.8 percentage points year-on-year, while the net profit margin reached 21.1%, up 2.7 percentage points year-on-year, with both metrics reaching new historical highs.
Analyzing these data points, it is evident that in the second half, as orders from high-value-added fields like AI computing power and humanoid robots accelerated, the optimization of the product mix further contributed to the upward breakthrough in the company's profitability.
Under the combined effect of multiple driving forces, the company's growth potential has been unprecedentedly strengthened.
Seizing Industry Opportunities and Cultivating New Growth Drivers
Looking ahead, the high-growth cycle for China's CNC machine tool industry is far from over.
Public data shows that in the first two months of this year, domestic output of CNC metal-cutting machine tools grew 45.9% year-on-year, continuing the high-growth trend since the third quarter of 2025.
Demand for high-precision, high-efficiency CNC machine tools from downstream emerging fields like new energy, humanoid robotics, and AI computing power continues to be released, and the trend of an extended industry upcycle is not expected to change.
Amid this historic opportunity, TSUGAMI CHINA's strategic focus on new areas like AI computing power has entered a realization phase, opening up new growth space for the company.
From an industry perspective, AI computing power is undoubtedly the most promising growth direction currently.
The rapid development of AI computing power has led to an unprecedented surge in demand for manufacturing small, precision components, and TSUGAMI CHINA, known for its small precision machine tools, is perfectly positioned to meet the expanding incremental demand downstream with its high-quality supply.
It is reported that TSUGAMI CHINA's equipment already covers the entire processing chain for such precision components, from core optical devices like optical transceiver assemblies (TOSA/ROSA) in AI optical modules to computing tray liquid cooling module and base structural parts.
Leveraging its high-precision processing capabilities and cost-effectiveness, TSUGAMI CHINA is expected to continue expanding its market share in the AI computing power precision component processing field, and the proportion of its revenue from AI computing power and other leading industries is projected to increase further.
Based on ample confidence in the industry's prospects, TSUGAMI CHINA has significantly increased its capital expenditure for FY2027 to RMB 200 million, a historical high, primarily for equipment upgrades and new factory construction.
According to the company, site leveling, wall construction, and plant design for the new Pinghu factory have been completed, and construction officially commenced earlier this month.
According to the plan, TSUGAMI CHINA will construct two new factory buildings with a total investment of approximately RMB 150 million, and the new project is expected to commence operations in January 2028.
The recent intensive capacity expansion actions not only reflect management's firm confidence in the medium- to long-term outlook for China's CNC machine tool market but also provide capacity assurance for TSUGAMI CHINA to continue achieving strong results.
Expanding from traditional strongholds into emerging tracks like AI computing power, it is clear that as TSUGAMI CHINA's multi-dimensional growth drivers are realized one after another, the visibility and elasticity of its growth have been significantly elevated.
As a responsible manufacturing enterprise, with its fundamental strength continuously increasing, TSUGAMI CHINA has also simultaneously enhanced shareholder returns.
As mentioned, the dividend per share for FY2026 will be HK$1.5.
Moreover, the company repurchased shares worth a cumulative RMB 253 million during the period, far exceeding the approximately RMB 62 million in the previous year.
With both highly certain growth prospects and steadily increasing shareholder returns, TSUGAMI CHINA, as a high-quality blue-chip stock in the Hong Kong market clearly benefiting from this wave of AI development, is poised to attract broader investor attention.
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