The market has long pigeonholed LAUNCH TECH (02488) as an automotive repair equipment manufacturer, applying traditional manufacturing valuation logic. Based on its 2026 interim results, the company has established a three-pillar business structure — devices as the entry point, software as the foundation, and AI and services as the growth engine — steadily upgrading toward an automotive industry AI service provider, with its corporate value undergoing fundamental changes.
Device Business: A Globally Deployed Terminal Entry Point
Diagnostic devices serve as the critical hardware carrier and business distribution entry point. As of the end of June 2026, LAUNCH TECH devices connect to over 420 million vehicles worldwide, with nearly 3.9 million active installed terminals, covering 234 countries and regions, firmly holding a position in the global industry's top tier. In the first half of 2026, the device business generated revenue of approximately 900 million yuan, up 3.1% year-on-year. Unlike the one-time sales logic of traditional hardware manufacturers, the installed terminal base serves as the physical touchpoint for recurring revenue from software, AI and services. The larger the scale, the more solid the foundation for value-added business penetration.
Software Business: The Core Foundation for Stable Recurring Revenue
The software business is the mature base for recurring revenue, with income derived from customers paying upgrade fees for new vehicle model protocol adaptation, feature iterations and upgrades, and advanced diagnostic modules. In the first half of 2026, the software business generated revenue of approximately 120 million yuan, up 67.9% year-on-year, with its share of total revenue rising to 11%. Compared with the hardware business, which recognizes revenue on a one-time basis and relies on new shipments for growth, the software business offers continuous revenue, stable cash flow, high gross margins and strong customer stickiness, serving as the core support for the company's transformation.
AI and Services: The High-Speed Second Growth Curve
AI and services represent the fastest-growing business segment in recent years, encompassing AI agents, remote diagnostics and automotive data, providing value-added services to customers across the entire automotive industry including repair shops, vehicle owners, parts suppliers, OEMs, insurance companies, used car dealers, auto finance institutions, environmental testing agencies and vehicle management offices. In the first half of 2026, remote diagnostics order volume reached approximately 1.166 million orders, generating revenue of 16.1 million yuan, up 45.7% year-on-year; the automotive data business generated revenue of 15.4 million yuan, up 93.6% year-on-year, leading all segments in growth rate. The deployment of the "Xiaozheng AI Agent" embeds AI into the entire repair workflow, driving the business from "selling devices" to "selling services."
LAUNCH TECH has built a three-layer differentiated competitive moat: first, the installed terminal entry barrier — the globally large-scale installed terminal base constitutes a unique service and data collection network that new entrants find difficult to replicate in the short term; second, the data closed-loop barrier — as of the end of June 2026, cumulative diagnostic reports exceeded 2.3 billion, with massive data continuously flowing back to feed model iteration, forming a positive growth flywheel of "installation growth → data accumulation → model upgrades → service value-add → driving more installations"; third, the global channel barrier — the worldwide dealer network can be reused to push value-added services, significantly reducing market expansion costs.
Previously, the market priced the company as a pure hardware enterprise, with its PE ratio long maintained at around 7 times, significantly below comparable software, AI and service companies. As the software business revenue share steadily rises and AI and services continue to scale, the company's recurring revenue structure is continuously optimizing, and the valuation logic is gradually shifting from a hardware manufacturer PE to a composite valuation system of "device business + software business + AI and services" — devices underpin the performance foundation, software contributes earnings stability, and AI and services unleash long-term growth elasticity, providing ample room for long-term valuation.
Looking ahead, LAUNCH TECH will anchor its positioning as an automotive industry AI service provider, deepen the synergy of its three major businesses, accelerate AI service terminal penetration, leverage its terminal and data advantages to iterate AI edge models, consolidate competitive barriers, and its long-term value has clear room for enhancement.
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