For stock investors, the authoritative, professional, timely and comprehensive analyst research reports help uncover potential thematic opportunities. Source: Securities Star. MGI Tech Co.,Ltd. (688114) is perhaps one of the most agonizing types of targets on the STAR Market: its technological foundation is solid enough, its position in the sector is critical enough, but its income statement has never looked good. After the 2026 semi-annual report was released, this agony did not disappear — only its content changed. In the past, the worry was whether it could hold its market share and whether losses could narrow; now the question is whether the trend of operational improvement is real or just another quarterly fluctuation. The answer leans toward the former, but the accompanying flaws cannot be ignored either.
Equipment sold less, but revenue became more "expensive"
In the first half of 2026, MGI Tech Co.,Ltd. reported revenue of 1.366 billion yuan, up 18.91% year-on-year; net profit attributable to shareholders was -158 million yuan, narrowing losses by 6.41% year-on-year; non-GAAP net profit attributable to shareholders was -161 million yuan, narrowing losses by 20.95% year-on-year. Looking at profit alone, it remains in loss territory, but changes on the revenue and structural sides carry more information than the profit figures.
The breakdown of the core sequencing segment best illustrates the point. Full-read-length sequencing revenue was 1.062 billion yuan, up 17.64% year-on-year, of which reagent and consumable revenue was 645 million yuan, up 16.28%, already accounting for over 60% (60.77%) of segment revenue; instrument and equipment revenue was 289 million yuan, actually down 6.37%; there was also a "other" sequencing revenue of 127 million yuan, up 229.62% year-on-year. Selling fewer instruments and more consumables is not a signal of shrinking demand — it is precisely the "harvest period" of the installed base being realized. More than 410 new sequencing instruments were sold in the first half, and combined with the installed base accumulated over the past two years, customer utilization rates and per-unit consumption depth are converting one-time equipment revenue into high-margin, high-stickiness recurring reagent revenue. Gross margin rose from 53.92% in the same period last year to 57.03%, with this being the main contributor. In other words, the quality of MGI Tech's revenue is becoming heavier, not merely larger.
The growth rate of the multi-omics business is even more直观: first-half revenue was 162 million yuan, up 44.91% year-on-year, of which cytomics grew 94.29% and spatiotemporal omics grew 41.34%. This segment is still small in scale, but it is the observation window for MGI Tech's extension from a "sequencing instrument company" to a "life science tools platform," and the significance of the growth rate outweighs the absolute value.
The foundation of STAR Market attributes is not in the growth rate of R&D expenses
The four words "STAR Market attributes" are easily simplified into the level of R&D expense ratio. MGI Tech's R&D investment in the first half of 2026 accounted for 20.32% of revenue, with an absolute value of 278 million yuan, down nearly 30% year-on-year, and the capitalization ratio was compressed from over 13% to less than 1%. Looking at this direction alone, it seems not "STAR Market" enough.
But the harder evidence of STAR Market attributes lies elsewhere. As of the end of the reporting period, the company had 1,342 valid authorized patents domestically and internationally, including 340 domestic invention patents; among gene sequencing instruments approved by NMPA for clinical use, 25 models, or 50%, are based on its DNBSEQ technology platform. More critically, platform coverage: through the 100% equity acquisitions of Hangzhou Xufeng (nanopore long-read) and Shenzhen Sanjian Qifa (spatiotemporal omics) completed in early 2026, MGI Tech became one of the few companies globally simultaneously holding short-read, long-read and spatiotemporal omics technology routes. The CycloneSEQ series nanopore sequencers have obtained CE-IVDR certification, forming a "short + long" combined solution with DNBSEQ. The main reason for the decline in R&D expenses is that core projects concluded in 2025 and entered a maintenance period, rather than cutting forward-looking investment. For a hard-tech company that has already crossed the "zero to one" stage, this morphological change in the R&D curve is itself neutral; what truly needs to be watched is whether patent depth and platform scarcity continue — and the semi-annual report's answer is affirmative.
The core variable of the investment logic is not domestic, but between overseas and foreign exchange
The logic of domestic substitution has been told many times: after Illumina was placed on the unreliable entity list in early 2025, MGI Tech's high-throughput sequencing products held over 70% of the domestic public tender market, and its domestic medical market share also stood above 70%. This position is solid enough, but it no longer constitutes marginal increment. Domestic business grew 12.03% in the first half, which is the base, not the source of elasticity.
The真正的 marginal change comes from overseas. First-half overseas main business revenue was 483 million yuan, up 33.77% year-on-year, with its proportion rising to over 36%; among this, Americas region sequencing revenue was 184 million yuan, up 126.15% year-on-year, mainly driven by the technical service agreement with Swiss Rockets and increased utilization saturation of existing equipment. The significance of technology licensing and localized cooperation is not just an extra revenue stream — it means MGI Tech is beginning to use patents and platform capabilities to exchange for access to overseas markets, rather than relying solely on selling hardware one unit at a time.
But there is a disturbance item on the profit side that cannot be ignored. First-half financial expenses turned from -95 million yuan in the same period last year to +54 million yuan — the same period last year was a foreign exchange gain of 93.55 million yuan, while this period was a foreign exchange loss of 54.33 million yuan. Foreign exchange directly pressured total profit: first-half total profit was -106 million yuan, narrowing losses by 52.32% year-on-year; excluding foreign exchange gains and losses, the loss reduction expanded to 83.73%. It should be noted that the net profit attributable to shareholders loss of 158 million yuan was actually larger than the total profit loss, with the difference coming from income tax — current period income tax expense was 52.5287 million yuan, while the same period last year had an income tax benefit of 52.1107 million yuan due to the reversal of tax provisions for overseas subsidiaries, and the base effect further amplified the gap between the two measures. This means that the operational improvement is more solid than what net profit attributable to shareholders shows, but it also indicates that as the overseas revenue proportion rises and foreign currency exposure grows, exchange rate fluctuations will disturb profits more frequently, and "loss reduction excluding foreign exchange" cannot simply be taken as the norm for valuation.
There is another variable that cannot be missed. The semi-annual report also disclosed that the company plans to sell 100% equity of its wholly-owned subsidiary Complete Genomics, after divesting related assets and liabilities, to Swiss Rockets, and simultaneously adjust the CoolMPS and StandardMPS sequencing technology licensing schemes; the company explicitly stated that after the transaction is completed, the process of turning profitable will be greatly accelerated, following a light-asset overseas expansion model of "not selling core technology, but sharing overseas returns through licensing." This is both the other side of the high Americas revenue growth and the largest uncertainty for the future income statement — the transaction has not yet been completed, and both the pricing and the timing of delivery will directly affect the magnitude of the turning point.
Risk warning: The three things the turning point narrative fears most
The first is the slope of reagent volume growth. First-half reagent revenue grew 16.28%, which is the right direction, but the absolute growth rate is not aggressive. Whether the consumption depth of the installed base can continue to increase depends on customer utilization rates, application scenario expansion and competitive substitution, not mechanical extrapolation of the number of installed units. Once reagent growth slows, the logic of gross margin recovery will loosen.
The second is the replicability of overseas growth. The 126% growth in the Americas includes a one-time boost from the Swiss Rockets technical service, and European OEM and Latvian localized production are still in the ramp-up stage. A rising overseas revenue proportion is a good thing, but geopolitical factors, intellectual property litigation and localized compliance costs will amplify simultaneously. The litigation pressure from Oxford Nanopore has already materialized: in May of this year, it filed a lawsuit against the company's subsidiary Hangzhou MGI Xufeng in the High Court of England and Wales, with claimed damages initially estimated at over 10 million pounds; the case has been filed but not yet heard; according to the company's announcement, nanopore sequencing-related revenue accounted for less than 3% in 2025, related products have not entered UK sales, and the compensation liability will ultimately be borne by the original shareholder MGI Tech.
The third is the quality of cash flow improvement. First-half net operating cash flow was 300 million yuan, positive for three consecutive quarters, which is one of the most positive signals in the 2026 semi-annual report. But accounts receivable remain substantial: 1.191 billion yuan at period-end, equivalent to over 40% of full-year 2025 revenue — fortunately, it has decreased 15.00% from the end of last year. If bad debt management and payment term tracking slacken even slightly, cash flow improvement could reverse. The turn to positive operating cash flow is the most tangible footnote to the "profit quality first" strategy, and precisely because it is important, it deserves continuous verification rather than one-time celebration.
The story of MGI Tech in the first half of 2026 is essentially the process of a technology platform company, after securing its share, beginning to use installed base, reagent cycles and overseas licensing to repair its income statement. The direction is right, and both gross margin and cash flow are cooperating, but the income statement is still far from "looking good." Foreign exchange, asset impairment losses of 48.60 million yuan (29.14 million yuan in the same period last year) and the base effect of income tax can interrupt the narrative rhythm at any time. When a hard-tech company switches from scale-first to profit-first, which signals are structural and which are merely quarterly — this is exactly what investors should see most clearly.
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