On August 27, Friend Co.,Ltd. (605050.SH) released its 2026 interim report, showcasing its ability to achieve simultaneous growth in both revenue and profit despite a challenging demand environment within the industry. This performance was underpinned by its core business of automotive metal sheet processing and distribution, alongside strategies focused on refined management and the expansion of its new materials business segment.
According to the financial data, the company recorded operating revenue of RMB 5.357 billion during the reporting period, a year-on-year increase of 2.72%. Net profit attributable to shareholders reached RMB 160 million, up 4.46% from the previous year, while non-GAAP net profit climbed 4.70% to RMB 158 million. However, a notable point of concern is the net cash flow from operating activities, which swung to a significant net outflow of RMB -957 million, contrasting sharply with the net inflow of RMB 191 million seen in the same period last year. This reversal is primarily attributed to a higher proportion of notes receivable in sales collections and increased cash payments for procurement. Additionally, the company implemented a substantial dividend distribution, totaling approximately RMB 196 million in cash payouts during the period.
In terms of business structure, the company specializes in the processing, shearing, and distribution of metal sheets for the mid-to-high-end automotive and home appliance industries, with core products including galvanized steel, cold-rolled steel, and aluminum. During the reporting period, total external sales volume reached 1.0704 million tons, a modest increase of 1.81% year-on-year. Of this, sales to the automotive industry totaled 730,000 tons, securing an approximate 12% market share in China's passenger vehicle steel and aluminum sheet market. The growth in performance was largely driven by the company's cost-control initiatives, efficiency gains through digitalization, and sustained market development efforts.
Despite a lackluster domestic passenger vehicle market, the continued growth in new energy vehicle production and sales provided a stable support base. The company is strategically aligning with the new energy vehicle supply chain, advancing the construction of new processing bases in Changzhou (Jiangsu) and Yibin (Sichuan). It has also progressively brought online new process lines for integrated aluminum die-casting, aluminum extrusion, and laser tailor-welded blanks, catering to the automotive industry's lightweighting demands, diversifying its product portfolio, and enhancing its competitive edge. However, these newly launched projects are subject to a capacity utilization ramp-up phase in their initial stages. If they fail to reach the break-even point, they could exert a negative impact on overall profitability.
Looking ahead to the second half of the year, the orderly implementation of the "two new" policies in the automotive sector is expected to generate incremental consumption. Nevertheless, the complex and volatile external environment, coupled with persistent domestic demand weakness, means the industry still faces considerable operational pressure. The company must closely monitor the risk of inventory devaluation stemming from fluctuations in raw material prices, as well as the potential for bad debts arising from its relatively high accounts receivable balances.