Zaisheng Technology has reported 1H26 results:revenue of RMB652mn,down 0.99%YoY but up 5.7%QoQ.Attributable net profit was RMB45mn,down 25.62%YoY,turning profitable QoQ.In 2Q26,revenue was RMB351mn,up 5.13%YoY/16.66%QoQ.Attributable net profit was RMB31mn,up 14.24%YoY/113.42%QoQ.2Q26 profit was broadly in line with our forecast of RMB33mn.The company made progress in new markets and expanded into the quartz fiber industry.We expect new refrigerator energy efficiency standards to drive revenue growth for VIP-related products.

New products contributed incremental revenue
1)In 1H26,clean air materials/high-efficiency energy-saving materials revenue grew 5.69%/0.24%YoY.Growth in high-efficiency energy-saving materials was driven by higher revenue from microfiber cotton and VIP boards.Dust-free air conditioning product revenue fell 11.26%YoY.The company kept expanding into new markets and applications and developing new products.Revenue from household air purifier filter components/automotive cabin air filters grew 68.37%/69.84%YoY,with both businesses turning profitable.2)Blended gross margin was 19.36%in 1H26,down 4.15pp YoY,mainly as higher upstream raw material prices pushed up costs for some products.The company has adjusted prices for some products,which we expect to help offset the impact of rising raw material costs.3)Revenue returned to growth in 2Q26.Clean air materials/high-efficiency energy-saving materials revenue grew 6.23%/10.05%YoY,while dust-free air conditioning product revenue fell 14.15%YoY.Blended gross margin was c.19.90%in 2Q26,up 1.17pp QoQ,with profitability improving.

Cost control delivered clear results,gearing declined
1)In 1H26,the company's overall expense ratio was 13.88%,down 2.62pp YoY.The selling/admin/R&D/financial expense ratios were 3.23/6.11/3.88/0.66%,changing-0.66/+0.21/-2.23/+0.06pp YoY.Lower expenses supported profitability.The convertible bond conversion reduced interest expense by RMB11.88mn YoY,but lower dividend income from U-air Environmental Technology and FX losses pushed financial expenses up slightly YoY.2)Operating cash flow was RMB80mn in 1H26,down 45.88%YoY,on higher prepaid energy costs and settlement of maturing notes.3)The gearing ratio was c.13.67%at end-1H26,down c.7.00pp from end-2025,due to convertible bond conversion and redemption.

New products and applications to create new growth drivers
1)The company continues to optimize key quartz fiber processes,improve product performance,and validate application scenarios.It is strengthening its core technology reserves and refining its pilot production system to deepen its quartz fiber footprint,which we expect to create anew earnings growth curve.2)The new national standard on maximum energy consumption and energy efficiency grades for household refrigerators took effect in June 2026.We think this could lift VIP board penetration in refrigerators and drive revenue growth for the company's VIP-related products.In 2Q26,high-efficiency energy-saving materials revenue grew 10.05%YoY.3)The company focuses on core areas including filtration materials,sound and thermal insulation,high-temperature protection materials,and purification equipment.We expect breakthroughs in several core technologies to expand application scenarios.