Airtac International Group Stock price
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = NT$242.00b | Revenue (TTM) = NT$36.25b
Market Cap = NT$242.00b | Estimated Revenue = NT$44.64b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = NT$235.14b | Revenue (TTM) = NT$36.25b
Enterprise Value = NT$235.14b | Forward Revenue = NT$44.64b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Dividend per Share (DPS)
📈 What is it?
Dividend per Share shows how much cash a company pays out to shareholders for each share they own – usually on an annual or quarterly basis.
🧮 How is it calculated?
🏛️ Why is it important?
DPS is the absolute value of the payout per share – crucial for income-focused investors and dividend strategies.
🧮 Calculation
🎯 What does this mean for investors?
- A stable or growing DPS often signals a strong, shareholder-friendly business.
- DPS alone doesn’t tell you how attractive the payout is – the stock price also matters (→ see Dividend Yield).
- Long-term dividend growth is often a hallmark of high-quality companies – like the dividend aristocrats.
📘 Dividend Yield
📈 What is it?
Dividend yield shows how large a company’s dividend is in relation to its current share price.
🧮 How is it calculated?
🏛️ Why is it important?
It allows investors to compare dividend payouts across stocks, regardless of price or payout size.
🧮 Calculation
🎯 What does this mean for investors?
- A stable yield can reflect reliable distributions.
- Comparing 1Y and 5Y yield shows whether dividend growth keeps pace with stock price appreciation.
- A low yield isn’t always negative – it can signal strong past performance or growth focus.
📘 Dividend Growth
📈 What is it?
Dividend growth shows how much a company has increased its dividend per share over time.
🧮 How is it calculated?
5Y: Compound Annual Growth Rate (CAGR)
🏛️ Why is it important?
Consistently rising dividends are often a sign of financial strength and shareholder orientation – especially relevant for long-term investors.
🧮 Calculation
🎯 What does this mean for investors?
- Stable dividend growth is a sign of sustainable earning power.
- High dividend growth can significantly boost your total return:
- If a company pays $1 in dividends and increases it by 15% annually over 5 years, you’ll receive $2 per share in year 5 – twice as much as at the start!
📘 Payout Ratio
📈 What is it?
The payout ratio shows what percentage of a company’s earnings (per share) is distributed to shareholders as dividends.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess whether the dividend is sustainable – especially in relation to the company’s profitability.
🧮 Calculation
🎯 What does this mean for investors?
- A low payout ratio means the company retains more earnings for reinvestment – typical for growth companies.
- A moderate payout (e.g. 25–50%) indicates a healthy balance between returns and reinvestment.
- High payout ratios may seem attractive but can carry risk if earnings decline.
📘 Consecutive Dividend Increases
📈 What is it?
This metric shows how many consecutive years a company has raised its dividend per share – without any cuts or pauses.
🧮 How is it calculated?
(Special dividends are not considered.)
🏛️ Why is it important?
A long track record of increases reflects financial strength, consistency, and shareholder commitment.
🎯 What does this mean for investors?
- A long dividend increase streak builds confidence – especially in volatile markets.
- Such companies are seen as reliable and income-friendly investments.
- The longer the streak, the stronger the company’s dividend discipline.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Airtac International Group Stock Analysis
Analyst Opinions
26 Analysts have issued a Airtac International Group forecast:
Analyst Opinions
26 Analysts have issued a Airtac International Group forecast:
Airtac International Group Events
Past Events
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JUL
28
Q2 2026 Earnings Call
2 months ago
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APR
29
Q1 2026 Earnings Call
5 months ago
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JAN
29
Q4 2025 Earnings Call
8 months ago
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OCT
30
Q3 2025 Earnings Call
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Airtac International Group — Q2 2026 Earnings Call
1. Question Answer
Good afternoon, everyone, and welcome to Airtac's 2Q 2026 Earnings Call. My name is Derrick Yang, I'm the coverage analyst at Morgan Stanley. Today, it's our honor to have Airtac's Vice General Manager and CFO, Ivan Tsao, join us to provide more details regarding 2Q '26 results, business outlook and the industry dynamics. So without further ado, let me pass it to Ivan for the opening remarks.
Thank you, Derrick, and good day, everybody. This is Ivan Tsao speak from Airtac, and welcome to join this conference call. And please let me brief our second quarter results and current market situation. First of all, pneumatic demand has entered a recovery cycle, and we expect this up cycle could sustain longer than 2 to 3 years. both shipment and order book amount have better than our expectation since the beginning of the year.
Pneumatic components are replacing human beings direction, and this industry can sustain single-digit growth annually once there is no too severe long-term issues. By continuous developing new products and new business, improving our brand image, we expect our annual revenue growth rate can be 10% higher than the industry growth rate. As pneumatic products support production line rather in the end products as long as customers launch new models or engage in production activities, there will be a greater demand for pneumatic. In addition, recent geopolitical impact on raw material costs remain within the company's control and won't affect our margins too much. Through ongoing improvements in internal production efficiency and product sales mix, the operating profit margin this quarter continues to rise compared to past couple of years.
Moreover, it seems that some investors have misunderstandings about our plans for future market share in the pneumatic industry. At present, we are targeting 35% China pneumatic market share before 2030. And when we have around 35% market share, maybe there are some consideration at that time. We will based on the market situation and the sales progress of our new business, meaning electrical controller and electrical actuator situation that decide whether to continue aggressively increase our pneumatic market share or optimize our product sales mix. This doesn't mean we will slow down our revenue growth rate or just fix our pneumatic market share at 35% in the future. Just like we expected the market share to reach 30% before 2028 in 2010, and we have adjusted to reach market share to be 35% by 2030 currently.
We used to deliver conservative numbers to investors and adjust them when we're almost there. It doesn't -- it's not necessary for us to provoke our main competitors at this moment. And basically, we can say our market share should be higher than 35% after 2030.
Next, let's announce our financial figures. Unapproved consolidated revenue for the second quarter of 2026 was RMB 2 billion, $620 million, a 25% growth year-on-year. Gross profit was RMB 1,303 million, a 35% growth year-on-year. Gross margin was 49.7%. Operating income was RMB 918 million, a 43% growth year-on-year. Operating margin was 35.1%. Net nonoperating loss was RMB 6 million, including 27 million the disposal loss of our fixed assets and RMB 15 million subsidy from government, RMB 6 million of interest income and $1 million of FX gain.
Income before income tax was RMB 913 million of 51% growth year-on-year. Pretax margin was 34.8%. Net profit was RMB 713 million of 49% growth year-on-year. Net margin was 27.2%. EPS for the second quarter of 2026 was TWD 16.55 -- the fixed asset disposal loss is caused by our demotioning 301 floor factory buildings to reconstructing another 2 new 4 floor buildings to improve our production efficiency, resulting in a loss on depreciated book value of the old buildings. Such activities won't affect our current production output and shipment.
Our approved consolidated revenue for the first half of 2026 was RMB 4,812 million, a 24% growth year-on-year. Gross profit was RMB 2,354 million. 34% growth year-on-year. Gross margin was 48.9%. Operating income was RMB 1,646 million, a 44% growth year-on-year. Operating margin was 34.2%. Net nonoperating income was RMB 16 million. Income before income tax was RMB 1.662 million, a 45% growth year-on-year. Pretax margin was 34.6%. Net profit was RMB 1.298 million. 43% growth year-on-year.
Net margin was 27.0%. EPS for the first half of 2026 was TWD 29.91. Effective tax rate is around 22%. And revenues from top 8 industries for the second quarter of 2026, the biggest one still was electronics, -- it's around 27% to our consolidated revenue, it's around 20% growth year-on-year.
Battery was around 18% -- sorry, 18% to revenue, 56% growth. Auto was 9% to revenue, 20% growth. Packaging was around 7% to revenue, 17% growth. Machine tool was 7% to revenue, 35% growth. General machinery was around 5% to revenue, 28% growth. Textile was around 4% to revenue, 39% growth and LED lighting was around 3% to revenue is around 7% decline year-on-year.
For current market situation, more and more customers are showing positive views on future demand. China government continues to release many stimulus policies and attempt to restore the confidence of people or enterprise. In addition, the China government proposed 15th 5 years plan emphasize intelligent manufacturing and industrial upgrading. Both of those policies will drive demand in pneumatic market. As for the demand of the various sectors of pneumatic, the revenue of the electronics industry grew by 20% in first half of 2026, which is better than our expectation.
Airtac is not an AI player, but strong demand on AI-related devices need more pneumatic to support their production activities. We expect we could have double-digit revenue growth from electronics for the whole year of 2026. And battery demand, government have announced its development guidance for battery and customers expand their domestic capacity.
In addition, more customers have -- more countries have relaxed their restriction policies on China players and those China players plan to spend their plan to expand their overseas capacity. So it still could be double digit growth for the battery in 2026 and 2027. In addition, government still try to develop more SSD-related demand. So it's still pretty strong demand for battery in coming years. And we have improved our brand image on auto customers and enjoy better share gain in the past couple of years. Even the overall auto industry has not recovered significantly, we have had double-digit revenue growth for years. We expect it still could be double-digit revenue growth in 2026 and coming years.
Moreover, government stimulus process for replacing old equipment to be new equipment, customers can get subsidy from government. This policy is still in the market. Those traditional demand that machine tools, machinery, textile and packaging still can enjoy double-digit revenue growth in 2026. And however, we had some demand issue on solar or LED lighting in 2026. The government have taken action to coordinate the overcapacity issues in solar and solar sectors. And we expect solar and LED lighting revenue decline rate will be much lower than 2025 in 2026.
Next, selected items for selected customers have pricing competition in pneumatic market, but it's still pretty rational or reasonable. We have increased the selling price in overseas market, but maintain stable pricing in China market, just try to improve or sustain better relationship with customers and accelerate revenue from various new products and business. And the increased raw material cost still can be offset by our internal efficiency improvement. But OP margin still has to depend on revenue scale and capacity utilization rate. Even we can improve our margins by launching more high gross margin new items, improving our selling product mix and continue to improve internal efficiency to reduce our production cost.
And we define a 100% utilization rate based on working 24 days a month and 21 hours a day with 2 shift operator working system. Our current pneumatic capacity rate is around 100%. And the inventory turnover days is around 110 days. It's very low inventory level. So we still will maintain around 100% capacity utilization rate in third quarter of the year.
For the development of linear guide, despite the overall weak demand and peers aggressive pricing in 2025, our shipment volume growth still could be more than 20%. We also have 27% revenue growth in second quarter of 2026, and we have increased our capacity utilization rate from over 20% in 2025 to over 40% currently and expecting to reach 50% utilization rate by end of 2026. When we have 20% to 30% retention rate, gross margin of Linear Guide is teens percent, 50% retention rate, gross margin is 30%. Even 30% gross margin from Linear Guide is lower than our existing pneumatic business, but we use the same sales team to do cross-selling pneumatic and Linear Guide and don't have to spend too much additional OpEx.
Linear Guide won't be a burden to our business from 2027. Our product quality is better than Taiwanese peers and our pricing is lower. So we missed customer in 2020. And our current sales strategy is to enhance our brand image and just compete with Taiwanese and Japanese peers. After achieved a better brand match within 1 to 2 years, we will design additional new spec to reduce product cost, production cost and selling prices to compete with local China players, continue to improve our retention rate, enjoy better fixed cost leverage and implement another aggressive pricing to compete with all the peers. When we have 80% retention rate, gross margin could be around 40%. It can improve our consolidated OP margin at that time.
And when we have more than 90% retention rate, we will consider change the current 2-shift operator working system to 3 shift. Current 2 shift, the equipment have to rest by 70 days a year. And once transferred to 3 shift, the equipment just have to rest by 20 days a year. We can increase our equipment working hours and enjoy better output, better fiscal leverage, then we can launch another great pricing at that chart. So basically, we still expect our linear revenue could be around RMB 3 billion in around 10 years. And for our third business, electrical controller is a very good business for Airtac with low CapEx and high gross margin of 60%.
We began to develop and launch this product in 3 to 4 years ago and have had around RMB 400 million revenue in 2025. And we also have enjoyed more than 20% market share. And there will -- another 3 new series product will be launched by end of this year to support higher revenue growth from 2027.
Total market cap of the electrical controller in China could be around RMB 100 billion with so many different kind of components. And we will pick up more high-yield product to develop it and launch it. And we expect we could have around RMB 3 billion revenue in around 10 years from electrical controller. For the development of the semiconductor product, based on our strategy, we have not developed semi product by 2024. And due to the product can enjoy very high gross margin is around 70%. And China government localization policies and it's better for Airtac or easier for Airtac to convince semi customers buy pneumatic products from Airtac. And we began to develop semi items from early of to launch them gradually from 2027. And current development progress is faster than expected, and we can launch some items from fourth quarter of 2026.
But also based on past experience, it used to take around 1 year for new products to have a better revenue contribution. And currently, we can find some products that were developed for other sectors in past, but also can be used by semi customers. And such revenue has increased from RMB 5 million monthly revenue in around 1 year ago and increased to current RMB 13 million per month.
And we expect we could have around RMB 1 billion revenue from semi customers in around 10 years. And we expect pneumatic industry can return to mid- to high single-digit growth in 2026 for the whole industry. And we still can have additional 10% revenue growth from market share gain in pneumatic plus the revenue contribution of linear guide and electrical controller. And we're still pretty optimistic of the overall operation of our business in 2026. and the shipment in the first half exceed our expectation and maintains a strong year-on-year growth in July shipment.
Even we are optimistic about the market demand in 2026 due to the short lead time of the pneumatic industry, we still provide guidance for 2026 based on a conservative principle and we adjust them upward with the next quarter's operating results. We raised our guidance for the whole year of '26 revenue growth will be over 20% in renminbi terms, and it will be a higher revenue growth rate once based on NTD dollar terms. And if we have over 20% revenue growth, our OP margin will be around 34%, higher than our previous guidance. And we have generated free cash flow for years, also have increased our cash dividend payout from 55% in 2025 to 65% in 2026. And our payout ratio still could be higher in coming years. And it's my briefing. And if you have any questions, we can discuss it. Thank you.
Thank you, Ivan, for the comprehensive update and view on the industry dynamics. Now we will open up for Q&A. Should you have any, read Ivan will answer them one by one. So the first question is from [indiscernible]. It is regarding the fifth 5-year plan from China. How is that going to influence Airtac? And is it going to have some implications to all industries of Airtac's customers?
Basically the 15th 5 years plan, government, they emphasized the intelligent manufacturing and industry upgrading, especially for those new applications, maybe they need more automation. And existing traditional application, maybe they still take advantage of the government policies, they can get subsidy from the government. So basically, when -- from second quarter -- from third quarter or fourth quarter of 2025 after U.S. government have the tariff policies to global countries, we have found some traditional customers back to China and expand their China domestic capacity.
So basically, -- once customers still can enjoy higher or better production efficiency, maybe demand for pneumatic still will be higher and higher.
And the second question is regarding the outlook. It goes like what gives the company confidence in suggesting that this time, the cycle will last longer than a typical 2-year cycle? And what end markets are contributing to this growth?
Yes. Basically, once just predict the cycle for the industry, that we cannot exactly to predict which sector will be better or not. And the reason why we have such expectation for this up cycle to longer than 2 to 3 years. First one, this down cycle from late '21 may be mostly affected by government some abnormal control and geopolitical issue for global countries restrict China players to expand their capacity in their countries. And once China government, they have realized economy is too bad for too many years. They still have to restore people confidence. And basically, once economy is not good for too long, it will affect social issue then to affect their political issue. So you can find government have begun to release so many stimulus buses from 2024. A year later, we can find some recovering s for pneumatic demand. And customers, they just spend limited automation improvement what they have to in the past 3 years.
And when they find government continue to release more stimulus process, they will spend a little more automation CapEx gradually. And you also can find in past 20 years, every up cycle, the demand could be reshaped or turned. But this up cycle from late of 2024 or early 2025, it's just a moderate linear recovery. And just a moderate linear recovery, it can sustain a little longer. So not just for such thing or situation, also have government tried to propose 15th, 5 years economy plan. It also could be good for pneumatic demand. So we say the demand in 2027 still could be a good year for pneumatic.
The next one is -- let me see. Could you repeat the numbers for the revenue contribution and also growth by sectors for 2Q and decline during the related Internet connection with some technical issues, so we couldn't catch the numbers.
Electronics, 27%, 27% to revenue, 20% growth in second quarter. Battery, 18% to revenue, 56% growth. Auto, 9% to revenue, 20% growth. Packaging, 7% to revenue, 17% growth, 17% growth. machine tool, 7% of revenue, 35% growth. General machinery, 5% to revenue, 28% growth; Textile, 4% to revenue, 39% growth. Solar energy lighting, 3% to revenue, 7% decline year-on-year.
And the next one is that given the offset between lower raw material prices and lower utilization in 3Q, can we expect the gross margin to stay above 48%?
We do plan production. So basically, utilization rate is just one of the factors of gross margin impact. We have discussed this issue earlier. We still will sustain around 100% utilization rate in third quarter because of the low inventory level. So basically, gross margin won't be affected too much in third quarter, even it's the low season of the year.
And the next one is, could you talk a little bit more about the new products in semiconductor in second half 2026? How many SKUs and who are your main customers? And what's your new guidance for semiconductor in 2027 for Airtac?
We have not launched any specific items for semi customers. We also have discussed this issue earlier in this conference call already. We scheduled to launch from 2027. But based on current progress, we could launch a couple of items from fourth quarter of 2026. Our current monthly revenue from semi customers, all of those items just developed for other sectors also can be shared to current semi customers. And we have not given any guidance from semi revenue in 2027, even coming years. We just expect we could have around RMB 1 billion revenue in around 10 years.
Maybe I can quickly follow up -- have a follow-up question on that. So our target is to have RMB 1 billion revenue in 10 years. And at that time, what will be our market share? Or in other way, what's the total market size for pneumatic components for semiconductor in China?
Currently, it could be around RMB 5 billion to RMB 6 billion revenue from semi demand. But whenever Airtac enter a new sector or new industry, this industry overall market size should be declined because our pricing could be much lower than the current market price. And maybe our peers have to decline their same price to compete with Airtac.
So basically, once based on current demand volumes, maybe a couple of years later, the market size will be declined to 4 to 5 or just around RMB 4 billion in China semi demand.
Very clear. And the next one is, may I ask about the 2Q OpEx. Are there any nonrecurring items in the quarter driving total OpEx amount higher on a quarter-over-quarter basis? And also any thoughts for second half '26 OpEx or OpEx ratio that we can expect?
1Q based on renminbi terms, our OpEx have not increased too much quarter-over-quarter. But except selling expenses, around 30% to 40% of our selling expenses could be sales teams bonus. And sales teams bonus, the key KPI could be revenue growth rate, OP margin for cash achievement. So basically, we have a higher revenue growth rate in second quarter and margin also could be better in the second quarter. Sales team's bonus could be better than first quarter.
Got it. Got it. And also, I think the second part of that question is regarding any OpEx ratio guidance for second half?
No. We just have annual guidance.
Got it. Got it. Very clear. And the next one is what are the 3 new products to be launched before end of 2026 and the estimated revenue contribution for those products in 2027?
Basically, those 3 series electrical controller have been prepared and ready for sale. And still the same issue. Whenever we launch a new items, it used to take around 1 year, then a better revenue contribution. So we don't have any guidance for such product in 2026 revenue -- sorry, 2027 revenue.
Got it. So those new - 3 new products will be electrical actuator, electrical controller and
With so many different kind of new products. So please tell me what kind of -- which new products are you indicating?
Got it. I think the investor was saying that because in the prepared remarks, it seems to mention that there will be 3 new products to be launched before end of 2026.
Yes, it's electrical controller, new 3 series.
Okay. Got it.
We have 3 new business, except pneumatic. -- second one, linear guide, third one, electrical controller, fourth one, electrical actuator. And we still continue to improve our brain image of linear guide and try to convince more customers buying from Airtac. Electrical controller, we have pretty strong compliments already. And we just launched 5 series products in around 3 years ago and enjoy RMB 400 million revenue in 2025. Those 5 series product revenue could be around RMB 500 million in 2026. And fourth quarter of 2026, we will launch another 3 new series electrical controller. And 2027, we have another revenue growth engine from those 3 new series products. But the revenue contribution, how high it will be still depends on how fast our customers place orders to Airtac to buy those new series product. And we have not launched electrical actuator. And basically, we have developed most of the key parts of electrical actuator already. And we could launch electrical actuator in 2028 or 2029.
And then we not just can support more existing pneumatic customers from their pneumatic demand, demand, electric controller, electric actual demand. And when we have electric actuator product, we still can support robotic arms and human no demand on their product, not just support their production process.
And the next one is, do you see any downstream demand accelerating or decelerating from 2Q? And what is the revenue contribution from linear guide in RMB terms in 2026? What is the current price gap of Airtac linear guide versus peers?
The investors' questions, he said the demand in second quarter was surrogate. Why? How? Whose got in?
I think he was referring to the Y-o-Y growth for electronics and the battery sector on a Y-o-Y basis versus the first quarter, not on a sequential basis.
Yes. Basically, electronics... [Audio Gap] Year-on-year base, second quarter of 2025, the electronics just growth 6%. Second quarter of 2026, the growth rate was 20%. Why is this targeted? And linear guide... [Audio Gap] and we had 27% growth in second quarter of 2026, and it just 10% revenue growth in 2025 of second quarter. So I don't know why these investors say the demand of second quarter or revenue in second quarter was [ de-targeted ].
Okay. Okay. No worries. Then do we have -- from the same investors, do we have a guidance or any view regarding the linear guide revenue this year for 2026 on a full year?
We don't have any guidance for Linear Guide in 2026 because I have missed my guidance for 5 years. So I don't want to give any guidance for Linear Guide in 2026. But year-to-date, we have 24% growth already. And just why I mentioned earlier, we continue to improve our brand match and convince more customers buy [ NGTech ]. And such brand match improvement, we think is good enough and still could be better and better. Then once peers, they try to raise their same price, but Airtac still will keep similar pricing, we can have a higher pricing gap to be lower than peers then convince more customers by NGTech. In addition, current Linear Guide pricing situation maybe most of the Linear Guide players, they also produce screw at the same time. And both screw demand or screw pricing have been raised, obviously. But as we know, Linear Guide pricing still not have been rise across the list. Just smaller customers, pricing have been hiked. Bigger customers, most of their demand, the pricing still keep similar. And we are happy to see Linear Guide peers increase their same price, then we could have a better revenue contribution from Linear Guide in coming quarters.
Okay. And then maybe a quick follow-up. What's the price gap of Airtac Linear Guide products versus peers right now?
We began to decline or decrease our pricing from third quarter of 2024. And we also divided our customers to be 4 labels. And the biggest label, the pricing could be around 20% lower than Taiwanese peers.
Got it. Got it. And then the next one will be -- so with the low inventory level, what's the plan for the utilization rate in second half versus the current 100%? And what's the sensitivity on the margin of like, for example, additional 5% utilization increase, how much could that help on the gross margin side?
Basically, the utilization cannot be quantified to gross margin 1%, 2% higher or not. We do plan production and different process have different situation. And we said our inventory turnover days just around 110 days at the end of second quarter of the year. It's too low. It used to be around 140 days in the past couple of quarters and 150 days in 5 to 10 years ago and shipment was better than our expectation in past 2 quarters. Even we have sustained around 110% utilization rate in first quarter and second quarter. But current China electricity expenses, unit electricity expenses is very high. And we prefer to keep 10% utilization rate in third quarter. It's good enough to support our shipment forecast, but we can adjust our rate easier maybe in a week. So basically, the rate is still based on the shipping situation in next couple of months. But basically, we will keep 100% retention rate in third quarter to keep a little healthy inventory level.
And the next one is that looking into second half 2026 or 2027, which business segments do you perceive the potential growth accelerating or decelerating?
Basically, once AI devices demand still is good, we still can benefit from such demand and customers need more pneumatic to support their production activities. And in addition, in our electronics revenue, around 25% to 30% is smartphone related, including international brand and local China brand. And as we know, this key international brand, they just launched spatial spec in this September and regular spec or common spec maybe will be launched in first quarter of 2027. Based on past experience, when customers -- when smartphone customers, they launch a new spec, the pneumatic demand could be around 3 to 5 months earlier.
So once the customers launch, the common of new smartphone in first quarter of 2027, maybe second half, the demand of electronics in second half still could be better than first half. Smartphone demand or smartphone revenue in first half was declined by low single digit year-on-year. And we expect those common spec, the volumes could be higher than those special spec, which will be launched in third quarter. So basically, maybe smartphone pneumatic demand will be better in second half than first half. Battery, we also have mentioned China government, they still try to develop more SSD or battery application.
And we heard from our customers, battery customers, their total demand still will be higher in 2027 than 2026. But it's still too early to tell the revenue -- the battery revenue growth rate year-on-year because the base could be a little higher for 2027. But as the information we got from customers, it still could be double-digit revenue growth in 2027 from battery demand. And auto still could sustain double-digit revenue growth because we have improved our brand image, and we also can enjoy better share gain from auto customers, especially for those traditional auto customers.
And I think the next one is regarding the bonus for the sales team. So is that calculated on a Q-o-Q or Y-o-Y basis? Or I think the question is whether or not we are going to have that pretty high bonus expenses into the third quarter?
Sales team's bonus was accrued by monthly. And the revenue growth rate is based on year-on-year base budget achievement based on our budget for the whole year by month. OP margin, we have an additional bonus plan for OP margin level. What kind of OP margin they can enjoy different kind of percentage of the bonus. So basically, the third quarter quarterly revenue still could be lower than second quarter of the year because of the seasonality of pneumatic. But once based on year base, third quarter still could be pretty strong result by year-on-year. And also based on such sales team bonus plan, third quarter bonus number should be lower than second quarter because the revenue amount basically.
Okay. Got it. And I think the next one is, could you repeat the target for the semi-related sales in the longer term? And what will be the price gap between Airtac versus the Japanese suppliers for these semi products?
From current items to support semi customers, but those items will develop for other sectors also could be shared by semi customers. Such items, our pricing could be around 60% discount compared to our biggest competitors. But those new items, the pricing has not finalized because we have not launched that.
Okay. Just to make sure that we get the number right, it's 60% lower than the Japanese competitors?
Yes, just 40% of our competitors' pricing. That means 60% discount to our peers' pricing.
Got it. And then
And we could have RMB 1 billion revenue in around 10 years from semi customers.
Got it. Got it. And the next one is what is the expected growth rate for pneumatic market in China in 2027?
Is a very short lead time business for pneumatic. We even cannot quantify the industry growth rate for fourth quarter of 2026, even in 2027. But basically what we mentioned, we used to based on government policies, customer feedback and our experience to predict the industry growth rate. And we just could say we expect the whole year of 2026, the total pneumatic industry could be mid- to high single-digit growth for the whole year. But we cannot give any quarterly numbers to the market because it's the short lead time business.
Got it. Got it. And the next one is what's the impact of the rising social security cost in China this year on Airtac's OpEx and gross margin?
Basically, local government just announced an ask... Corporate have to increase the social security accrued percentage in this and different government have different policy. Some government ask company have to accrue such percentage from beginning of the year. But some -- the whole government just accrue such expenses from this strict. And our total impact for such policy in second quarter was around 1.8% OP margin level.
And in second half, we have to accrue around RMB 7 million by monthly. And what's the impact to monthly OP margin depends on monthly revenue. But basically, we say such impact could be much lower than the second quarter because we still can continue to improve our internal production efficiency to offset or dilute such social securities impact in second half or from second half.
And the next one is -- regarding the account receivables for customers in China, are they paying on time? Or are you seeing any delay in the payment?
Yes. Basically, we choose customers and choose orders, and we still can keep very high quality of our receivable situation. And maybe you can see our receivable balance could be higher than past couple of quarters and it's caused by -- we could have a record high month revenue in the past 4 months. So what's based on our regular receivable turnover days, it is around 120 days and we treat the past 4 months, our revenue in past 4 months was around RMB 3.5 billion, and it's very similar to our receivable balance at end of this June. So you still can indicate our receivable still pretty stable or... In high quality.
Okay. The next one is that according to China's MDS data, the manufacturing equipment FAI started to weaken in the past 2 months. So do you see the potential risk of automation new orders slowing down in second half this year?
FA sectors with so many different kind of components. Pneumatic, we say second quarter always is the peakest season or highest season. Third quarter could be mid- to high single-digit decline quarter-on-quarter. So basically, even the synergy still will affect our quarterly revenue in third quarter or in second half of the year. But based on year-on-year base, it's still pretty strong because it's a similar synergy in 2025. And once the demand is weaker in coming months or coming quarters, we still can get more shares from the market to sustain pretty good revenue growth or revenue number in coming quarters.
Thanks, Ivan. I think we have answered most of the questions online. And for the interest of time, we are going to wrap up the call here. So thank you, everyone. Thank you, Ivan, for joining us today. And should you have more questions, please feel free to reach out to me or Ivan directly. Yes. Thank you for joining us today.
Thank you, Derrick. Thank you, everybody. Have a good day. Thank you.
Thank you.
Airtac International Group — Q2 2026 Earnings Call
Strong 2Q: revenue and margins surged, management raised FY26 revenue guide above +20% (RMB) and lifted dividend payout to 65%.
📊 Quarter at a Glance
- Revenue: Unapproved Q2 revenue RMB 2.0B ($620M), +25% YoY; H1 approved RMB 4.812B, +24% YoY.
- Gross profit: RMB 1,303M, +35% YoY; gross margin 49.7%.
- Operating: Operating income RMB 918M, +43% YoY; operating margin 35.1%.
- Net profit: RMB 713M, +49% YoY; Q2 EPS TWD 16.55; H1 EPS TWD 29.91.
🎯 What Management Says
- Demand view: Pneumatics entered a multi‑year recovery; management expects mid‑ to high single‑digit industry growth and believes the upcycle could last beyond 2–3 years.
- Portfolio shift: Targeting ~35% China pneumatic share by 2030 but will balance share gains with growth in linear guides, electrical controllers/actuators and semiconductor items.
- Product roadmap: Three new electrical controller series due by end‑2026; semiconductor‑specific items to start rolling out late 2026 with wider revenue from 2027 onward.
🔭 Outlook & Guidance
- FY guidance: Raised FY26 revenue growth target to >20% (RMB); operating profit margin guided ~34% if >20% revenue achieved.
- Capital return: Cash flow positive historically; dividend payout raised to 65% for 2026 (from 55% in 2025).
- Risks: Social security cost increase (~1.8% OP margin impact in Q2), margin sensitivity to utilization and product mix, short lead times add timing uncertainty.
❓ Analyst Q&A
- Semiconductors: Management expects to launch semi items from late‑2026, targets ~RMB 1B revenue in ~10 years; pricing indicated at ~40% of Japanese rivals (≈60% discount) for some items.
- Linear guide: Shipment growth strong; utilization up to ~40% now, target ~50% by end‑2026; current pricing ~20% below Taiwanese peers; retention and scale should lift margins over time.
- Operations & cash: Current pneumatic capacity ~100% (defined by shifts), inventory turnover ~110 days; sales bonuses drove higher Q2 OpEx accruals but expected lower in Q3 on seasonality.
⚡ Bottom Line
- Bottom Line: Airtac delivered robust top‑line and margin beats, raised FY26 guidance and increased shareholder payout while outlining three new growth engines (linear guide, electrical controllers/actuators, semi). Execution risk remains on new‑product ramp, utilization and rising labor/social costs, but near‑term cashflow and margins look strong.
Airtac International Group — Q1 2026 Earnings Call
1. Question Answer
[Audio Gap] sector at UBS Taiwan. It's our pleasure to host Airtac management today for their first quarter '26 earnings release. Now let me pass to Mr. Ivan Tsao, the CFO of Airtac for opening remarks.
Okay. Thank you, Ally, and good day, everybody. This is Ivan Tsao speaking from Airtac, and welcome to join this conference call. And please let me brief our first quarter results and current market situation. First of all, pneumatic demand have entered recovery cycle, and we expect this up cycle could sustain longer than 2 to 3 years. And both shipment and order book amount have exceeded our expectation since the beginning of the year.
Pneumatic components are replacing human beings direction and the industry can sustain single-digit growth annually once there is no too severe NOLCOM issue. By continuously developing new products and improving our brand image, we expect our annual revenue growth rate could be 10% higher than industry growth rate as pneumatic products support production line rather than the end product -- as long as customers launch new models or engage in production activities, there will be a better demand for pneumatic.
In addition, recent geopolitical impact on raw material costs remain within the company's control through ongoing improvement in internal production efficiency and production and product sales mix. The operating profit margin this quarter continues to rise compared to the past couple of years.
And our improved consolidated revenue for the first quarter of 2026 was RMB 2.192 million, a 22% growth year-on-year. Gross profit was RMB 1.052 billion, a 33% growth year-on-year. Gross margin was 48.0%. Operating income was RMB 728 million, a 45% growth year-on-year. Operating margin was 33.2%. Net nonoperating income was RMB 22 million, including RMB 14 million subsidy from government. 5 million of FX gain and 4 million of interest income. Income before income tax was RMB 750 million, a 37% growth year-on-year. Pretax margin was 34.2%. Net profit was RMB 585 million, a 36% growth year-on-year. Net margin was 26.7%. EPS for the first quarter of 2026 was TWD 13.35.
And revenue for top 8 industry for the first quarter of 2026, the biggest one was electronics, around 26% to our consolidated revenue. It's 20% growth year-on-year.
Second one, battery was around 20% to revenue, 85% growth year-on-year. Auto was 9% to revenue, 15% growth. Packaging was around 7% to revenue, 10% growth. Machine tool was 7% to revenue, 20% growth and general machinery was around 5% to revenue 32% growth. Textile, 5% to revenue, 22% growth and energy and lighting was around 3% to revenue, is 2% decline year-on-year. And for current market situation, more and more customers are showing positive views on future demand.
China government continues to release many stimulus process and attempt to restore the confidence of people or enterprises. Some of them have improved their confidence and increased their end product consumption or capacity expansion. As for the demand of various industry for pneumatic, the revenue of the electronics industry grew by 20% in first quarter of 2026 is better than our expectation. And so many customers say there could be a good year for electronics in 2026 because they could be launching more new models and the spec upgrade in the year. And with that, we could have double-digit revenue growth from electronics customers.
And for battery demand, government has announced its development guidance for EV and battery industry and customers expand their domestic capacity. In addition, more countries have relaxed their recession policies on Chinese players, and those players plan to extend their overseas capacity. So it could be double-digit revenue growth from battery in 2026.
Better revenue growth from auto industry also could be expected in 2026. We have improved our brand match on auto customers and enjoy better share gain. Even though overall auto industry has not recovered significantly, we have had double-digit revenue growth from auto for years. We expect double-digit revenue growth in 2026 from auto customers. Moreover, government stimulus process for replacing old equipment to be new equipment can get subsidy from government still in the market. Those traditional demand like machine tool, general machinery, textile or packaging customers can enjoy positive growth.
However, we have some demand issues on solar or energy lighting in 2025. But the government has recently taken the action to coordinate the overcapacity issue. We expect solar or energy lighting demand can be positive growth in 2026. And selected items for selected customers have pricing competition in pneumatic market, but it's still rational basically. We have increased the selling price in our overseas market, but maintain stable pricing in the China market to improve our customers' relationship and accelerate revenue from those various new business or new products.
And in addition, we need to comprehensively consider revenue growth, pricing range, operating profit margin and market share rather than just pursuing high-speed revenue growth and the increasing material costs still can be offset by our internal efficiency improvements. The operating margin still have to depend on revenue scale and capacity utilization rate. Even we can improve our margins by launching more higher gross margin new items, improving our selling product mix and continue to improve internal efficiency to reduce production cost. We define a 100% capacity utilization rate based on working 24 days a month and 21 hours a day with 2 shift operator working system. Current pneumatic capacity retention rate is higher than 100%.
For the development of the linear guide, despite the overall weak demand and peers aggressive pricing in 2025, our shipment volume growth still could be around 20% in 2025. We also have a 20% revenue growth in first quarter of 2026. We have increased our capacity utilization rate from over 20% last year to over 30% since the beginning of this year and expecting to reach 50% by end of the year.
When we have 20% to 30% retention rate, gross margin of linear guide is 10% and 50% retention rate, gross margin is around 30%, 80% retention rate, gross margin could be around 40%. Even 40% gross margin is lower than our existing pneumatic business, and we use the same sales team to do cross-selling pneumatic and new guide without too much additional OpEx. It still can improve our consolidated operating margin. And our product quality is better than our Taiwanese peers and our pricing is lower than theirs. But we missed customer expansion in 2020, our current sales reach is to enhance our brand image and just compete with Taiwanese and Japanese peers.
After have a good enough brand image within 1 to 2 years, we will design additional spec or SKU to reduce production cost and selling product and selling price to compete with local China players, continuously improve our inflation rate, enjoy better fixed cost leverage and implement another aggressive pricing to compete with all peers.
When the inflation rate exceeds 90%, we will consider changing the current 2-shift awaited working system to 3 shift and increase our equipment working hours also can enjoy better fixed cost leverage. This will give us the opportunity to implement more aggressive pricing strategy further to compete with all the peers and accelerate our market share in linear guide market. We still expect we could have around CNY 3 billion revenue from linear guide in around 10 years.
For the development of supporting semiconductors business, based on our strategy, we have not developed products to meet semi customers demand by end of 2024. But due to those products enjoy higher gross margin and China government have localized policies. We began to develop semi items from early of 2025 and scheduled to launch them gradually from 2027 and current development progress is better than our expectation, and we can gradually launch some items from second half of 2026. But based on past experience, usually takes around 1 year for new product to have a better revenue contribution. So it could be in second half of 2027 or early of 2028, we could have higher revenue contribution from semi customers. And we expect pneumatic industry can return to low single-digit growth in 2026, and we can have least 10% revenue growth from pneumatic products plus the revenue contribution of linear guide and electrical controller product.
The shipment in first quarter exceeds our expectations and remain pretty strong in this April. Even though we are optimistic about the market demand in 2026 due to the short delivery time in pneumatic industry, we still prefer to provide our guidance for 2026 based on a conservative principle and we will adjust them upwards with the next quarter's operating results. We raised our guidance for 2026 to achieve a revenue growth of mid-teens to high teens percent and operating margin of 33% for the whole year. And we have generated free cash flow for years and also have increased our cash dividend payout from 35% in 2021 to 55% in 2025. It will be 65% in 2026 and still could be better or higher in coming years.
It's my briefing. Should you have any further questions, we can discuss it. Thank you.
Okay. So now let's start the Q&A session. I already see several hands up. So let's start with Ming.
Congrats Ivan, for the great results. So I have 2 questions. The first question, so regarding the current business, I think in the first quarter, you already see a very strong shipment growth. So right now, compared between linear guide and pneumatic, which product has a stronger demand? And do you consider to raise the price for either of the product? I think that's my first question.
So basically, we have stronger demand from pneumatic. And linear guide in the first quarter, the overall demand still has not recovered significantly. Even some peers, they say they want to raise their some price. But as we know, it just selective items can be hiked to customers' pricing. And basically, we have increased our pricing in overseas market but still sustain stable pricing in China market because we still will launch more new items for pneumatic and prefer to sustain better relationship with customers and convince more customers to buy more linear guide from Airtac.
And we also have electrical controller new spare will be launched in second half of 2026. And we're still continuing to develop electrical actuator or electrical thing, maybe we can launch electrical actuator in 2028 or 2029. So based on we have a record high revenue and high position of the OP margin, maybe it's better not to hike our same price in China market in this moment.
I have another question is regarding to your cash management, et cetera. So you mentioned you will raise your dividend payout. So at the same time, your cash flow from operation is improving as well. So how will you make your investment more efficient to improve your ROE or ROIC?
Yes. Firstly, in past, we just sustained around 50% payout ratio. So we have specific profit in the year stay on our return earnings. So once we just continue to sustain 50% cash dividend payout, the base of return earnings will be higher and higher. And even we pay 50%, the ROE still won't be too high. So maybe we can increase our payout ratio, and we also continue to improve our internal efficiency, same product mix also can have a higher OP margin, higher EPS to increase our ROE in coming years.
Yes. Sorry. To follow-up, so because you raised your revenue guidance, so do you need to increase your CapEx or you can spend the same CapEx but generate higher revenue?
Basically, in past 3 years, even over demand still not very obviously recovered, but still spend CapEx to improve our equipment productivities. And we have a lower CapEx number from 2023 to 2026, just around TWD 2 billion to TWD 3 billion a year. And it doesn't mean we slow down our expansion. We have better productivities of our process and still can support 20% output volume growth every year, even we just have TWD 2 billion to TWD 3 billion CapEx. So basically, we still can find some ways to improve our productivity or production efficiency. And 2027, maybe the CapEx still could be around TWD 2 billion to TWD 3 billion. And 2028 or 2029, we have to spend a little higher CapEx to expand our electrical actuator part capacity. But even the CapEx could be a little higher, it just could be TWD 3 billion or a little higher than TWD 3 billion a year.
The next question comes from Daisy.
Yes, this is Daisy from Macquarie. First, congratulations, Ivan, for your very exciting results. I have several questions. The first is regarding, say, your OP margin actually is up that based on the year-on-year or Q-on-Q base. Actually, I want to know what's the reason behind for your OP margin improvement.
Okay. Thank you, Daisy. I mentioned we still can find more ways to improve our production efficiency internally. And we also can improve our sale product mix. So basically, we have a better OP margin first quarter of this year. The other reason could be we have better revenue scale and the OpEx leverage also could be better. And we expect even we can say we could have another higher OP margin in second quarter of this year, even could be a record high number in second quarter of the year because we not just improved our internal production efficiency, and we expect second quarter revenue scale also could be much better than first quarter of the year.
So OP margin, once there is no too severe NOLCOM issue, we believe our OP margin in second quarter of 2026 could be a record high numbers or percentage.
Ivan, you just guided, say, 2026, the OP margin will be around 33%. But given another say that the improvement in the second quarter, is that your OP margin, the whole year guidance is too conservative?
Yes. I have mentioned it in my briefing. The lead time of pneumatic is too short. So we still cannot 100% ensure the demand situation in second half of the year. So we used to give a little conservative numbers to the market in the first half of the year. And based on quarterly results, we'll upgrade the guidance number.
Understand. And my second question, Ivan, is regarding that what's the reason behind your very strong. We are seeing, say, the record high order book in January and then in March again. Is this the industry that overall demand recovery or just your wallet share gain?
As we know, so many FA players, they have pretty strong revenue or order book in the first quarter of the year. And Airtac, we still continue to launch more new pneumatic items. We had share gain. And we also have new business electrical dehydrator -- sorry, electrical controller to support our business.
In addition, even the linear guide revenue still could be a little lower than our expectation, but it has been record high quarterly linear guide revenue in Q1 of this year. So basically, once we can continue to improve our linear guide brand image, we believe the revenue contribution from linear guide in coming quarters or coming years still could be better and better, and it can improve our consolidated revenue growth, also could have a better fixed cost leverage on OpEx.
And my last question that we just want to know your estimated revenue from the semi sale in the second half next year and also the whole year contribution in 2028.
Basically, it's how -- it's our whole new business. And our current semi revenue just coming from those items we used to develop for other applications, but still can be shared by semi customers. And monthly revenue just around CNY 5 million to CNY 6 million a month in 2025, but it could be -- it was a little higher in March of 2026, higher than CNY 8 million. So the -- maybe still too early to tell the expecting revenue for 2027, 2028. But basically, based on -- we could have better brand mix, also benefit from government localization policies, maybe we still could be enjoy higher revenue contribution from semi in coming years. And it's difficult to tell or it's too early to tell the exact number for 2027 or 2028 from semi customers.
Okay. Next, we have [ indiscernible ]
Congratulations on your strong results and good job on delivering your guidance since last year. My question is very simple. I think you guided the electronics to see recovery this year. So from what our observation in the electronics industry in China, there are 2 groups, right? One is the traditional smartphone, PC, those are still pretty weak. But then there's like the AI-related electronic supply chain, maybe the PCB, the optical modules, those have been very strong.
Within your electronics segment, is it able to classify into maybe the traditional PC, smartphone? Maybe historically, you are more tilted to the [ Apple ], right? But then this year, with the orders momentum, I suspect it's related to some of those AI electronics. Is it possible to maybe split your electronics by AI versus maybe smartphone PC? That's my question.
Okay. Basically, any production activities need pneumatic indirectly. And pneumatic customers' production process, not in the end product. So even somebody say the sales volume of smartphone in 2026 won't be too good. But we also have mentioned in my briefing, we need more new models launched and bigger upgrade, then customers need to set up new assembly line of capacity. And the volume -- selling volume of customers' product is not very high correlation to pneumatic demand.
So basically, we expect pneumatic could have double-digit revenue growth and maybe higher than 10%. And we have 20% growth in first quarter is better than our expectation. But also based on the short lead time of the pneumatic product, we just can say it could be double digit for the whole year 2026.
So this is still more smartphone related...
Smartphone revenue just around 25% to 30% of our electronics revenue. And not just what you mentioned, Apple are our customers, all the local China smartphone players are our customers.
How about PCB optical module, maybe AI-related.
Yes. I mentioned, whenever customers have production activities, they need more pneumatic to support their automation improve.
Okay. But you can't say the percentage within the electronics.
Firstly, so many electronic supply chain customers, maybe they're not just engage in specific single product. And we can pick up smartphone revenue from our electronics revenue. The rest of the electronics revenue is not very high percentage to consolidated electronics revenue. And it's better not to quantify those smaller percentage items.
Next, we have Andrew.
You talked a bit about increasing ASPs in overseas markets. So I just wondered, can you please elaborate on the business you have overseas and exports, what products that entails and just how much you're able to raise prices and who you're taking market share from?
Firstly, overseas revenue just around 4% -- 4% to 5% of our consol revenue. And we have a better business in Europe and America. So basically, pricing hike is still based on different items for different customers, and it could be single digit to teens percent for the price hike. And we said the total pneumatic demand in non-China market could be around 75% of the global demand. But we just have 4% revenue from overseas market. So it's very limited market share of our overseas business. And basically, there's still so many bigger competitors or small competitors in global. And we get more shares from Chinese peers in China, and we can get shares from different variant competitors in global. But all of them still not very high revenue for Airtac.
Okay. And maybe just one follow-up. Can you talk more about the products that you're developing within semiconductor specifically? What is it? And are you able to quantify even roughly just the sort of the revenue potential, the margins that you think you can make on these devices?
As we know, the biggest Japanese players, their China revenue almost around 20% to 30% contributed by semi items. And the total semi demand amount in China market could be CNY 5 billion to CNY 6 billion. And we just have CNY 60 million in 2025 and maybe will be a better or higher from 2027 or 2028. We expect we could have CNY 1 billion revenue from semi in around 10 years, but it's just our expectation. And how fast of the progress will be still depends on how fast the customers want to place more orders to Airtac.
Okay. So next, we have Jason.
This is [ Jason Luo ] from [ First Capital Management ]. The first question, I would like to know the profit margin guidance because from late -- from early March, we see the hard metal price or even the energy price be higher. So in the second quarter, do you see any negative effect for our variable cost to our products?
I mentioned we still have found more ways to improve our internal efficiency and productivity. We have 33% OP margin guidance for the whole year. We have included the metal material cost hiked teens percent in 2026. So basically, those hiked raw material costs still can be offset by our internal production efficiency improvement.
Okay. So for my second question and the last question is, could you recap for us the utilization rate in the 2026 first quarter and the guidance for the second quarter?
Pneumatic utilization rate have been higher than 100%. And linear guide had over 30% in first quarter of 2026.
And for the second quarter, maybe we can expect the number will be higher than before?
Still could be higher in the second quarter because the shipment in the first quarter had higher than our expected. And our inventory turnover days even could be just around [ 110 ] days. It's not healthy. It's too low. So basically, we still will keep very high retention rate, even ask for more operators to -- over time to produce more volumes in second quarter.
Next, we have Iris.
Congratulations on your good results. I've got 3 questions, if I may. By the way, this is Iris from Deutsche Bank. Sorry, I forgot to introduce myself. My first question is actually on the raw material price and pricing as well. Could you maybe give us a rough split of what are the key raw materials in your cost of goods sold? I assume it's preliminary aluminum, but want to have an understanding like a rough split is fine.
And then like you've mentioned that your guidance has included a teens percentage increase for the metal price. Then to which point then you will consider increasing the price, I think like by how much the metal price needs to increase, then you will consider to increase the price.
Our cost structure raw material cost, almost around 50% of our cost of goods sold, including 20% cost of goods sold is aluminum, 45% is copper and another 5% is steel. So basically, aluminum cost hiked by 10% in the past 12 months and it's around 30% hiked from copper. And basically, we will keep stable pricing for pneumatic in China market. And it doesn't mean we cannot pass those raw material cost disadvantage to customers. Basically, we just hiked pricing once in 2011 because the copper was hiked -- copper cost was hiked by 5 to 6x, then we just hiked those pricing for customers just for the copper material can change a higher percentage of the cost of goods sold product or SKUs. Rest of the items still keep stable pricing, even similar pricing.
And I still have to stress we still an find more ways to improve our production efficiency. And not just we can speed -- can accumulate our experience to find more ways also caused by the automation knowledge of technology is improving. We can find more ways to improve the equipment productivity or production efficiency. So basically, we won't hike selling price to customers basically. But it still depends on the competition environment. But we believe even the raw material cost still will be hiked in 2026 or rest of the 2026, but still can be controlled by ourselves.
Understand. My second question is on the linear guide business because I believe, like, some of the peers in the linear guide business is pointing to better demand for their linear guide business. But you've mentioned that you believe the linear guide demand didn't really recover for the market in the first quarter. And can you give us maybe a bit more color on that? And also, what do you think is preventing Airtac from kind of seeing higher growth in this business?
Yes, basically, we expect the overall demand could be better in 2026, but we have not seen that in first quarter. And why we expect the linear guide demand could be better in 2026 because the demand cycle of linear guide used to be around 2 to 3 quarters later than pneumatic cycle. So once pneumatic began to recover from end of 2024, the linear guide demand could be better from fourth quarter of 2025, but second quarter of '25, U.S. have a tariff policies. And linear guide could be a CapEx component. It's not like pneumatic with CapEx demand and component replacement demand. The tariff policy impact to linear guide could be higher than pneumatic. So basically, we still expect the linear guide demand could be better or began to recover in 2026, but just not in Q1 of 2026.
Okay. And are we seeing some signs of maybe the demand picking up since toward end of April now in the second quarter?
Yes. Basically, the demand seems a little better in past 1 or a little more than 1 month.
Okay. That's great. My last question on the exciting semiconductor business. And can you give us some understanding of what are the, say, barriers for entry in the semiconductor market? Is it more about customer relationship and the customization required? Or it's more technological in the clean rooms like -- and also how we think we can be -- what are the drivers for us to be successful in this market? I mean I understand the whole localization drive. And other than that, I mean, where -- like what can drive us to grow in this market?
Firstly, we still could be a beneficiary of the government process localization. And our pricing just around 40% of Japanese peers' pricing, that means 60% discount to Japanese peers pricing. We still can enjoy 70% gross margin from those items. So basically, it's our whole new field to support semi customers. And we have our expectation, but still depends on customers' revocation period and how many orders they can place to Airtac.
And basically, pneumatic or even so many high application, higher-end customers, they have very deep brand image for pneumatic suppliers because pneumatics are a little complicated than other FA components, but it's very low ASP, low cost percentage to customers' total production cost. Even we have 20%, 30%, 40% pricing lower than peers, lower than Japanese peers or European peers, but it's very minor to customer total production cost. So many customers, they don't want to take any risk to change their pneumatic price to made in China suppliers.
So basically, in past, is the main reason why we don't want to set semi items development to be our first priority. We still prefer to do those easy money items first. So the progress or the competence of Airtac to enter in semi items. So basically, we could have similar quality, similar large technology with international peers. But the semi revenue progress still depends on how fast the local China semi customers place how many orders for Airtac.
Understand. And just to double check, when you say about the pricing being only 40% of the Japanese peers, you're referring to the semiconductor specific products or you're referring to the broader product portfolio? I guess it's a bit higher than that.
Semi items. You asked me semi items, so I just answer you about the semi pricing.
Next, we have KekYee.
Good to hear from you again. This is from KekYee from Principal. Just want to double check this year, right, do we still see the normal seasonality in the monthly sales? Or this year is a bit abnormal. We may see the sales pick up in April, May and then flattish into August, September? How is the monthly sales seasonality this year?
Yes. Basically, second quarter used to be the peak season of pneumatic. So whenever the economy is good or bad, second quarter always is the peak season, peak season of the pneumatic. And once one to talk about the consider revenue of Airtac, it still depends on the progress of our new business, linear guide electrical controller. Yes, so it still depends.
Okay. And coming back to the segment like Electronics segment, right, you said there's more new model and spec upgrade this year. When you say new model, do you see like new items that are not in the market before coming into the market this year by different new company that enter the consumer electronic or new product range that entering the consumer electronics?
Maybe not just count by new entrants. Existing players in the market, they still have launched or going to launch many new models in rest of the year. So whenever they launch new models, basically, they need to set up new production process or something like, and they need more pneumatic component.
Yes. Okay. And for the auto segment, SMC is about 30% of the mix is auto and Airtac currently, we are only 9%. So it's quite easy for us to gain market share. But how many -- how fast can we go to like, say, 20% -- like we need 2 years to go to 20% of mix or 1 year next year, we can go to -- end of next year, we can go to 20% of mix coming from auto?
Basically, percentage to the mix from basic application still depends on the base. And we could be the biggest traditional pneumatic suppliers -- pneumatic component suppliers. And once we want to achieve 30% of the revenue coming from auto, we think it could be very difficult because we have the best...
Because you are very diversified and your mix is quite different from SMC.
Yes, basically. We think we have -- we just have teens percent market share in China auto industry, much lower than our overall market share, 30%. So we believe we still can enjoy pretty good market share gain from auto customers in coming years. But how high of the percentage will be still depends.
Next question comes from Jeremy.
Just 2 questions from me. So as far as I understand it, there are a lot of different kinds of specifications for pneumatic equipment, right? I mean a lot of different kinds of [ indiscernible ]. And I understand that for a company like, let's say, SMC, they cover a lot of specifications. And in order for them to maintain a very short lead time, they keep a very large inventory in order to respond very quickly to the market, right?
So my question here is, if you are looking to gain more market share in China going forward over the next 2 to 3 years. Does that mean that you will need to build up your inventory in terms of the number of specifications that you have on hand as well? And if that's so, does that mean that you need to actually boost your capacity going forward?
Okay. Basically, most of the different SKU, the production can be shared by the same equipment or production process. We don't have to buy specific new equipment for specific new SKUs. And different companies have different operation strategy. So basically, our lead time to spot customers could be the shortest one in China market. We promised customers they can get their demand in 3 to 5 days after they place order to Airtac. And as we know, the other 2 bigger peers is longer than 1 week. And we review our inventory from raw materials work in process to finished goods under our ERP system.
And we observed or review, even revised the ratio of the -- each items by-weekly. And we just have -- 10 years ago, we just have 120,000 or 150,000 items and our inventory turnover days was around 170 days at that time. And we have increased our SKU number to be around 50,000 to 60,000 items currently. And our inventory turnover days is just around 120 days, even lower than 120 days at the end of this March. So basically, different companies have different strategies, and we could be -- have a better efficiency to manage our inventory level.
I see. So anyway, based on your current strategy and your business model, you feel that you don't need to boost capacity in order to still take market share in the near-term, right?
We still have to expand more capacity because we have basic shipping volume growth. We need to buy more new equipment to increase our output. And in addition, for SMC or Festo, they have around or even more than 700,000 items, 50% customized, 50% standardized. Airtac, we have 250,000 to 260,000 items, 90% standardized. And we just target around 35% of China pneumatic market share. And we just developed 350,000 items to cover 80%, 85% of the total market demand and enjoy 35% among the 80%, 85%. It's good enough for Airtac. So we won't develop 400,000 items, 500,000 items.
Okay. Understand. Very clear. My other question is, you stated in your opening statement that you're expecting possibly a 2- to 3-year up cycle for pneumatic equipment in China. However -- and also, I noticed that you said that you are producing right now above 100% capacity utilization. So -- but then it doesn't seem that you're accelerating your CapEx spend. So you're still going to spend about TWD 2 billion to TWD 3 billion per year. When you speak to your customers, do you get a sense that this year, it seems like demand recovery is very broad-based across many, many industries when I speak to other companies as well. Do you get a sense that the investment is being front-loaded this year because it's the first year of the 15th 5-year plan and they want it to be a good start. And is there a risk that we might see a slowdown next year?
We defined 100% utilization rate based on 24 days a month and 21 hours a day. So once we have a better shipment, we can ask our operator to work for 26 days a month, then meet 110% utilization rate. And in the bester of the process, we still can put it more operator to that equipment work for 24 hours. So basically, TWD 2 billion to TWD 3 billion CapEx a year is good enough for our current demand situation or based on our prediction.
In addition, the equipment, pneumatic equipment lead time from we placed orders to vendors, our vendors to this new equipment could make production just around 3 months. And we used to construct buildings first. And we can -- based on the current shipping situation and decide when to buy more equipment just in 3 months, we can have a new capacity. And just the same world. We always can find some ways to improve our internal production efficiency. Even the same equipment, we could have additional output or production volume to support customer demand. And we can adjust our CapEx whenever we want to. So basically, even 2026, 2027, our current expansion plan, TWD 2 billion to TWD 3 billion CapEx a year but still can support 20% shipping volume growth in those 2 years.
Next, we have Kenny.
Congrats on the amazing results. I have actually 2 quick questions. Just following up the overall demand situation. I guess in the previous several cycles, you had some years growing your revenue over, say, 20% or even 30%. I'm wondering if this time, you need to try picking your orders like your P/B ratio is going beyond control, so you need to forgo a little bit demand. What do you think about the current situation right now?
Firstly, in past 20 years, every 2 years, we have an up cycle then 2 years down cycle. And this time, we prefer not to define as a cycle issue from late 2021 because it's government some specific control policy to that overall demand could be deserted pretty fast. And government have released or launched so many stimulus policies, but they still need to take some time to restore people or corporate confidence. So this up cycle from late 2024, it just could be a moderate recovery. It's not like previous up cycle in 2021 or 2017. It's new turn of V-shape.
So once this time, it's just a moderate linear recovery, that's the main reason why we expect it could be longer than 2 to 3 years. But just for our prediction, the lead time of the industry is pretty short. We cannot ensure our prediction can be achieved 100% in coming years or in future.
I see. If I may squeeze one last question is that regarding the OpEx I know usually you will not give us an absolute number, but looking back on 2024 and 2025, you were so disciplined controlled like TWD 5.2 billion to TWD 5.4 billion every year. Supposedly this year, I think given your guidance, you will probably have $400 billion -- $40 billion revenue. How should we think about this? Is there any ratio you would give us for as an OpEx rate target internally? How should we think about this? I know you have answered that you will have operating leverage, but just for us modeling, if any color.
Firstly, once we have good revenue scale, we could have pretty good leverage for OpEx. And marketing used to be around maybe high single digit to 10% of our revenue. And around 40% of the selling expenses is related to sales team's bonus plan. And our bonus plan used to based on revenue growth rate, OP margin, budget achievement and the receivable received on time or not. So it still depends on those variable issues to decide our selling expenses.
And most of the general and administration expenses or R&D expenses could be fixed cost, but those 2 departments still can enjoy bonus plan based on OP margin of the subsidiary. So basically, we cannot give you any OpEx number by NT dollar because most of our business or expenses are still located in China based on renminbi base. And our functional currency still is renminbi. But we listed in Taiwan, we have to transfer our financial statement from RMB to NT dollar. So once you just compare by NT dollar base, you still have some issue of the FX every year or every quarter is different. So you can say the percentage of the OpEx, selling expenses could be high single digit to 10% and 3% administration expenses, around 3% could be R&D expenses.
Okay. Thank you. I think we are running out of time. So Ivan, do you have anything else you want to remind us?
I'm fine. Thank you.
Okay. Thank you, Ivan, and thank you all for joining the call. This concludes the call today. Thank you. Have a good day. Thank you. Bye-bye.
Thank you, Ally, and thank you, everyone. Have a good day.
Bye.
Airtac International Group — Q1 2026 Earnings Call
Pneumatic demand recovery supports solid Q1 with margin expansion and an upbeat 2026 plan.
📊 Quarter at a Glance
- Revenue: RMB 2.192B (+22% YoY)
- Gross Profit: RMB 1.052B (+33% YoY); Gross Margin: 48.0%
- Operating Income: RMB 728M (+45% YoY); Op. Margin: 33.2%
- Net Profit: RMB 585M (+36% YoY); Net Margin: 26.7%
- EPS: TWD 13.35
🎯 What Management Says
- Recovery cycle: Pneumatic demand has begun recovering and could last 2–3 years, with shipments and order book above initial expectations.
- Growth & mix: Accelerating new products and brand strength aim to lift revenue faster than peers; cross-sell pneumatic with linear guides and electrical controllers.
- Efficiency & capacity: 100%+ utilization, ongoing efficiency gains, and capex of about TWD 2–3 billion per year to sustain growth and margins.
🔭 Outlook & Guidance
- Guidance: 2026 revenue growth raised to mid-teens to high-teens; full-year operating margin target around 33%.
- Cash & payout: Free cash flow generation remains solid; dividend payout raised to 65% in 2026 (from 55% in 2025).
❓ Analyst Q&A
- Pricing & raw materials: Overseas price hikes possible; aluminum and copper cost pass-through considered; China pricing kept stable to protect customer relationships.
- Linear guide & capacity: Linear guide demand lagged pneumatics in recovery; capex remains ~2–3B TWD annually to support volume growth, with inventory turnover around 110 days.
- Semi business: Semiconductor products begin 2025–26, with gradual launches; potential to reach about RMB 1B revenue in 10 years, aided by localization and higher margins.
⚡ Bottom Line
Airtac delivered a robust Q1 with meaningfully higher revenue and margins, underpinning a raised 2026 outlook. The company continues to diversify beyond pneumatics into linear guides, electrical controllers and semiconductors, while maintaining disciplined capex and a higher dividend habit. Key risks remain raw material costs and the pace of demand recovery across end markets.
Airtac International Group — Q4 2025 Earnings Call
1. Management Discussion
So, hi, everyone. Let me read the verbal disclaimer first. This call is strictly for clients of Goldman Sachs and people who are invited by AirTAC only. This conversation is not intended for the media and is off the record. Participants will be removed from the call if they cannot be properly identified. This call is not for the purpose of sharing or receiving nonpublic information. Attendees are public market participants who may not receive and should not request nonpublic information about security end markets.
Hi, everyone. So thanks for joining AirTAC's First Quarter 2025 Results Call hosted by Goldman Sachs. This is Chao Wang, technology and automation analyst at Goldman Sachs. Today, it's our pleasure to have Ivan Tsao, CFO of AirTAC, to be with us on the call. Ivan will start with business update first and followed by the Q&A session. Okay, Ivan, over to you now. Please kindly go ahead. Thank you.
Okay. Thank you, Chao, and good day, everybody. This is Ivan Tsao speaking, from AirTAC, and welcome to join this conference call. And please let me brief our fourth quarter results and current market situation. First of all, the U.S.-China tariff issue and the China government anti-involution policy are limited impact to our business. Currently, for the recovery of the China economy, the importance of how the China government implement more policies to restore people's confidence, consumption confidence is far greater than the impact of U.S. tariffs. And pneumatic industry can sustain single-digit growth rate annually once there is no too severe noneconomic issue. By continuously develop new products and improving our brand image, we expect our annual revenue growth rate can be 10% higher than the industry growth as pneumatic product support production line rather than in the end product. As long as customers launch new models or engage in production activities, there will be more demand for pneumatic.
Moreover, the impact of cross trade between China and Taiwan tariff agreement, we mean ECFA, and our margins have subsided by the second quarter of 2025, and we can improving our OP margin to be better and better. And approved consolidated revenue for the fourth quarter of 2025 was RMB 2.64 billion, a 21% growth year-on-year. Gross profit was RMB 980 million, a 25% growth. Gross margin was 47.5%. Operating income was RMB 645 million, a 35% growth year-on-year. Operating margin was 31.3%. Net nonoperating income was RMB 31 million, including RMB 29 million of FX gain, RMB 9 million loss on equipment disposal, which caused by replacing equipment to improve our production efficiency, and RMB 7 million subsidy from government, RMB 5 million of interest income and RMB 2 million of interest expenses.
Income before income tax was RMB 675 million, a 34% growth year-on-year. Pretax margin was 32.7%. Net profit was RMB 532 million, a 33% growth year-on-year. Net margin was 25.8%. EPS for the fourth quarter of 2025 was TWD 11.64 and improved consolidated revenue for the whole year of 2025 was RMB 7.931 billion, a 15% growth year-on-year. Gross profit was RMB 3.647 billion, a 13% growth year-on-year. Gross margin was 46%. Operating income was RMB 2.378 billion and 17% growth year-on-year. Operating margin was 30%.
Income before income tax was RMB 2.459 billion or 14% growth year-on-year. Pretax margin was 31%. Net profit was RMB 1.941 billion, a 13% growth year-on-year. Net margin was 24.5%. EPS for the whole year of 2025 was TWD 42. And revenue from top 8 industry for the fourth quarter of 2025, the biggest one still was electronics, around 26% to consolidated revenue, is 17% growth year-on-year. Second one, battery was around 15% to revenue, 57% growth. Auto was 10% to revenue, 31% growth. Packaging was around 9% to revenue, 16% growth. Machine tool was around 7% to revenue, 17% growth. General machinery was around 6% to revenue, 16% growth. Textile was 4% to revenue, 5% growth. And energy lighting or solar was around 3% to revenue is 15% growth year-on-year.
And revenue breakdown for the whole year of 2025. Electronics was around 27% to consolidated revenue is 10% growth year-on-year. Battery was around 14% to revenue, 84% growth. Auto was 10% to revenue, 40% growth. Packaging was around 8% to revenue, 9% growth. Machine tool was 7% to revenue, 14% growth. General machinery was around 5% to revenue, 13% growth. Textile was 4% to revenue, 5% decline. And LED lighting and solar was around 4% to revenue. It's 31% decline year-on-year.
And for current market situation, more and more customers are showing positive views on future demand. We believe that the pneumatic industry demand has entered a recovery cycle from late of 2024. Even it may only be a gradual or moderate recovery. This duration of the recovery cycle may be longer than normal 2 years recovery period in the past. In addition, China government continued to release many stimulus policies and attempt to restore people consumption confidence. Some of them have improved their confidence and increased their end product consumption or capacity expansion.
Overall shipment was better than our expectation in first quarter of '25, but just in line in the second quarter of '25 caused by the U.S. tariff policies because some customers postponed their demand. However, the impact of such tariff issue have been diluted and customers still need to improve production process automation and replace pneumatic product. The shipment from last September or September of 2025 to this moment have been better than our expected. As for the demand of various industry of pneumatic, the revenue of electronics industry grew by 10% as we expected in 2025. And so many customers say it could be a good year for electronics in 2026 because there will be -- there could be more new model launch and spec upgrade in the year. And we expect we could have another 10% revenue growth from electronics in 2026.
And battery demand, government has announced its development guidance for EV and battery from late of '24 and the shipment was better than our expectation in 2025. In addition, more countries have relaxed their restriction policies on Chinese players and those players plan to expand their overseas capacity, also will increase their domestic capacity. So we expect we could have double-digit revenue growth from battery in 2026.
Better revenue growth from automotive industry also could be expected in 2025 and 2026, and we have improved our brand image on auto customers and enjoy better share gain from that. Even the overall auto industry, especially for those ICE demand still have not recovered significantly. We have had double-digit revenue growth rate for years, and we expect we could have double-digit revenue growth in 2026 from auto industry. Moreover, government stimulus policies for replacing old equipment to be new equipment can get subsidy from government still in the market. Those traditional demand like machine tool, [indiscernible] machinery, packaging, textile still enjoy positive revenue growth. And it's mid- to high single-digit growth in 2025 and all of them still was better than our expectation. We expect those traditional demand can enjoy positive growth again in 2026.
And even we have some demand issue on solar or energy lighting in 2025, but the demand seems to have won up from a decline of 46% in first half of 2025 to 15% growth in fourth quarter of 2025. And we also expect this industry demand still could be turned to positive growth in 2026 from solar or energy [indiscernible]. For the pricing, selected customers selected items still have some pricing competition in pneumatic. But overall speaking, it still could be rational basically. The increased material cost can be diluted or offset by our internal efficiency improvement. The OP margin still have to depend on revenue scale and capacity utilization rate, even we can improve our margin by launching more higher gross margin new items, improving our selling product mix and continue to improve internal production efficiency to reduce production cost.
And we defined 100% capacity retention rate based on working 24 days a month and 21 hours a day with 2 shift system. Current pneumatic capacity utilization rate is around 110%. And the inventory turnover days at end of 2025 was around 124 days and accounts receivable turnover days was also 124 days at end of 2025.
And for the development of [ Mini Guide ], industry demand is still weak and peers still keep aggressive pricing. We have changed our pricing policy since third quarter of 2024 and also extend new sales reach. Our shipping volume has been around 20% growth in 2025. The revenue number is still lower than our expectation. We have asked our sales team to convince more customers and also expect the Mini Guide market overall demand will be better from 2026 because the Mini Guide demand cycle used to be around 2 to 3 quarters later than pneumatic cycle. And when pneumatic began to recover from later of 2024, it could be better from fourth quarter of '25 from Mini Guide demand. And once the Mini Guide overall demand is warm up, peers used to raise their same price and AirTAC will maintain the same price to increase the pricing gap lower than peers and [indiscernible] more customers to place more orders to AirTAC. Current that capacity utilization rate is around 30%.
Gross margin is teens percent. The shipment quantity in past 2 years has higher than the output, and we continue to decrease Mini Guide inventory. And we have the opportunity to increase utilization rate in 2026. When we achieve 50%, 5-0% utilization rate, production gross margin could be around 30%. And once we have 80% utilization rate, we can support 40% gross margin from Mini Guide. Even 30%, 40% gross margin is lower than our existing pneumatic business, but we use the same sales team to do cross-selling pneumatic and Mini Guide and without too much additional OpEx we still can improve our consolidated OP margins.
And for the development of supporting semiconductors customers' demand. Based on our strategy, we have not developed products to support semi customers' demand by end of 2024. But due to those products can enjoy higher gross margin and China government localization policies, we began to develop semi items from early of 2025 and scheduled to launch some items gradually from 2027. And the current development progress is better than our expected, and we can gradually launch some spread to support semi demand from second half of 2026. But based on past experience, used to take around 1 year for new product to have a better revenue contribution. And better revenue contribution may be still have to wait to second half of 2027, even 2028.
And we expect pneumatic industry can return to low single-digit growth in 2026. And we can have at least 10% revenue growth from pneumatic product, plus the revenue contribution of Mini Guide. The shipment in this January has exceeded our expectation. And even we could have a monthly revenue record high number in this January. Even we are optimistic about market demand in 2026 due to the short lead time of the pneumatic business, and we prefer to give a conservative guidance to the market at the beginning of the year.
Annually revenue growth rate for the whole year in 2026 could be over 10% and OP margin of 31%. CapEx number could be TWD 2 billion to TWD 3 billion. And we have generated free cash flow for years, also have increased our cash dividend payout ratio from 35% in 2021 to 55% in 2025. And it will be around 65% payout in 2026 and also could be higher in coming years. Despite briefing and should you have any questions, we can discuss it. Thank you.
Yes. Thank you, Ivan. That's pretty comprehensive. So, hi, everyone, let's start the Q&A session now. Please feel free to raise your hand on Zoom if you like to ask live. So before we start taking questions from the investor online, I'd like to ask a few questions first, if I may.
So Ivan, so my first question is that regarding your business outlook in 2026, which is pretty good. And in 2025 for fourth quarter, you delivered the record high EPS number in the fourth quarter. Just want to know your view on the overall 2026 seasonality. In the past, we actually see -- we're definitely see that fourth quarter is a low season, but this time it's not. So I just want to know how should we think about -- do you expect that in second quarter this year will still be the traditional peak season? Or you do believe in the full year, we will not see a very strong seasonality just like before? That is my first question.
Okay. Basically, more and more customers, they think the demand could be better and better in coming months or coming quarters. So our order book or shipment value in this January could be record high. So basically, we could be very optimistic of the demand in 2026. And second quarter used to be the peak season for pneumatic. So it still could be based on such rules for 2026. And it's still too early to tell what the growth rate will be in second quarter of 2026, even next month because Chinese New Year located mid of February. And every time when the location of Chinese New Year in mid of February, the demand seems a little flat because some customers, they used to let their employees have early holidays and also that then back to their workshop a little late. And overall, we just can say once China government continue to release more stimulus process, the demand still could be better and better in 2026.
Got you, Ivan. That's pretty clear. So my next question is regarding your Linear Guide business. You mentioned about Linear Guide business, you expect that the overall demand to recover sometime in 2026. But should we expect -- or do you have any guidance on the revenue in 2026, just like what you did in the past few years? Or any target on the utilization will be good enough?
We are sorry to say we miss our Mini Guide sales numbers for years. And we still have our internal expectation or budget target. And maybe it's better not to give the Mini Guide numbers to the market this time. And our Mini Guide capacity, not just support our customers, we still have internal demand to support our pneumatic product. So once pneumatic products have a better demand in 2026, and we also expect we can convince more customers buy more Mini Guide from AirTAC. And the overall industry demand still could be better in 2026. So we expect we could have 50%, 5-0% rate in second half of 2026, and we can improve our production gross margin to be better and approaching 30%. But once we have a higher revenue number of Mini Guide in 2026, at beginning of the year, we still have to suffer a little lower gross margin in first half '26 because our existing inventory production cost still could be a little higher and gross margin just around teens percent. Once we have a higher revenue from Mini Guide, the impact of our consolidated gross margin still could be a little higher. But we continue to improve our internal production efficiency and the gross margin still could be better than 2025 in 2026.
Got you, Ivan. That's pretty clear and looking forward to see the progress here. So we are open to the Q&A session right now. Everyone, again, please raise your hand on Zoom with your name, and please unmute yourself to discuss with Ivan. Before asking question, please speak out your name and the company name first.
So our first question will come from Helen. Hi, Helen, [indiscernible] unmute yourself.
2. Question Answer
It's [ Helen ] from HSBC. So our first question is about the downstream verticals, if we may, because you sound quite positive towards the 2026 outlook. I was wondering if we can break that into different downstream verticals. What about auto? Because auto capital expenditure has been quite strong, I would say, for almost 18 months now. And speaking from the past experience, the first half or the June this year, it might be going down. Is that the case that you are looking from your side now? That's for the auto sector.
Number two is for the smartphone because we have high expectations for smartphone as well for the second quarter orders. I was wondering, is it like more coming in, in the second quarter and will tune down more towards the third quarter? How big is the impact of the smartphone for us this year?
Okay. Basically, for auto demand, most of the revenue growth could be supported by market share gain, especially from those ICE customers. And in past, so many ICE customers that have very deep [indiscernible] for pneumatic suppliers. Even we could have 20%, 30% pricing lower than international peers, but it's very limited to custom total production cost. And around 6 years ago, the ICE sales volume is not good. So some customers, they still have production cost pressure. So we made a pretty good opportunity for us to support their demand from noncore production process. So we have pretty good or double-digit revenue growth from auto industry for 5, 6 years, mostly coming from market share gain. And even the overall CapEx in 2026 will be slowed down from auto customers, but they still have [indiscernible] demand from auto. So we just gain more shares from those existing demand and still can support our auto revenue, could be double-digit revenue growth in 2026.
And for smartphone, basically, even some end brand customers will release more -- release some affordable spec. And we always talk to customers, always talk to investors, pneumatic support customers' production process, not in their end product. So whenever customers, they have more new models launched and greater spec upgrade, they have to set up new capacity. And once they have any production activities, they still have to maintain or replace their existing old capacity to be new pneumatic demand. So basically, 10% revenue growth from electronics may be still not too aggressive for AirTAC.
Okay. Thank you, Helen. So our next question is coming from [ Daisy ]. Daisy, you can unmute yourself and -- yes, you can unmute yourself.
Actually, I have 3 questions. The first is that you just mentioned the recent order book and the shipment value actually reached a record high, but you only have 10% revenue growth. Is that too conservative? And the second question is regarding your market share of the pneumatic products in 2025? And how is the comparison with SMC? And the last question that you mentioned that you are going to launch the semi-related products that in the second half this year, maybe we are going to see some revenue contribution. And could you give us some estimation for the revenue contribution next year from semi side?
Thank you, Daisy. And firstly, pneumatic is very short-time business, and we used to give a very conservative guidance to the market at the beginning of the year. So I say the guidance for revenue growth for 2026 is over 10%. But how high it will be still depends. And our internal percentage could be higher than this number. And maybe we can raise up our guidance quarterly in next couple of quarters. So 10% -- over 10%, over 10% revenue growth rate for 2026, just a number for you.
And for SMC, firstly we release different sales rate on different region to compete with SMC. And we still have pretty good progress to get more shares from the market. So basically, SMC, as we know, they still have revenue growth in China market in 2025, but maybe not just not as high as AirTAC did.
For semi revenue, basically we said we can launch semi items from second half 2026. But whenever we launch new items, used to take around 1 year, they have a better or obvious revenue contribution. So we say maybe from second half 2027 or 2028, we could have much higher revenue contribution from semi customers. And current revenue from semi customers just around RMB 5 million to RMB 6 million monthly. And maybe by June of 2027 still could be such a similar number. And in second half 2027, it could be a little higher and higher, but it's still too early to tell what's our expectation for the whole year revenue in 2026 -- sorry, 2027. The whole year semi revenue for 2027 is still too early to tell. Even we have some number internally.
I'm [ Angela ] coming from [ Citi Research ]. And congrats on the strong results and outlook. My first question is about the fourth quarter gross profit margin. Can you share with us what are the key drivers for the strong fourth quarter gross profit margin? And also, is it sustainable?
And the second question is about your guidance for 2026 OP margin, which is around 31%. And is it driven mostly by better leverage on OpEx? Or is it driven by GP margin expansion?
Yes. Basically, we have good numbers for fourth quarter gross margin maybe still contributed by our internal production efficiency improvement. And we have find some new ways to improve efficiency. So basically, such condition still can sustain it to 2026 and next couple of years. And sorry, what was your second question?
Second question is about the guidance of the OP margin of 31% for '26. And is it driven by better leverage on OpEx? Or is it driven by gross profit margin expansion?
Maybe both of them because we still can continue to find more ways to improve our internal production efficiency and also can offset the higher material cost currently. And [indiscernible] scale still could have a better fixed cost leverage of OpEx. So you can find our OP margin in fourth quarter have been around 31.3%. It still included nonnational holidays in October. So basically, maybe it's not difficult to sustain 31% OP margin for the whole year of 2026, even could be higher.
Thank you, Angela. So our next question will come from [ Jason ]. Jason, you can unmute yourself. Thanks.
This is [ Jason Lu ] from [ First Capital Management ]. My first question is about the future of the China market. I think many analysts concern about the involution policy such as in the auto sector, the decrease in the subsidy and for the electronic sector, we see a decrease in the PC or laptop market in 2026. And for the battery, we see some maybe restrict policies. So have you seen our clients be more conservative? If not, what's the driver for our revenue growth in these 3 sectors in 2026? That's my first question.
Basically, I don't know what your information got from. And basically, information from our customers, especially for battery, they're still pretty optimistic and also try to expand their capacity aggressively. And the overall demand for pneumatic from battery still could be higher in 2026 than 2025, but just the base. 2025, we have low base in 2024. So we have 80-plus percent revenue growth from battery industry and high base for 2026. So we just expect double digit, but still could be 30 -- even could be higher than 30% revenue growth from battery.
And we think in the [indiscernible] in China market in the past couple of months, maybe it could have short-term impact for demand. But basically, it could improve the transaction orders for the China market is good to mid to long term. So basically, pneumatic is not just a CapEx component, also is a consumable product have replacement demand. And in past 20 years, every 2 years, we have up cycle and then 2 years down cycle. But this time, the demand was [indiscernible] from late of 2021 and just a little better from late 2024, almost around 3 years. And some customers, they just explain what they have to spend in the past 3 years. And once they have -- once they want to improve the automation level or improve their production efficiency, they still have to improve automation level and they need more pneumatic. It's the best thing for our guidance for 2026. Thank you.
Okay. For the detail, I'd like to know for the auto sector, our clients, they are major in the traditional ICE vehicle or also we have the customer in the new EV or PHEV sector.
Yes. Basically, ICE customers, they have deep [indiscernible] for pneumatic suppliers and because their company history could be much longer than AirTAC. And EV customers, EV brand customers, most of them could be young company. Their brain [indiscernible] for pneumatic suppliers is not that high as ICE customers. So it's easier for AirTAC to convince EV customers buy pneumatic from AirTAC. And we could have a higher market share in EV than ICE demand.
Okay. And my last question is for the expense value in 2026. Is that maybe 1.3 -- 100,000 and 300 million every quarter in 2026 or maybe it's for the 17% for the revenue? That's my last question.
You mean OpEx?
Yes, the OpEx value. Yes, okay, value.
Yes. Basically, we spend what we should spend and not a percentage to revenue or any index. So basically, once we have a better revenue scale, we can enjoy better fixed cost leverage, especially for OpEx. And variable OpEx could be certain expenses and bonus to our sales team. And our bonus plan to [indiscernible] is based on revenue growth rate, OP margin numbers and budget achievement is flexible. And R&D expenses or administration expenses could be fixed cost basically. So once we have a better revenue scale, the OpEx percentage still could be lower.
It's [ Kenny ] from Nomura. Congrats on the very good Q4 results. I have 2 questions. The first one is I want to go back to fourth quarter. I remember, correct me if I'm wrong, you were targeting flat quarter-on-quarter sales for the fourth quarter 2025, but it turns out it's much better than we thought. Could you please provide a little bit color on which end application you saw were better than expected and whether they are carrying such momentum into first quarter?
Yes. Basically, electronics is better than our expectation and some customers, some electronic customers, they will wait and observe the development situation of the U.S. tariff and also postpone their demand from second quarter to maybe August. And it just around [indiscernible] single-digit growth in first 3 quarters from electronics, but it's 10% growth in fourth quarter. So the shipment or revenue from electronics is better than our expectation. And also from those traditional demand textile machine tool or general machinery or packaging also is better than our expectation in fourth quarter of 2025.
Okay. Based on your strong January order book, I can assume the momentum at least be carried on to the first quarter, right? Is that correct?
Basically, it's correct. But what I mentioned earlier, the Chinese New Year holiday located in mid of February, and you still have a little higher uncertainty whenever the location of the Chinese New Year holiday in mid of February. But just the revenue is higher or lower, but we still believe we could have a pretty good revenue growth rate in the first quarter of 2026.
Very helpful. And I have a follow-up on the semiconductor equipment. Could you provide a little bit more color on with the first launch of your new products in second half of this year, so it could be mid- to high end already? Or how do you just maybe categorize the semiconductor pneumatic equipment? Like do we do start from those entry level or we can easily go to mid- to high end? I assume it's very complicated. So I want to understand how you can upgrade your products over time.
Firstly, to [indiscernible] semi items start [indiscernible] to AirTAC. And we still we will start this business from back-end customers, but it doesn't mean we just can support -- it doesn't mean we just can support back-end customers' demand. We still will launch more items to support from low end, mid and even high application gradually in coming years.
Okay. Thank you, Kenny. So our next question will be coming from [ Bill ]. Bill, you can unmute yourself. Thanks. Okay, Bill is offline right now. So we have [ Jeremy ]. Jeremy you can unmute yourself right now.
I just had kind of like 2 small questions. The first question is, so it sounds like you still have quite decent momentum right now. What would you say is -- do you think will be your biggest risk for 2026?
Government policies.
Okay. Meaning it might be maybe delay, it might not come as fast as expected, is it?
We expect government can continue to release a lot more stimulus process. And how long it will last or how strong it will be still depends on government.
Okay. And one small kind of like housekeeping question because I couldn't really hear one number earlier on in your presentation. Your auto-related revenue in the fourth quarter was 31% year-over-year growth. And how many percent of total revenue?
You mean consolidated revenue or auto revenue?
Auto revenue for fourth quarter. How much...
10% to consolidated revenue from auto and 31% growth.
Thank you, Jeremy. So we have Bill on the line right now. Bill, you can unmute yourself and starting to ask questions. Thanks.
This is Bill from JPMorgan. I have 2 questions. First of all, can I have the inventory days as of fourth quarter? And given you have very strong order intake in January, do you plan to further raise up your utilization rate in first quarter and second quarter? Second is for the cycle of the Linear Guide. I think in the past, usually, when AirTAC shows some recovery inside Linear Guide, demand will coming up maybe 2 to 3 quarters later. But if you look into the competition landscape in China in recent years, we are seeing more competitors enter the Linear Guide business. So for this round of the Linear Guide demand recovery, apart from the cyclical view, is there any indicators you think can point to a better growth of the Linear Guide business? Because if you look in 2025, actually revenue already grow pretty good, but the Linear Guide demand is still weak.
Okay. Basically, 110% [ industry ] rate for pneumatic is good enough. And we still can support the shipping volume growth in 2026. And for Linear Guide, basically Mini Guide is a CapEx component. It's not like pneumatic with CapEx demand and component replacement demand. And it's a little difficult to find index for Mini Guide demand basically. And even we expect the Mini Guide demand will be better or recover from 2026. And it's still too early to tell peers will raise their pricing or not. But basically, we still can convince more customers AirTAC Mini Guide is good enough. And 2025, even in such low demand environment, we still have 20-plus percent volume growth. And once we spend more time to convince more customers AirTAC is good enough, and we believe we still can enjoy pretty good volume growth in 2026.
Thank you, Bill. So our next question will come from [ Eric ]. Eric, you can unmute yourself. Thanks.
It's glad to hear that you're getting more positive for the outlook. But I'm just curious about, we have noticed that China has recently tightened the subsidy standards for new energy vehicles and consumer electronics. So could you comment on whether these changes have affected your expectations or guidance for the 2026?
Okay. Basically, based on past experience, once government want to encourage battery application, even the existing or old policy have been terminated, they still will launch another new policy to support such application or demand. And our main revenue growth from auto industry is coming from market share gain. And our market share in total China pneumatic market in China could be around 30%, but our market share in China auto industry just around teens percent. So we still have so much addressable market to gain more shares from China auto and support our revenue growth.
Okay. Thank you, Eric. So Ivan, I would like to ask one question, if I can. So you just mentioned for the dividend in 2026, it could be probably around 65% and it's up from a very low level in the past few years. So I'm just wondering, in terms of the capital allocation, don't you really find any new investment target in the core business side, for example, investing in more capacity in pneumatic or linear AI or even for the electrical actuator versus that you decided to just pay out a dividend. So how should we think about the ROI for this kind of new business or invest in existing capacity?
Okay. Firstly, in past 3 or 4 years, we spent some CapEx to improve our equipment productivities. Same equipment, the output volume could be around 20% higher than 4 or 5 years ago. So even we have slowed down our CapEx number from 2023. But our product capacity or output volume still can support our revenue growth or shipment volume growth by teens, even double digit. So basically, we have been net cash for 2 years. And low CapEx, higher payout ratio won't affect our business in coming years. And we said in 2026, even 2027, our CapEx just could be around TWD 2 billion to TWD 3 billion. And we still continue to develop electrical actuator product or business. And maybe we will set up new capacity to support electrical actuator parts manufacturing in 2028 or 2029. And even we will increase such new business capacity. The CapEx could be TWD 3 billion or a little more than TWD 3 billion. It won't be TWD 4 billion, TWD 5 billion as our peak CapEx period. So basically, higher payout ratio won't affect our business development in coming years. Thank you.
Thank you, Ivan. That's super clear. So that's my last question regarding the market share target for pneumatic linear guided electrical actuator in the long term. Do you have this kind of target on your hand or any target you can share with us on these 3 business segments? Thank you.
Firstly, we expect we could have RMB 9 billion, even a little higher than RMB 9 billion revenue from pneumatic by end of 2030. And Mini Guide still could be RMB 3 billion, RMB 4 billion -- RMB 3 billion to RMB 4 billion in around 10 years. And we have another new business, electrical controller. And maybe to achieve RMB 3 billion in around 10 years won't be difficult to AirTAC. And it's still too early to tell electrical actuator revenue number, even electric actuator can support robotic arms or humanoid demand directly, but it's still too early to tell. Thank you.
Got you. Got you. Thank you, Ivan. So given the interest of time and Ivan's already very comprehensive introduction of the company's fourth quarter and result in the guidance outlook in 2026 and beyond, I would like to conclude the call here. And thanks for everyone to join this call, and thank you, Ivan, and congratulations for the fantastic fourth quarter and good 2026 guidance. Yes.
Okay. Thank you, Chao, and thank you, everybody. Have a good day.
Okay. Bye-bye.
Airtac International Group — Q4 2025 Earnings Call
📊 Quarter at a Glance
- Q4 Revenue: RMB 2.64B (+21% YoY)
- Gross Margin: 47.5%
- Operating Margin: 31.3%
- Net Profit: RMB 532M (+33%)
- Full-year 2025 Revenue: RMB 7.93B (+15%), Net Profit RMB 1.94B (+13%), EPS 42 TWD
🎯 What Management Says
- Tariffs & policies: impact is limited; automation and new models drive demand as recovery takes hold.
- 2026 outlook: revenue growth >10% with ~31% operating margin; CapEx ~TWD 2–3B; dividend payout around 65% in 2026.
- Road map: Mini Guide and semiconductors on track; Mini Guide utilization expected to rise in H2 2026; ongoing efficiency gains to support margins.
🔭 Outlook & Guidance
- 2026 Revenue: over 10% YoY growth; OP margin around 31%; CapEx RMB 2–3B; payout about 65% of net profit.
- Industry backdrop: pneumatic market to grow in low single digits; stronger growth anticipated from battery and auto segments.
- Risks: policy shifts, tariff changes, and seasonality around Chinese New Year affect timing.
❓ Analyst Q&A
- Q2 seasonality & momentum: Q2 typically a peak quarter; 2026 momentum supported by policy stimulus and order book strength, though Lunar New Year timing adds timing risk.
- Mini Guide & semis: Mini Guide demand recovery expected in 2026 with utilization target rising; semiconductors to begin in 2027–28 with gradual revenue contribution.
- CapEx vs. dividends: OpEx/CapEx aligned to revenue scale; dividend payout forecast around 65% reflects balance of growth investment and shareholder return.
⚡ Bottom Line
AirTAC delivered a strong Q4’25 and issued a cautious yet upbeat 2026 outlook: revenue growth above 10% with a ~31% operating margin, capital spending of about 2–3 billion Taiwanese dollars, and a dividend payout near 65%. The core drivers remain auto, electronics, and battery-related demand, supported by efficiency gains and share gains in select markets. Key risks include policy shifts and seasonal demand timing.
Airtac International Group — Q3 2025 Earnings Call
1. Question Answer
Good afternoon, and good morning, everyone. Welcome to Airtac's Third Quarter Earnings Call. This call is hosted by UBS. I am Ally Chen, Taiwan Strategist and Industrial Analyst. Before we start the call, we would like to ask for your support in the Extel survey, which will start in November. This survey is important for UBS. Please vote for UBS and myself in Taiwan industrial and equity strategy categories.
Now let's start the call today. It's our great honor to have Mr. Ivan Tsao, Airtac's CFO, in this call. We will start with Ivan's updates on the company and then open up for Q&A later. So Ivan, I'll hand the microphone to you.
Okay. Thank you, Ally, and good day everybody. This is Ivan Tsao speaking for Airtac, and welcome to this conference call. And as usual, please let me brief our third quarter results and current market situation.
First of all, observing the impact of the U.S.-China tariff issue, we thought that most of the China customers have experienced the tariff from U.S. since 2018. Although new tariff factors have had a partial impact on the China current economy, it most could be caused by customers' psychological influence and this time will not be greater than that in 2018, '19.
Currently, for the recovery of the China economy, the importance of how the China government continues to implement more policies to restore people's confidence and improve people's consumption and is far greater than the impact of U.S. tariff. For Airtac, we are closely observing the development of tariff friction and proposing corresponding stretch timely to continuous increase our market share and support revenue growth.
Pneumatic industry still can sustain single-digit growth annually once there is no too severe NOLCOM issue. By continuous developing new products and improving our brand image, we expect our annual revenue growth rate can be 10% higher than the industry growth rate. Recently, some investors concerned the anti-innovation, evolution policy may affect demand for pneumatic products. However, we believed this policy has very limited impact on the pneumatic demand and is actually beneficial to the overall market trading orders as pneumatic product support production line rather than end product. As long as customers launch new models or engaged in production activities, there will be a greater demand for pneumatic.
In addition, the impact of the cross-trade tariff agreement between Taiwan and China, we seen it as ECFA issue and our operating margin has subsided by the second quarter of 2025. The year-on-year decline in our operating margin over the past 4 quarters will tend to recover and grow from this third quarter onward. And our approved consolidated revenue for the third quarter of 2025 was RMB 1,971 million, a 20% growth year-on-year. Gross profit was RMB 907 million, a 20% growth year-on-year. Gross margin was 46.04%.
Operating income was RMB 588 million, a 28% growth year-on-year. Operating margin was 29.84%. Nonoperating income was RMB 46 million, including RMB 35 million of FX gain, RMB 9 million subsidy from government, RMB 8 million of interest income and RMB 3 million of interest expenses. Income before income tax was RMB 634 million, a 31% growth year-on-year. Pretax margin was 32.16%. Net profit was RMB 502 million, a 30% growth year-on-year. Net margin was 25.46%. EPS for the third quarter of 2025 was TWD 10.5, and TWD 30.36 for the first 3 quarters of 2025.
And revenue from top 8 industries for the third quarter of 2025. The biggest one still was electronics, is around 26% to our consolidated revenue and is 10% growth year-on-year. Second one, Battery was around 14% to revenue, 100% growth year-on-year. Auto was 11% to revenue, 52% growth. Packaging was around 9% to revenue, 10% growth. Machine tool was 7% to revenue, 17% growth. General machinery was around 6% to revenue, 15% growth. Textile was 4% to revenue is flattish year-on-year in third quarter. And LED lighting was around 3% to revenue is 8% decline year-on-year.
For current market situation, we believe that the pneumatic industry demand has entered in a recovery cycle since late of 2024, even it may only be a gradual or moderate recovery. The duration of this recovery cycle may be longer than the normal 2 years recovery period in the past. In addition, China government continues to release many stimulus policies in past couple of quarters and attempting to restore people confidence in government policies. Some of those customers have improved their confidence and increased their end product consumption or increased their capacity expansion.
Overall, shipment was better than our expectation in Q1 of 2025, but just in line in second quarter of 2025 caused by the tariff policy from U.S. and some customers postponed their demand. However, the impact of tariffs have been diluted and some customers still need to improve production process, automation and replace pneumatic product. The shipment in the third quarter of 2025 is once again better than our expected.
As for the demand of various industry for pneumatic component in 2025, pneumatic support customers' production process, not in their end product. Once customers have more new models launched or spec upgrade, they need more new production processes to support their production. However, due to some customers observing the development of tariff negotiation in second quarter, especially those in consumer electronics industry, electronics revenue in second quarter were lower than our original expectation, but some of such postponed orders have gradually been delivered starting from this September. There is still a chance of the growth nearly 10% throughout the 2025 from electronics.
In addition, there is still so many customers saying it could be a good year for electronics demand in 2026 because there could be more new model launch or spare upgrade in the year. And we expect we could have another 10% revenue growth from electronics in 2026.
And for battery demand, government announced its guidance for the EV and battery industry for 2025 in last November, and the demand has accelerated pretty fast from that time. We have had around 1% revenue growth from battery year-to-date, and was better than our expected and still could be double-digit revenue growth in 2026 because government process used to be suspended more than 1 year, and we still expect the battery demand still could be pretty good in 2026.
Moreover, government stimulus process for replacing old equipment to the new equipment can get subsidy is still in the market. Those traditional demand like machine tools, general machinery and packaging still can enjoy positive for 2025 and 2026. It's mid- to high single-digit growth in first 3 quarters of 2025 from those traditional demand and is better than our expectation.
Better revenue growth from automotive industry also could be expected from 2025. We have improved our brand image and enjoy better share gain from auto customers. Even the overall automation -- even the overall auto industry has not recovered significantly, we have had double-digit revenue growth in the past 5 years, and we still expect double-digit revenue growth in 2026 from auto customers. However, we [ had ] some demand issues on solar or energy lighting demand, but its decline rate have narrowed from 50% in first half of '25 to 8% in third quarter of 2025. Even it still could be weak for the year. It just around 3% of our revenue and won't affect our business too much.
Selected items for selected customers have some pricing conditions in pneumatic market, but it's still rational or reasonable basically. Material costs have been relatively stable and fluctuate within a reasonable range, which will be friendly for our profit margin. The OP margin still has to depend on revenue scale and capacity utilization rate, even we can improve our margins by launching more higher gross margin new items, improving our selling product mix and continuing to improve internal production efficiency to reduce our production costs.
Pneumatic capacity utilization rate currently is around 1% and the inventory turnover days at the end of this September was 122 days and the accounts receivable turnover days was also 122 days at the end of the September. It's including 1/3 of risk-free bank acceptance notes. All of those numbers are pretty healthy.
For a development of our linear guide, industry demand is still pretty weak and peers still keep aggressive pricing. We have changed our pricing policy since third quarter of 2024 and also extend new sales rate. Shipping volume has been around 20% growth year-to-date, but the revenue number is still lower than our expectation. We have asked our sales team to convince customers continually and also expect the overall demand of linear guide will be better from 2026 because the linear guide demand cycle used to be around 2 to 3 quarters later than pneumatic cycle, and we believe pneumatic cycle have entered in recovery cycle from late of 2024. So we expect the demand for linear guide could be better in coming quarters or 2026.
Whenever demand warms up, linear guide peers always raise same price and Airtac will maintain the same price to widen the price gap lower than peers and persuade more customers to place more orders to Airtac. Current linear guide capacity rate just around 20% to 30%. Gross margin is [ 10% ]. When we can achieve 50% production rate, production gross margin could be around 30%. And when the production rate is 80% gross margin could be around 40%. Even 40% gross margin is lower than our existing pneumatic business. We use the same-store team to do cross-selling pneumatic and linear guide and want to spend too much additional OpEx. It still can improve our consolidated OP margins.
And we expect pneumatic industry can return to flat or low single-digit annually growth in 2025 and 2026 will be better than 2025. And we can have at least additional 10% revenue growth from pneumatic product. Plus the revenue contribution of linear guide, the shipment of this October have also better than our expectation, and we raised our 2025 revenue growth rate guidance to mid-teens percent in renminbi terms. Operating margin could be nearly 30%. CapEx of 2025 still could be around TWD 2 billion to TWD 3 billion, and we have generated free cash flow from 2019 and it's around RMB 6.5 billion in 2023, RMB 8 billion in 2024. We also have increased our cash dividend payout ratio from 35% in 2021 to 55% in 2025, and it could be 60% in 2026. And still will be higher in coming years. This is my briefing. And should you have any questions, we can discuss it. Thank you.
Okay. Thank you, Ivan. Now let's open up the floor for Q&A. I do see Ming Hsun has a question. Ming Hsun, please go ahead.
I have 2 questions. So first question, Ivan, you just mentioned that in terms of the business cycle, linear guide is supposedly a few quarters later than pneumatic. So since you expect the linear guide demand will also improve next year, which sector do you expect to see better demand? Is it also 3C and auto and also battery? And also specifically, do you think Apple's upgraded affordable smartphone launch next year will drive overall FA demand next year?
Thank you, Ming. And firstly, compared to pneumatic, linear could be CapEx component mostly in nonpneumatic with component replacement demand and CapEx demand. And for Airtac linear guide business, basically, we have limited market share in linear guide industry. So in 2026, we expect we could get more orders from the market and still will follow current policy. We won't target on any specific application or industry demand. We just ask our sales team to assess any customers once they can pay receivable to Airtac on time. And whenever these customers -- these bigger customers, small customers, in any application or any industry, we still will accept those orders to improve our linear guide business. So basically, you can find linear guide components in so many assembly lines, also can find so many machine tool or general machinery. So basically, it's still pretty difficult to tell which segment will be enjoy higher growth in 2026 for linear guide.
And another question is your OP margin. So as you mentioned, I think this quarter is the first time in the past few quarters, you start to see OP margin to turn positive on Y-o-Y basis. So looking into 2026, do you expect the overall margin can recover back to maybe 31%, 32% if the linear guide utilization continues to improve. And also the pneumatic component utilization is supposed to improve as well. So could you share your outlook?
I mentioned earlier, the OP margin still will be affected by the revenue scale. Even we have find some additional ways to improve our internal production efficiency, and we also can find some higher gross margin new items to support our OP margin improve. But it's still too early to tell, it will be 31%, 32% OP margin in 2026 or not. But basically, it could be higher than 2025 -- it's very high probability and also could be higher than 30% in 2026.
Okay. While we are waiting for others to raise questions, let me -- I actually have 2. So first is on the semi customers. Ivan, can you share with us more color on how your product and also business expanding in the semi and semi equipment-related categories?
Yes. Basically, we could be the beneficiary of China policy, China government policy, local procurement, local production. But we have limited SKU can support semi customers currently. And we just can find some SKU product, which used to support other industry and also can support partial new semi customers. And our monthly revenue from semi customers just around CNY 5 million or CNY 6 million. And we began to more aggressive to develop semi items from late of 2024. We also total market maybe it takes around 2 years to develop and improve it to a better or best cost structure, then we will launch the semi items. And current schedule, it seems a little faster than our expectation, maybe in second half of 2026, we can launch some semi items gradually and also can improve our revenue from semi customers.
Okay. I understand. Can we have a little bit like a background on the customer? Are they like equipment -- local equipment suppliers? Or can you give us a little bit color on the background, what type of industry subsector within the semi industry?
Okay. Basically, most of our current semi customers could be backend, local China semi equipment players and limited from international customers.
Okay. Understand. Okay. And then separately, I also want to ask you another question on pricing strategy. We had -- like Airtac has been aggressive in gaining market share. And so particularly some pricing strategy for SMC. Do you foresee a change in rest of this year or next year? And also, when we talk about market share gain, you just mentioned actually next year, you can still have 10% market share gain. What market segment like do you get more market share from?
Basically, we still have so many SKUs have not developed and launched as could be in so many different applications. For example, even electronics is our biggest sector of our revenue, but our market share number in China electronics demand still lower than our total China limited market share. So our electronics market share in China is just around 20-plus percent. And auto is just around 10% market share of Airtac. And we still will as our sales team and marketing team to find what items, Airtac have not produced -- the market has demands urgent and we shall pass those items and develop them in first priority. And it could be so many different applications. And we also have not focused on any specific applications to develop new items to support such specific applications. So it still could be strong -- the SKUs still could be from so many different industries.
And our aggressive pricing just focused on specific customers, not across the list of the customers. So most of our existing customers, the pricing is still pretty stable. And we're just talking on those customers who do limited business with Airtac, but mostly could be international peers or Japanese peers support such kind of customer demand. In past, such customers have very deep brand image and price limited even 0 orders to Airtac. So once the orders volume is small and pricing by Airtac could be very high. Even the customers is a very big company or big demand volume. But from second quarter or third quarter of last year, we ask salespeople to base on this customers' total demand volume whenever they buy the limited product from any peers, any suppliers, we just based on their total demand volume and give them pricing, low pricing directly. So we can get more shares from such kind of customers. So our aggressive pricing is not across these customers, just best customers can enjoy aggressive pricing from Airtac. Thank you.
Okay. Thank you, Ivan. I see more questions in the list. Helen.
Hi Ivan, this is Helen from HSBC. Well, thank you so much for the briefing, and it's glad to hear that you are getting more positive for the outlook. I just want to double check with you because next year, some of your peers has been talking about the potential replacement cycle of the machine tools that were purchased during the last peak cycle, i.e., during the year 2017 and 2018. Would you expect something similar to happen? And do you think it is going to benefit Airtac? And if so, by how much?
Thank you, Helen. Basically, customers could be pretty conservative from late of 2021. And what I mentioned earlier, pneumatic can enjoy single-digit growth annually. And from late of 2021, the demand was disturbed caused by COVID issue or government abnormal control. So the pneumatic industry was suffered double-digit decline year-on-year in 2022, single-digit decline in 2023 and around 10% decline in 2024. So, so many customers, they just spend or replaced their pneumatic component cautiously. So maybe we won't say the replacement cycle will be pretty obvious, pretty strong demand in 2026. But just based on our prediction for assessment, the pneumatic cycle could be entering recovery cycle from late of 2024. Even it was affected by U.S. tariff issues in second quarter, but the shipment also be better in third quarter of 2025, even in this October.
So basically, the pneumatic demand will be better and better or recover moderately in 2026 and its CapEx demand or replacement demand still depends. But once customers have more or higher production activities, they should need more replacement demand for pneumatic product.
Understood. If I may follow up, when you're guiding for about 10% of the growth for the smartphone sectors in next year, so 2026, are you already considering into the potential model change for some smartphone companies or that would be an additional catalyst for 2026? You're just giving a baseline kind of the guidance for smartphone growth.
Basically, we have not finalized our forecast or budget for 2026. But we still contact with our customers closely, and we could have some numbers from customers' feedback or information from the market. And we can say currently, the opportunity for pneumatic demand to have low single-digit growth for the whole industry is very high. So demand from smartphone or electronics still could be good in 2026. And we say, we always ask our sales team have to enjoy additional 10% revenue growth higher than industry growth. And just I mentioned, we expect electronics revenue growth rate could be 10% at least in 2026. And we have not allocated to any specific sector or application.
So next question comes from Kenny.
I have 2 questions. First off, I want to have a follow-up on the semiconductor equipment. Could you give us some more color on whether the entry barrier is relatively high compared with your current portfolio? And do you have any initial thoughts on how much bigger than total addressable market will be unlocked, [ thanks ] to this SPE development?
Firstly, pneumatic is a very mature industry and also for more than 100 years. And we don't have too many semi items. It doesn't mean we don't have such capability to develop and produce it just because we have so many easy money items have not been developed and launched in the past. So we prefer to do those easy money items first.
And second one, semi could be the last territory of our main competitors or main competitor. And in past, we don't want to attack their last territory. So we have not focused on semi items developed. But we believe we have been stronger enough and also follow China government policy, local production, local procurement. So we became more aggressive to develop semi items from late of last year. And we don't think it's difficult for our tech to develop and support semi customer's demand. So maybe from late 2026 or 2027, we have higher and higher semi revenue to support our business.
Appreciate it. I have a follow-up on the OpEx. I just noticed that in the fourth quarter in 2023 and 2024, you were having relatively higher R&D expenditure. I'm wondering if this will be a new pattern continuing in 2025 or 2026?
We spend what we should spend. So the higher R&D expenses in 2023 or '24, it doesn't mean 2025. We also have had higher R&D expenses still depends.
Our next question comes from KekYee.
This is KekYee from Principal. I'd like to go back to semi as well. Can you give us an idea like how big can semi be as a segment over the next few years? Can it be like as big as auto in 1 year down the road or 2 years down the road? That's my first question.
Okay. Basically, as we know, our biggest competitors in China, their semi revenue in China could be around RMB 2 billion to RMB 3 billion. And it's still too early to tell how much will Airtac can enjoy it. But basically, it's a new sector for Airtac. And based on past experience, we still can get shares from this sector in coming years.
Okay. My second segment is related to humanoid. I was just wondering because you're also developing linear guide, right? Do you have any -- have you engaged any companies on parts for humanoid from linear guide or pneumatic or what or what segment? I'm not sure. Do you have exposure there?
Firstly, pneumatic is for all the production activities to improve their automation. And maybe we still have limited revenue to support humanoid customers directly because the humanoid demand still could be pretty limited. And we not just have pneumatic linear guide. We also have developed electric actuator, which can support humanoid directly for years. And electric actuator, the main paths could be motor driver, linear guide ball screw switch and some frame to assembly as the set of electric actuator to support robotic arms or humanoid demand.
And we have had stepping motor, linear guide and sensor switch already and still in developing servo motor and driver. And we expect we could launch the set of electric actuator in 2028 or 2029. And once the demand of humanoid or electric actuator proved to be very high or before we launch the set of electric actuators or before we can predict the development of the server motor and driver, we still can buy the servo motor or driver from the suppliers and accompany linear guide ball screw switch to be the setup of the actuator to support market demand.
Next question comes from Jason.
My first question is about the gross profit margin. We see our gross profit margin is almost flat from the second quarter. And however, our revenue is seasonally decreased in third quarter. So I would like to know what's the driver to keep the gross margin in third quarter? And did we provide any sales discount in the third quarter to dilute the gross profit margin? That's my first question.
First one, we do plan production. So basically, the product we sold in third quarter, it doesn't mean we produce it in the third quarter. And second one, from 2016, '15, we have not stressed our gross margin numbers because we used to consider the market share gain, the specific customers we want to approach or get more procurement percentage from them. So many different factors will affect our pricing strategy or policies.
And also depends on the overall demand. And for sustained specific percentage of the utilization rate and enjoy better fixed cost leverage. We also have timely pricing policy to specific customers. So basically, we prefer to target on our quarterly OP margin rather to keep our gross margin.
So maybe you found our gross margin in 2014 could be around 55% and gross margin 55%, OP margin just around 27%, 28% every time. And we changed our sales rate or pricing rate because Airtac still is a growing company. We have different sales rate on different stage. So we prefer to have a higher shipment growth, revenue growth and enjoy better fixed cost leverage, enjoy a higher OP margin rather than to keep a very high gross margin, also can improve our market share in the market at the same time. So in past 3 to 4 years, our gross margin just around 40%, but we can keep our OP margin to be around 30%. So it's our sales' range -- it's our current sales range.
Okay. And my second question is about the revenue. We saw a really outstanding revenue in September, almost 30% year-to-year growth. So I'd like to double check, there's no any like postpone from the second quarter or any advanced shipment from maybe sequentially months if there's no situation, we can assume that our revenue in the fourth quarter, maybe we can achieve maybe high 10% year-to-year growth or almost 20% year-to-year growth in the fourth quarter?
You mean for Q4, Q1?
Yes, the fourth quarter in 2025, the Q4.
Q4, okay. Basically, pneumatic industry was entering recovery cycle from late of 2024. So it should be better and better from a demand, even there's still some synergy in pneumatic industry. The second quarter, it should be much better than the shipment what we did in the second quarter of 2025 caused by some customers that postponed their demand. And maybe from late of August or this September, some of such postponed demand began to deliver to customers. So not just for this September. October, even we have 9 days for the national holiday, but the daily shipment still much better than September in this October. So basically, we just can say postponed delivery it should be in September or October. But the industry recovery is still support better shipment in past 2 months and it still could be pretty good in next couple of months. Even it still could be low season for pneumatic for fourth quarter, Q4 of the year. So we expect the quarterly revenue of this fourth quarter, this Q4 could be flat compared to Q3. It's better than past experienced seasonality.
Next question comes from Jeremy.
I have just 2 quick questions. It's very, very good news to hear that you are being more optimistic as suggested by you raising your outlook for the full year. So I think that maybe this next question is a little bit maybe not timely, but looking forward, going forward, I'm just a little bit concerned because the pneumatic market in China has always been, I would say, rather like the oligopoly. So yourselves and the biggest player about 60% market share in China. So when you look at pneumatic versus other components in China, other components, you have seen very, very fierce pricing pressure and very, very fierce competition. But increasingly, as you are going into the field of your #1 competitors, is there a risk of this sector, pneumatic becoming much more competitive going forward? And is that going to impact profitability?
Basically, our biggest competitor is a very big company and good company. We cannot speak for that. But based on past 10 years years experience, even they still launched so many sales stretch want to against Airtac and start Airtac getting share from that. But so far, those stretch seems not successfully to against Airtac. And pneumatic still is a conservative industry, big player always will be bigger. And top 3 players in China, SMC, Airtac, Festo is just around 50% -- 50-plus percent market share totally in 15 years ago in China but have increased to be around 70%.
And Festo is a private company. They prefer to keep their margins rather to keep their market share. So the pricing leaders could be SMC and Airtac. But the last time SMC launched aggressive pricing is in 2014. And such pricing war just ascended around 3 quarters. And from late of 2020 -- so late 2014, they start cutting some price and raised price back. So from 2015 to this moment, have 3 to 4 times down cycle, but the pricing between Airtac, SMC in pneumatic market still could be rational reasonable. So basically, we think severe pricing competition, even pricing war in pneumatic market in coming years could be pretty low risk or the opportunity could be very limited, but it's the same war, we cannot speak for SMC.
I understand. Yes, I hope that the pneumatic market continues to grow so that the competition can remain quite benign. But I'm just a little bit concerned just because I looked at the inventory days outstanding at SMC and they have expanded a lot of capacity recently. So, I'm just worried if the demand disappoints going forward, there's some risk there. That's all.
My next question is, if you're going to get into newer fields, like, say, into semis, my understanding is that pneumatic is an industry whereby you want to keep the lead times quite low, quite short, like within 1 week, right? So, as you expand the number of [ quicker ] specifications products that you have, does that mean that you're going to have to invest much more in terms of working capital? So will your inventory days outstanding start to go up?
Basically, it won't because once we have better scale, we could have a higher efficiency to manage our inventory. Maybe you can find our inventory turnover days could be around 150 days in 2 years ago. And even we still continue to launch more new items, and we have decreased our inventory turnover days to be around 122, 124 days in the past couple of quarters. So more SKU, it doesn't mean we have to increase our inventory turnover days.
And once we track back to 10 years ago, in 2015, 2016 -- our inventory turnover days even could be 160 days, much longer than our current inventory turnover days. Even we have additional one or additional 100,000 new SKUs have been launched in past 10 years, but we still can decrease our inventory turnover days.
Yes, I understand. So it depends on the -- whether or not you can increase your revenue as fast as well is the answer.
Next question comes from Iris.
This is Iris from Deutsche Bank. I have actually a question which is more longer-term oriented on the return of investment, so the ROI that you have on the new products or the new categories that you are expanding into. And I mean, people have asked about semiconductors. So I want to ask about maybe the other areas. One is the linear guide, which is new, but not so new. And the other area is the electric actuators area.
So firstly, on the linear guide because you've mentioned that even if we increase the utilization to, say, to 80%, then the gross profit margin will be 40%, which should still be lower than the current group level. So do you think that maybe it is in the longer-term, a lower return business? And how do you think about it? Or should we more look at the operating margin perspective?
And then what is the operating margin that you foresee for your linear guide business in the longer-term once it reaches a more stable state?
And also related to the linear guide and how do you assess the competitive landscape of the linear guide business? Because you've mentioned before that when you entered the business, you thought the biggest competitor should be the other Taiwanese peer, but then you realized there might be -- they might not be like the best indicator for the market. And then we hear there are many local competitors also emerging who also claim to be of good quality for their products. So how do you think about the question is the ROI for the linear guide business on an operating margin perspective in the long-term? And also in relation to that, the competitive landscape for the linear guide business. And this is question number one.
Okay. Basically, 40% gross margin when we have 80% utilization rate just based on to ship operator working system. So when we have a higher retention rate, we still can transfer our operator working system from 2 shifts to 3 shifts. So 40% gross margin is pretty conservative numbers. And the business of Airtac is much lower than our expectation for 5 years. So we prefer not to give a very aggressive number or pretty good number to the market. It's too far away from the practice. But it doesn't mean we just can have 40% gross margin from linear guide.
And second, we use the same sales team and don't have to spend too much additional OpEx to sell linear guide. So 40% is still pretty good for our consolidated OP margin. And another reason why we have to develop more new business, linear guide, electrical controller, electric actuator because we just target on 35% pneumatic market share currently, maybe by 2030, we have such 35% market share in China. And it's been more effort to increase additional 1%, 2% pneumatic market share after we have 35%.
So basically, we prefer to have more new business, to have better fixed cost leverage because all of those new business, pneumatic linear guide, electrical controller, electric actuator, all of them use the same sales teams, same sales employees. And we cannot expect all of our business can enjoy such high gross margin pneumatic, high 40%, even 50%. And it's easier to develop the new business and high yield for Airtac to enjoy high revenue growth or higher revenue growth, higher operating income and it's good -- also it's good for our bottom-line.
And our new guide development stage, currently, we could have a better product quality, shorter lead time, lower pricing than Taiwanese peers. And we missed the best timing to enter a linear guide market, also missed customer expectation in 2020. So the sales progress was much lower -- slower than our expectation in the past 5 years. But our current target just wanted to improve our linear guide brand image.
So, we just compete with Taiwanese and Japanese peers. We have not competed with local China players. After we have a better brand image, then we can develop inferior product quality and lower our unit production cost to compete with local China players. And we can improve our retention rate consecutively to 80%, 90%, then we have better fixed cost leverage, also can decrease our higher-quality product pricing, lower our high-quality product pricing to compete with Taiwanese and Japanese peers, then we can transfer our operator working system from 2 shifts to 3 shift and enjoy better fixed cost leverage again.
So 40% gross margin, it doesn't mean 5 years later, 10 years later, we just could have 40% gross margin from linear guide. And gross margin number also depends on our pricing surge. Once we want to increase our linear guide market share faster, we can have a lower pricing -- aggressive pricing to speed up our share gain. And it's good for our revenue number, operating income and bottom-line. Even the GPM number or OPM number won't be improved to be very high, but it's good for our bottom-line. We still believe linear guide is a good business for Airtac.
Understand. Thank you for sharing that. And a very quick housekeeping question related to linear guide. Can we check how much revenue linear guide generated in the third quarter and in the first 9 months of the year?
Just around CNY 142 million in third quarter and around CNY 4 million in first 9 months.
Got it. My second question is also related to the return on investments. So similarly, this is related to the electric actuator business. So as you know, I mean, for electric actuators because it can be used for humanoid robots. So many local Chinese players, I mean, many of them, I'm sure you know that they are also now developing electric actuators used mainly for humanoid robots, but can be used for other areas as well. And also given that, as you've mentioned, you are developing the servo motors and the drives still, but then there are local Chinese players who have already developed the servo motor products. So can you maybe elaborate a bit more with us on what you think is the competitive advantage of Airtac in this business and why Airtac has chosen this as a kind of one of the new business areas to expand into?
Thank you. Basically, we could be an expert of mechanical parts, including pneumatic, linear guide, mechanical even electric actuator or parts of electric actuator. And we can -- we always can find some ways to achieve most competitive cost structure. And we just can say we could enjoy competitiveness of those items we're going to develop. And it's just like 20 years ago, nobody believed Airtac can compete with SMC, just such big pneumatic players. And pneumatic component is much complicated than linear guide, electric actuator or electrical controller. So basically, we believe we can success in this sector.
Okay. Thank you, Ivan, for sharing with us. So I think we are running out of time. So we'll need to end the call here. Thank you, everyone, participating. Thank you, Ivan. And again, we appreciate your support for UBS in the Extel survey. Have a good day. Thank you. Let's conclude the call here. Thank you.
Okay. Thank you, Ally. Thank you, everybody, and have a good day. Thank you.
Airtac International Group — Q3 2025 Earnings Call
📊 Quarter at a Glance
- Revenue: RMB 1,971m (+20% YoY)
- Gross Margin: 46.04%
- Operating Margin: 29.84%
- Net Profit: RMB 502m (+30% YoY)
- EPS: Q3 2025: TWD 10.5; 9M 2025: TWD 30.36
🎯 What Management Says
- Growth & tariffs: Tariffs' impact is fading; Airtac aims to gain market share and drive revenue growth, targeting ~10% above industry growth through new products and stronger brand.
- Portfolio expansion: 2026 should see electronics revenue grow ~10%; battery demand double-digit; semiconductors to contribute from late 2026/2027; cross-selling across pneumatic and linear guide; capex and dividends aligned with growth.
- Capital allocation: 2025 capex around TWD 2–3 billion; dividend payout rising toward 60% by 2026; sustained free cash flow and enhanced shareholder returns.
🔭 Outlook & Guidance
2025 revenue growth raised to mid-teens in renminbi terms; pneumatic demand to be flat to low single-digit in 2025, improving in 2026. Electronics expected ~10% growth in 2026; auto remains double-digit. Capex ~TWD 2–3 billion in 2025; dividend payout to ~60% by 2026. Risks: tariffs, demand cadence.
❓ Analyst Q&A
- Linear guide ROI: What is the long-run operating margin for linear guide as utilization climbs, and is 40% gross margin sustainable?
- Semi ROI & scale: What is the entry barrier, and how big could semiconductors become for Airtac in coming years?
- Pricing & market share: Where will Airtac gain share, and is pricing relief selective to key customers or broader?
⚡ Bottom Line
Airtac delivers solid Q3 momentum with margin expansion and raised 2025 guidance. The strategy centers on a recovering pneumatic cycle, broader product breadth (including linear guide and electric actuators), and selective expansion into semiconductors. With capex guidance and higher dividend returns, the stock offers growth with improved shareholder returns.
Financial data from Airtac International Group
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Mar '26 |
+/-
%
|
||
| Revenue | 36,247 36,247 |
15%
15%
100%
|
|
| - Direct Costs | 19,236 19,236 |
13%
13%
53%
|
|
| Gross Profit | 17,012 17,012 |
17%
17%
47%
|
|
| - Selling and Administrative Expenses | 4,520 4,520 |
5%
5%
12%
|
|
| - Research and Development Expense | 1,151 1,151 |
8%
8%
3%
|
|
| EBITDA | 13,961 13,961 |
19%
19%
39%
|
|
| - Depreciation and Amortization | 2,620 2,620 |
1%
1%
7%
|
|
| EBIT (Operating Income) EBIT | 11,340 11,340 |
24%
24%
31%
|
|
| Net Profit | 9,135 9,135 |
18%
18%
25%
|
|
In millions TWD.
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Airtac International Group Stock News
Company Profile
Airtac International Group engages in the research, development, manufacture, dealership, and retail of pneumatic equipment. The company is headquartered in Taipei City, Taipei. The company went IPO on 2010-12-13. The firm's main products include standard cylinders, mini cylinders, compact cylinders, multi-position fixed cylinders, electric control valves, air control valves, human control valves, machine control valves and other valves, fluid control valves, triplexes, duplexes, pressure regulating filters, oil mist separators, filters, electronic pressure sensors, electronic sensors, reed sensors, and oil pressure buffers. The firm mainly sells its products in mainland China and Taiwan.
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| Head office | Cayman Islands |
| Website | www.airtac.com |


