NewTimeSpace | Slight Revenue Growth, Net Profit Drops Over 20%: AUX Electric (02580.HK) Faces Cold Shoulder from Capital Market

Revenue has seen a marginal increase, but net profit has plummeted. AUX Electric (02580.HK), known in the industry as the "Price Butcher," appears to be losing ground in the intensifying price war.

After years of effort, AUX Electric finally listed on the Hong Kong Stock Exchange, yet it has failed to gain the favor of the capital market, with its share price breaking below the offer price on its first day of trading. As of the close on April 2, 2026, the company was quoted at HK$9.53, a decline of over 40% from its IPO price of HK$17.42, with its market capitalization shrinking to HK$15.14 billion.

Recently, AUX Electric disclosed its first financial report since listing. While revenue surpassed the RMB 30 billion milestone, net profit fell by more than 20%.

Slight Revenue Growth, Net Profit Down Over 20%

On March 27, 2026, AUX Electric released its 2025 annual report. During the reporting period, the company achieved total revenue of RMB 30.049 billion, a year-on-year increase of 0.97%. However, net profit attributable to the parent company was RMB 2.235 billion, a year-on-year decrease of 23.2%. The company’s 2025 distribution plan includes a dividend of RMB 1.06 per share.

NewTimeSpace understands that AUX Electric was founded in 1994 and is headquartered in the Yinzhou District of Ningbo, Zhejiang Province. The company's primary business includes the design, R&D, production, sales, and service of household and central air conditioning systems.

Previous financial data shows that from 2022 to 2024, AUX Electric’s revenue was RMB 19.528 billion, RMB 24.832 billion, and RMB 29.759 billion, respectively, while net profit attributable to the parent was RMB 1.442 billion, RMB 2.487 billion, and RMB 2.91 billion.

According to the 2025 annual report, within its revenue streams, household air conditioning (AC) income was RMB 26.235 billion (+1.3% YoY), while central AC income reached RMB 3.285 billion (+1.9% YoY).

By brand, the AUX brand generated RMB 15.914 billion (+2.5%), the Huasuan brand generated RMB 829 million (a sharp decline of 39.0%), and the new brand AUFIT contributed RMB 996 million.

Geographically, revenue from Mainland China was RMB 15.308 billion (+1.5%), while Asia (excluding Mainland China) contributed RMB 8.208 billion (+11.8%). Conversely, North America saw a steep drop of 30.7% to RMB 1.452 billion, and Europe decreased by 6.3% to RMB 2.835 billion.

In terms of profitability, both gross profit margin (GPM) and net profit margin (NPM) have declined for two consecutive years, indicating significant pressure. Data shows that AUX Electric’s GPM fell from 21.8% in 2023 to 21.0% in 2024, and further to 18.8% in 2025. From 2023 to 2025, its NPM was 10.0%, 9.78%, and 7.44%, respectively.

The company attributed these declines to intense market competition, rising raw material prices, and high inventory levels in certain regions.

Furthermore, selling and distribution expenses increased by RMB 326 million to RMB 1.603 billion, a year-on-year increase of 25.5%, with its percentage of total revenue rising from 4.3% to 5.3%. This increase was primarily due to business expansion, costs associated with new overseas sales offices, and increased marketing investment.

However, the significant declines in North America and Europe have dragged down the company's overall performance. AUX Electric has long been labeled with a "low-price strategy," resulting in inherently thin profit margins. Its recent GPM is considerably lower than that of industry giants like Gree (29.43%), Haier (27.8%), and Midea (26.42%).

Stagnant Industry Fundamentals and Rising Raw Material Costs

NewTimeSpace notes that domestic household AC revenue growth slowed in 2025, showing signs of exhaustion. In the first half of 2025, year-on-year growth was only 5.8%, while central AC market capacity dropped by 17.1%, with the home improvement retail segment plunging by 20%.

With the downturn in the real estate market and a sharp reduction in new home deliveries impacting demand, the AC market has entered a "stock game" phase. The market shares of the "Big Three"—Midea, Gree, and Haier—continue to climb, making the environment for AUX increasingly hostile.

Data shows that AUX Electric’s online market share was 7.35% (ranked 5th) in 2024, but it fell to 6.55% in the first half of 2025, with its ranking dropping to 7th.

The company’s "price-for-volume" strategy is facing severe challenges; its price advantage is no longer distinct as consumers shift toward new players like Xiaomi and Hualing, which offer perceived higher cost-efficiency.

Additionally, rising costs are further compressing the company’s profit margins.

Industry-wide raw material prices have risen significantly, with copper prices increasing by 34.3% over the year. The copper cost for a single 1.5HP AC unit increased by approximately RMB 120–240. Given that copper accounts for about 30% of total AC costs, this has directly pushed up manufacturing expenses. Furthermore, the prices of refrigerants R32 and R410A skyrocketed by 61.9% and 40.6%, respectively, adding over RMB 30 to the cost of each unit.

Technologically, AUX has failed to implement "aluminum-for-copper" substitution, and it lacks the scale to effectively hedge costs through bargaining power. In March 2026, AUX announced a 6%-10% price hike across its entire central AC product line in an attempt to digest cost pressures and repair eroded margins.

Capital Market Apathy: The Misalignment Between IPO Valuation and Reality

In the capital market, AUX Electric’s stock performance has remained under pressure since its debut. On September 2, 2025, the company officially listed in Hong Kong at an offer price of HK$17.42, but immediately fell below that price during intraday trading.

Since then, the share price has fluctuated downward. As of the close on April 2, the price was HK$9.53 per share, a cumulative decline of 45.29% from its IPO price. Its total market value has evaporated by over HK$10 billion, dropping from an initial HK$27.6 billion to HK$15.14 billion.

Regarding earnings forecasts, Huatai Research has lowered its profit predictions for AUX Electric for 2026–2027 due to rising raw material prices and the slow pace of terminal demand recovery. It now estimates net profits for 2026–2028 to be RMB 2.412 billion, RMB 2.654 billion, and RMB 2.917 billion, respectively.

Comparing institutional expectations before and after listing: before the IPO (October 2025), Huatai Securities predicted a 2025 net profit of RMB 3.167 billion; Haitong International (November 2025) predicted an EPS of RMB 1.96 with a corresponding PE ratio of approximately 10x.

AUX Electric’s actual 2025 performance of RMB 2.235 billion fell far short of these forecasts. This missed expectation directly led to institutional rating downgrades, which may be a primary driver of the sustained share price decline.

Referring to the average valuation of comparable companies, Huatai Research currently gives AUX a target PE of 7x for 2026—a downward revision from previous valuations—noting a significant gap between second-tier white goods brands and industry leaders.

Furthermore, the lock-up periods for cornerstone investors and the controlling shareholder, the family of Zheng Jianjiang, are set to expire in March and September 2026, respectively. If fundamentals do not show significant improvement by then, the pressure from these unlocked shares may further intensify selling.

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