What happened
Hanxin Technology (920092) reported 2026 interim results on the evening of Aug 28, with revenue of 48.4865 million yuan, down 24.06% year-on-year. The net loss attributable to shareholders was 14.9024 million yuan, narrowing by 16.84% from a year earlier but still leaving the company in the red after it turned to a loss in 2025.
The company attributed the revenue decline mainly to its traditional smart city business. Digital city solutions and construction revenue came to 45.4842 million yuan, accounting for 93.81% of total revenue, but fell 23.04% year-on-year. Industrial AI revenue dropped sharply by 40.88% to 2.7914 million yuan, as large orders landed later than expected amid intensifying competition.
Regionally, revenue from Yantai, the company's home base, plunged 40.52% to 34.1531 million yuan, while revenue outside Yantai soared 123.19% to 14.3334 million yuan. Management cited slower local project bidding and delivery, plus a deliberate decision to abandon high-risk projects.
Why it matters
The results highlight Hanxin's heavy dependence on smart city construction, which makes up nearly all of its revenue and is sensitive to customer investment cycles. As government, education and medical clients delay projects, the company's core revenue engine keeps shrinking.
While the industrial AI business saw a big revenue drop, its gross margin jumped to 36.95%, suggesting a strategic pivot away from low-margin system integration work. However, the company's overall gross margin still fell from 24.52% to 19.71%, indicating overall profitability remains under pressure.
Litigation and asset restrictions are an emerging concern: cumulative litigation and arbitration amounts reached 36.2584 million yuan, or 10.68% of net equity, and restricted assets totaled 64.238 million yuan, equivalent to 10.08% of total assets.
Key facts
Revenue fell 24.06% year-on-year to 48.4865 million yuan in the first half of 2026, while net loss narrowed 16.84% to 14.9024 million yuan.
Digital city solutions revenue dropped 23.04% to 45.4842 million yuan, accounting for 93.81% of total revenue.
Industrial AI revenue declined 40.88% to 2.7914 million yuan, but its gross margin rose 15.68 percentage points to 36.95%.
The company obtained a 61.2 million yuan project loan from the Agricultural Development Bank of China's Yantai branch with a 10-year term and 3% annual interest rate.
As of the report's disclosure date, orders on hand were about 100 million yuan, with follow-up orders of about 680 million yuan.
What to watch next
Whether the company can convert its roughly 100 million yuan of orders on hand and 680 million yuan of follow-up orders into revenue, especially in the industrial AI segment where it is focusing on higher-margin projects.
The outcome of ongoing litigation, with in-trial cases amounting to 21.6056 million yuan and 2.3905 million yuan in cash frozen due to lawsuits, could affect liquidity and balance-sheet flexibility.
Cost control will be key: administrative expenses rose to 28.11% of revenue while sales and R&D spending were cut, a trade-off that may influence the company's ability to develop new growth areas such as unmanned commercial vehicles and embodied AI.