Analysis Report on the Sustained Decline in Gross Margin of Lijing Innovation (002876.SZ)
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Based on the latest financial data, Lijing Innovation’s gross margin indeed shows a
| Report Period | Gross Margin | Cost of Sales Ratio | Quarterly Change |
|---|---|---|---|
| Q4 2024 | 20.83% | 79.17% | +4.52pp |
| Q1 2025 | 17.72% | 82.28% | -3.11pp |
| Q2 2025 | 15.52% | 84.48% | -2.20pp |
| Q3 2025 | 12.55% | 87.45% | -2.97pp |
- The decline in gross margin has accelerated in the last two quarters, with a nearly 3-percentage-point drop in Q3 alone
- The cost of sales ratio has climbed from 79.17% to 87.45%, indicating a significant increase in cost pressure[0]
| Fiscal Year | Gross Margin | Year-on-Year Change |
|---|---|---|
| 2021 | 24.99% | - |
| 2022 | 21.42% | -3.57pp |
| 2023 | 13.25% | -8.17pp |
| 2024 | 15.47% | +2.22pp |
Gross margin rebounded briefly in 2024 but resumed its downward trend in 2025[0].
| Quarterly Comparison | Year-on-Year Change |
|---|---|
| Q3 2025 vs Q3 2024 | -3.76pp |
| Q2 2025 vs Q2 2024 | +1.10pp |
| Q1 2025 vs Q1 2024 | +0.69pp |
| Indicator | Q3 2025 | Year-on-Year Change |
|---|---|---|
| Operating Revenue | $958 million | +38.8% |
| Gross Profit | $120 million | +6.9% |
| Net Profit | $7 million | -24.5% |
| Report Period | Net Profit/Gross Profit Ratio |
|---|---|
| Q3 2024 | 8.3% |
| Q4 2024 | 2.2% |
| Q1 2025 | 20.8% |
| Q2 2025 | 6.1% |
| Q3 2025 | 5.9% |
The efficiency of converting gross profit to net profit remains sluggish, with an average conversion rate of only
| Report Period | Operating Profit Margin |
|---|---|
| Q4 2024 | -1.40% |
| Q1 2025 | 4.48% |
| Q2 2025 | 1.54% |
| Q3 2025 | 1.60% |
Operating profit margin has long been at a low level, reaching only 1.60% in Q3 2025, indicating that the company’s operational efficiency needs improvement[0].
| Company | 2024 Gross Margin | Industry Ranking |
|---|---|---|
| Lijing Innovation (002876.SZ) | 15.47% |
5/5 |
| Average of Peer Companies | 11.36% | - |
Despite the recent decline, Lijing Innovation’s current gross margin is still
The optoelectronics/consumer electronics industry generally faces:
- Fluctuations in downstream market demand: Weak consumer electronics demand
- Fluctuations in raw material prices: Rising costs of chips and lens components
- Intensified competition: Ongoing price wars in the industry
- Overcapacity: Pressure from new production capacity release
- Continuous increase in cost of sales ratio: Rising from 79.17% to 87.45%, indicating weakened product cost control capability
- Accelerated quarterly decline in gross margin: Sharp consecutive drops in Q2 and Q3
- Decline in absolute gross profit: Falling from $149 million in Q4 2024 to $120 million in Q3 2025
- Volatile expense ratio: Operating expense ratio fluctuates sharply between 10% and 22%
- Revenue scale effect: With a 38.8% year-on-year revenue growth, scale effects are expected to gradually emerge
- Conservative financial strategy: Financial analysis shows the company adopts conservative accounting policies; the high depreciation/capital expenditure ratio indicates large asset investments, and reduced depreciation in the future may improve gross margin[0]
- Room for cash flow improvement: Free cash flow is expected to improve as revenue grows
| Valuation Scenario | Intrinsic Value | Vs. Current Price |
|---|---|---|
| Conservative Scenario | $79.85 | +228.1% |
| Neutral Scenario | $106.22 | +336.4% |
| Optimistic Scenario | $173.31 | +612.0% |
| Weighted Average | $119.79 | +392.2% |
-
Gross margin is indeed deteriorating: Falling from 20.83% to 12.55%, with the cost of sales ratio increasing by 8.28 percentage points, indicating weakened cost control capability
-
Multiple causes for deterioration:
- Pressure from rising raw material costs
- Changes in product structure (possible increase in the proportion of low-priced products)
- Pricing pressure from intensified industry competition
-
No need for excessive pessimism:
- Gross margin is still 4 percentage points higher than the industry average
- Rapid growth in revenue scale lays a foundation for future improvement
- Conservative financial strategy is conducive to long-term healthy development
-
Key Indicators to Monitor:
- Whether gross margin can stabilize in Q4 2025
- Whether revenue growth can continue to offset cost pressure
- Whether new product launches can improve product structure
[0] Jinling API Data - Financial Analysis, DCF Valuation, and Industry Comparison Data of Lijing Innovation (002876.SZ)
Insights are generated using AI models and historical data for informational purposes only. They do not constitute investment advice or recommendations. Past performance is not indicative of future results.
About us: Ginlix AI is the AI Investment Copilot powered by real data, bridging advanced AI with professional financial databases to provide verifiable, truth-based answers. Please use the chat box below to ask any financial question.