MORIMATSU INTL (02155) Shows Promise with New Orders Increasing Over 95% Amid Discrepancies Between Revenue and Net Profit

On the evening of August 27, MORIMATSU INTL (02155) released its half-year performance announcement. During the reporting period, the company achieved sales revenue of 2.573 billion yuan, with a net profit loss of 157 million yuan; the total orders on hand amounted to 15.522 billion yuan, marking a year-on-year increase of 46.9%. The company stated that due to the rising supply chain costs resulting from geopolitical turmoil and delays in overseas project progress, some orders could not be delivered on time, and revenue could not be recognized; coupled with foreign exchange losses brought by the appreciation of the yuan and the upfront personnel costs incurred in anticipation of expected expansion, this collectively exerted short-term pressure on current profitability. It is noteworthy that during the reporting period, the company signed new orders worth 11.721 billion yuan, a year-on-year increase of 95.5%, which rose against the backdrop of profitable pressure. This not only confirms that demand has not disappeared but also that to ensure the smooth delivery of this batch of incremental orders, the company expanded its team in advance. The related upfront costs are a strategic investment anticipated during the expansion of demand, showing both necessity and foresight. The "Stable Alpha + Dynamic Beta" strategy reflects a departure from traditional manufacturing cycles. Starting with pressure equipment, MORIMATSU INTL has evolved over more than thirty years from single-unit equipment to complete modular factories, with its business spanning multiple industries including pharmaceuticals, biopharmaceuticals, green energy, daily chemicals, and energy materials. In September 2025, the company acquired Switzerland's Bioengineering AG to fill the critical gap in bioreactors. To truly understand MORIMATSU, one must set aside the traditional measuring stick of manufacturing. The cyclical narrative of traditional manufacturing has long been solidified: expand production in boom times, engage in price wars and clear stock in downturns, then wait for the next cycle. Profit fluctuations lead stock prices to ride the waves. However, every round of expansion in cyclical stocks involves the same type of capacity, leading sooner or later to an oversupply. MORIMATSU has chosen another pathcontinuously entering new industries and regions to expand its capability boundaries, finding incremental growth beyond existing competition. The company refers to this as the "Stable Alpha + Dynamic Beta" strategy. The results of this strategy are evident in its income structure. From 2023 to 2025, the company's operating revenue is projected to decline from 7.36 billion yuan to 6.955 billion yuan, whereas the proportion of overseas revenue has surged from 47.20% to 77.15%. The extremely high ratio of overseas income has shifted MORIMATSU's performance volatility from following the tides of a single domestic industry to being influenced by a global array of cyclesessentially a transition period of globalization and cross-industry demand rotation. In today's global environment, geopolitical competition, exchange rate fluctuations, trade barriers, and differences in compliance are reshaping the competitive landscape of high-end manufacturing. For multinational project delivery companies like MORIMATSU, expanding overseas is no longer merely "market expansion"; it is a comprehensive test of supply chain resilience, compliance across jurisdictions, and operations across cultures. The more prevalent this situation becomes, the more scarce structural advantages of "multiple industries + multiple regions" appear. The valuation logic for such companies has also changed. Cyclical stocks are anchored to PB, reset costs, and cyclical bottoms, while MORIMATSU is pursuing a "non-cyclical premium." The market will eventually reprice it based on its resilience across cycles and industries. Orders are increasing, but revenue is flatwhy is MORIMATSU's advancement delayed? Currently, more than 70% of MORIMATSU's revenue comes from overseas. The pressure on performance does not lie in the direction but rather in the rhythm of recognitiongeopolitical tensions in the Middle East have led to delayed deliveries and project postponements, while the appreciation of the yuan has resulted in foreign exchange losses, causing the recognition of income and profit to be postponed accordingly. Simultaneously, to prepare for expected growth in enterprise scale, the number of employees has increased rapidly in the last performance cycle, momentarily narrowing profit margins. These are all "rhythm" issues, not "demand disappearance": delivery delays do not equal order cancellations, and project postponements do not equal customer losses. MORIMATSU's overseas approach is one of "modularization and standardization," converting complex on-site engineering into highly controlled production within factories, minimizing overseas delivery times and avoiding the uncontrollable risks of on-site construction, thereby establishing a solid delivery assurance for global customers. The improvement measures disclosed in MORIMATSU's profit warning point in the same directionoptimizing the global delivery and service network, accelerating the shift towards high-value-added sectors such as AI infrastructure, sustainable energy, and life sciences, and proactively managing currency risks through forward foreign exchange contracts, currency hedging, and even exploring RMB settlement. Three samples of Fuyao, Techtronic, and WuXi AppTec share the same qualities. The paths of Fuyao Glass Industry Group, TECHTRONIC IND, and WuXi AppTec provide a reference point for understanding MORIMATSU. Fuyaos core is localized capacity + product upgrades. In 2014, Fuyao invested approximately $768 million to acquire its base in Dayton, Ohio, USA, which began production in 2016, turned profitable in 2017, and generated $148 million in profit in 2018localized capacity saved on cross-border transport and tariff costs while also avoiding the immediate impacts of the trade war; simultaneously, high-value products like HUD glass and panoramic sunroofs have gradually increased their share, achieving gross margins 10 to 15 percentage points higher than ordinary glass, thus stabilizing the profit baseline amidst rising raw material prices. Over the past decade, Fuyaos operating revenue grew from 16.62 billion yuan in 2016 to 45.79 billion yuan in 2025, while net profit attributable to the parent company increased from 3.14 billion yuan to 9.31 billion yuan, nearly tripling in both cases. However, the past decade has not been smooth sailing: in 2019, Fuyao's net profit attributable to the parent company declined by 29.7% year-on-year, which the market attributed to trade frictions. However, if we exclude the integration losses from its German subsidiary, foreign exchange gains and losses, litigation compensations, and previous high baselinesnon-recurring factorsthe total profit only decreased by 7.45% year-on-year, while the sustained operating cash flow exceeding 5 billion yuan during the same period corroborates that its genuine financial vitality has never wavered. To assess a business's quality, one must look beyond reporting noise and focus on the continuity of cash flow and capacity upgrades, which is more meaningful than fixating on annual fluctuations in the profit statement. TECHTRONIC IND adopts a "global capacity + brand lock-in" approach, with its production distributed across China, Vietnam, Mexico, and the USA; its dual-brand system sees Milwaukee targeting the professional market while the M12 and M18 lithium battery platforms are compatible with hundreds of tools, making it extremely costly for contractors to switch ecosystems. Ryobi targets the consumer DIY market, creating a complementary structure of high and low product ranges. In 2021, faced with demand expansion and global supply chain disturbances, Techtronic proactively increased inventory to offset transport cycle delays and raw material cost pressures. However, excessive channel inventory turned into a pressure test after expansion. From 2022 to 2023, North American channels entered a destocking phase, and Techtronic's overall revenue experienced nearly zero growth, with net profit declining by 9.4% in 2023. However, upon disaggregation, Milwaukee still grew by 21.8% in local currency in 2022; the real drag came from a 25.6% decline in the floor care business, stemming from the dual impact of retreating post-pandemic consumer demand and retailers cutting inventory. The cyclical misalignments across categories thus partially hedged against downward risks. Even more convincing is the cash flow. In 2023, the company reduced its inventory by $987 million, while free cash flow surged from $329 million to $1.281 billion, and further to $1.591 billion in 2024; by 2025, gross margins are expected to climb to 41.2%, with year-end turning to net cash of about $700 million. The year of the biggest destocking corresponded to the year of the greatest cash improvement. To assess a companys true situation, one must consider category structures and cash flows rather than just total revenue growth rates. WuXi AppTec exemplifies "regulatory moats + customer stickiness." In January 2024, the U.S. draft "Biosecurity Act" specifically mentioned WuXi AppTec, resulting in a more than 30% drop in the companys Hong Kong stock the next day. However, the compromised version of the act that was eventually passedprohibiting only federal funding flows and including a five-year transition periodunderlines the objective dependency of U.S. innovative drug development on it concerning efficiency and cost. On a fundamental level, WuXi AppTec's revenue for 2024 is projected to be 39.24 billion yuan, a slight decrease of 2.7% year-on-year; excluding COVID-related projects, it has still grown by 5.2%. Revenue is expected to return to 45.46 billion yuan in 2025, with a year-on-year growth of 15.8%. In June 2026, the U.S. Department of Defense added it to the "1260H List," prompting WuXi AppTec to file a lawsuit. The market reacted not with panic but viewed it as the "shoe dropping": on August 7, the U.S. District Court in the District of Columbia approved its preliminary injunction motion, during which the 1260H designation was deemed unenforceable; that same week, WuXi AppTec delivered its strongest interim report everfirst half revenue of 28.897 billion yuan, a year-on-year increase of 38.93%, with net profit attributable to the parent company at 11.08 billion yuan, up 29.43% year-on-year, and a complete upward revision of the annual performance guidance. By mid-August, its A-shares and H-shares both hit historical highs. Even at the peak of political labeling, the demand for core business did not vanish. Geopolitical pressures can temporarily compress stock prices, but they cannot suppress commercial irreplaceability. These three cases point to the same conclusion: demand is layered, customers are bound, and supply has barriers. MORIMATSU embodies all these traits and is intricately connected in the upstream and downstream of these three cases. Four gene traits uphold the "non-cyclical premium." When placing Fuyao, Techtronic, WuXi AppTec, and MORIMATSU together, four commonalities can be distilled. First, multi-industry coverage acts as a risk hedge. MORIMATSU's downstream business spans pharmaceuticals, biopharmaceuticals, green energy, daily chemicals, and energy materials; Fuyao and Techtronics capacities and revenues are similarly distributed across multiple industries and countries, mitigating the chill of single industries and countries through a combined buffer. This offers a primary layer of insurance against significant downturns. Second, robust customer ties and deep barriers. Techtronic's battery platforms, WuXi's regulatory certifications, Fuyao's automotive supply chain, and MORIMATSU's modular delivery all involve high switching costs for long-term relationships; alongside their respective technological accumulations, it is challenging for newcomers to replicate. Stagnant periods do not equate to "no growth" but indicate a build-up of ammunition for the next level. Third, orders drive revenue rather than spot sales. Cyclical stocks sell on the spot with prices reacting to market conditions; step-based companies sell orders with hand-held orders smoothing income fluctuations over one to two years. MORIMATSU's orders on hand amounting to 15.522 billion yuan, Fuyao's automotive supply contracts, Techtronic's channel orders, and WuXi's long-term service agreements all serve as proofs of "future income already locked in." Fourth, management focuses on fundamentals. Fuyao's Cao Dewang, Techtronic's long-term operations, and MORIMATSU's adherence to the Stable Alpha + Dynamic Beta strategy all reflect a commitment to capacity, customers, and technology. When stock prices are overlooked during stagnant periods, it is precisely when management is diligently laying the groundwork for the next level. The market tends to view the manufacturing sector through a cyclical lens, assigning them price-earnings ratios below 10. However, step-based companies always have a supportive foundationindustry diversification, orders on hand, and customer lock-in ensure profits have a safety net. MORIMATSU has remained profitable and continued to secure new orders during its two years of stagnation. In reality, a flat period is not a recession but a period of accumulation: many actions are not visible on the financial statements but are subtly pointing towards the next level. Each ascent is not merely about earning slightly more in the original industry but about breaking through to new industry ceilings. Some institutional figures believe that this type of companys valuation should not be measured by "current step profits" but rather priced based on "capabilities for the next step." Returning to the initial set of diverging data: orders are rising, profits are under pressure. However, when viewed together with the structure of orders and revenue, this is actually a company transitioning to a new stepthe recognition of revenue from the old step is tapering, while the orders from the new step have already piled up at the doorstep. The key to judgment lies not in the positive or negative of current quarter profits, but in three questions: Are orders still increasing? Are customers still retained? Are new industries and regions still expanding? If the answer is "yes" to all, this divergence is not a risk but a signal for the next step. MORIMATSU INTL stands at the crossroad of deep water overseas steps.