When a power equipment company begins to reap easy gains effortlessly through wealth management.

The real test for the company lies in whether it can convert its ample cash reserves into lasting impetus for technology R&D and market expansion, and reshape the competitive moat of its core business amid the industrial transformation of the new power system construction.

Xinlian Electronics, which once reaped easy gains from the dividends of power construction, has failed to keep up with the new tracks while losing ground in its old business, landing in a very awkward situation.

Recently, Xinlian Electronics (002546.SZ) released its 2026 interim performance report. During the reporting period, it achieved an operating revenue of 408 million yuan, a year-on-year increase of 8.25%; net profit attributable to shareholders reached 453 million yuan, a year-on-year increase of 140.95%; non-recurring profit and loss deducted net profit attributable to shareholders stood at 71.7 million yuan, a year-on-year decrease of 10.91%.

Behind this seemingly impressive performance report, a vigilance-inducing truth is hidden upon closer inspection: the sharp surge in the company's net profit attributable to shareholders mainly comes from the investment income from wealth management products (about 185 million yuan) and the fair value change income of trading financial assets (about 252 million yuan), the sum of which accounts for more than 84% of the total net profit. Such income is one-off, non-sustainable non-operating revenue.

What does this mean? The company seems to be using high wealth management returns to cover up the weak growth of its core business. However, the wealth management market is an unknown profit source. If there are fluctuations in the financial market or the scale of wealth management shrinks, the net profit may drop significantly in the future.

Why is this happening?

01 Core power product business: revenue drops instead of rising

To understand the real situation behind this financial report, we must first figure out the background of Xinlian Electronics.

As one of the earliest domestic enterprises to enter the power consumption information collection field, Xinlian Electronics caught the golden window of smart grid construction.

Back in the 1990s, domestic power consumption data collection was almost entirely done through manual meter reading, which was extremely inefficient and had huge errors.

Starting its business in Nanjing, Xinlian Electronics cut into the market from electric meter accessories, gradually mastered the full-chain software and hardware technologies of the power consumption information collection system, and became a leader in this track.

After landing on the capital market in 2011, it happened to step into the dividend period of State Grid's "full collection and full coverage" construction.

That was the golden decade for Xinlian Electronics: tens of millions of terminal orders kept pouring in, its products were deployed in the power grid systems of more than 20 provinces and municipalities across the country, its market share steadily ranked in the first echelon of the industry, and it firmly stood at the forefront of the track.

At that time, Xinlian Electronics made huge profits relying on its core business, with cumulative cash dividends exceeding 1.1 billion yuan after listing, making it a well-known "big dividend payer" in the A-share market.

After 2023, as the large-scale infrastructure boom of the power grid faded, the power consumption information collection market completely shifted from incremental construction to stock iteration.

According to industry information, the centralized bidding scale of State Grid has shrunk year after year. The market pie has become smaller, but more players are competing for it. To win orders, the industry launched a price war that directly pushed profits to the extreme.

In such fierce competition, Xinlian Electronics' main business has also been significantly impacted. After sorting out the financial reports of the past two and a half years, the revenue of Xinlian Electronics' core power product business shows a trend of "rising first then falling, with the narrowing of the decline". It rose to 728 million yuan in 2024 driven by the expanded State Grid bidding volume, fell back to 656 million yuan in 2025 due to the slowdown of bidding rhythm and intensified competition, down 9.79% year-on-year, and recorded 356 million yuan in the first half of 2026, down 0.86% year-on-year, which has not yet returned to positive growth.

02 "Alternative Breakthrough" under the Pressure of Core Business

Against the backdrop of weak revenue growth of core power products, Xinlian Electronics, which holds abundant monetary funds, took a different path to find profit points.

The company invested huge amounts of idle funds in bank wealth management, trading financial assets and other categories, and obtained returns through robust financial investment to hedge the performance pressure caused by the slowdown of core business growth.

Judging from the financial report data, this strategy has indeed achieved extremely brilliant book results in the short term. In the first half of 2026, the company's investment income surged by 346.18% year-on-year, and non-recurring gains and losses contributed a total of 381 million yuan, which directly pushed the net profit attributable to shareholders to a high of 453 million yuan, with a year-on-year increase of 140.95%, far exceeding the market's expectation of profit performance.

However, behind this "beautiful" performance report, many hidden worries have also emerged synchronously. To obtain higher investment returns, the company has significantly increased the allocation scale of wealth management products, which directly led to a 45.63% year-on-year decrease in monetary funds, and a large amount of liquidity is deposited in financial assets.

Accompanied by this, the company's accounts receivable increased by 59.93% year-on-year, credit impairment losses surged by 1096%, inventory increased by 79.50% year-on-year, and the net cash flow from operating activities plummeted from a positive net inflow of 32.8343 million yuan in the same period of the previous year to -35.3091 million yuan, down 207.54% year-on-year.

These data all point to one fact: the occupation of funds at the core business level continues to intensify, the operating hematopoietic capacity continues to weaken, and the company's profit structure has completely "changed its flavor".

03 How to Layout the Second Growth Curve Is Worth Pondering

As a leading enterprise in the power equipment sector, Xinlian Electronics holds tens of millions of real-time power consumption data of terminal users, which is the core underlying asset for building new business forms such as virtual power plants and load aggregation regulation.

At the same time, after 30 years of deep cultivation in the power consumption side market, the company has a power grid service network and customer relationships covering major regions across the country, with extremely high channel barriers. In addition, it has hundreds of millions of yuan of cash reserves and trading financial assets on its books all year round, with sufficient financial fault tolerance space. It can be said that it is one of the enterprises in this track that are most qualified to complete the layout of the second growth curve.

At present, the construction of the new power system is speeding up in an all-round way, and emerging tracks such as distribution network intelligent transformation, distributed photovoltaic grid-connected monitoring, industrial and commercial user-side integrated energy services, and virtual power plant aggregated scheduling are in the golden window on the eve of explosion, with huge market space.

But regrettably, judging from the strategic trends in this interim report, the revenue of the data service business only accounts for 2.04%, and the transformation progress is far slower than market expectations. The abundant cash has not been invested in new tracks to lay out in advance to cope with transformation risks, but relies on wealth management to "earn easily" to achieve short-term performance explosion.

For Xinlian Electronics, the profit barrier built by wealth management returns can buffer core business fluctuations in the short term, but it cannot resolve the structural contradiction of long-term growth.

The real test for the company lies in whether it can convert its ample cash reserves into lasting impetus for technology R&D and market expansion, and reshape the competitive moat of its core business amid the industrial transformation of the new power system construction.

How to get rid of the path inertia of "wealth management dependence" and complete the strategic shift from capital appreciation to technology appreciation is worth pondering for this power equipment enterprise.

This article is from the WeChat Official Account "Aotou Finance" (ID: theSankei), written by New Financial Media Leader, authorized for release by 36Kr.