Ningshui Group Q1 Net Profit Drops Over 60% Year-on-Year

Revenue Grows While Profits Plummet

According to 36Kr, smart water services company Ningshui Group recently released its Q1 2026 earnings report. The report shows that the company achieved operating revenue of 360 million yuan in the first quarter, up 35.19% year-on-year. However, net profit attributable to shareholders of the listed company was only 10.7932 million yuan, a sharp year-on-year decline of 61.76%. Basic earnings per share came in at 0.05 yuan.

This pattern of "rising revenue without rising profits" has drawn market attention. With revenue growing by more than 30% while net profit shrank by over 60%, the stark divergence between these two core metrics reflects the cost and profitability pressures the company faces during its business expansion.

Cost Challenges Amid Smart Water Services Transformation

As a leading domestic provider of smart water meters and intelligent water services solutions, Ningshui Group has been ramping up R&D and market investment in IoT water meters, AI data analytics platforms, and smart water systems in recent years. The company's product portfolio includes ultrasonic water meters and NB-IoT smart water meters, and it is actively applying artificial intelligence technologies to scenarios such as leakage analysis and water usage behavior prediction.

Industry analysts point out that the substantial revenue growth in Q1 likely benefited from concentrated delivery of smart water projects and sustained release of demand in the smart water meter market. At the same time, the notable pressure on the profit side may be related to several factors:

• Increased R&D spending: Continuous iteration of smart water meters and AI algorithm platforms requires substantial R&D funding
• Rising raw material and supply chain costs: Price fluctuations in core components such as chips and sensors are impacting gross margins
• Intensifying market competition: More participants in the smart water services sector are putting downward pressure on project bidding prices
• Changes in project mix: Large-scale integration projects require high upfront investment and have longer profit recognition cycles

Industry Trends and Competitive Landscape

The smart water services industry is currently in a phase of rapid development. As water utilities across regions accelerate digital transformation, AI-driven application scenarios such as intelligent metering, pipeline network monitoring, and water quality early warning systems continue to expand. On the policy front, the Ministry of Housing and Urban-Rural Development and other government agencies continue to promote intelligent upgrades of urban water supply networks, creating a reliable growth trajectory for the industry.

However, the sector's popularity also means competition is becoming increasingly fierce. In addition to Ningshui Group, companies such as Sanchuan Wisdom and Sunray Technology are also actively positioning themselves in the smart water meter and smart water services space, making the battle for market share ever more intense.

Future Outlook

For Ningshui Group, whether the Q1 pattern of rising revenue without rising profits will improve in subsequent quarters depends on the company's progress in cost control, product mix optimization, and the commercialization of AI technologies. As smart water projects gradually transition from the construction phase to the operational phase, economies of scale and a rising share of software service revenue are expected to help restore profitability.

Investors and industry observers will be closely watching the company's upcoming half-year report to determine whether this profit decline is a short-term fluctuation or a signal of a longer-term trend.