On the evening of July 14, COST unveiled its earnings forecast for the first half of 2026, projecting a net loss attributable to shareholders ranging from RMB 59.95 million to RMB 84.51 million. This marks a significant improvement compared to the RMB 120 million loss recorded in the same period last year, translating to a 29.74% to 50.16% reduction in losses. The anticipated net loss attributable to shareholders after excluding non-recurring items is expected to range from RMB 64.26 million to RMB 90.58 million, down from RMB 129 million in the corresponding period last year.

The announcement attributes this reduction in losses to clear and effective tactical execution, with a strong emphasis on "scale growth and structural optimization" as the guiding principles. The company has systematically bolstered its market expansion and order acquisition capabilities, leading to a steady increase in market share and a subsequent rise in business gross profit. Concurrently, comprehensive budget control and business process optimization have been implemented, fostering a culture of cost reduction and efficiency enhancement throughout the entire supply chain. These combined efforts have yielded visible results in terms of loss reduction. The traditional optoelectronic defense and component businesses have demonstrated steady overall growth, albeit at a moderate pace, providing a solid foundation for the company.

Notably, the company anticipates procuring goods and services worth no more than RMB 73.3 million from its controlling shareholder and its affiliates in 2026, with total sales and leasing transactions not exceeding RMB 132.1 million. The anticipated growth in these related-party transactions reflects, to a certain extent, the potential impact of internal resource synergy and supply chain integration within the group.

However, the core challenge that still needs to be addressed to achieve profitability is the fact that the strategic new products under the "New Quality, New Domain" initiative are still in the investment and ramp-up phase. These products currently contribute relatively little to revenue and have not yet reached the breakeven point, which is one of the key factors contributing to the current pressure on the company's overall performance.

Since 2026, the company has significantly accelerated its strategic布局 (layout) in emerging sectors such as automotive optoelectronics and unmanned systems. At the Beijing International Auto Show, COST showcased a comprehensive range of core products, including standard AR-HUD, depth AR-HUD, PHUD, light field screens, and aerial imaging technologies. Its automotive AR-HUD and LiDAR-related products have undergone continuous customer validation, with designated projects progressing smoothly. Several automotive and new optical products have already achieved bulk supply.

In the field of unmanned systems, its subsidiary, COST (Hangzhou) Intelligent Optoelectronics Technology Co., Ltd., has successfully completed static multi-scenario field testing of its prototype bionic polarized light navigation system. This technology is primarily targeted at autonomous mobile platforms such as drones, unmanned vehicles, and industrial AGV/AMR, laying a solid foundation for future entry into the intelligent equipment market.

According to the company's New Year message, the special products business has made breakthrough progress in focusing on sighting devices and individual soldier goggles, securing a cumulative total of 29 orders for border and coastal defense system integration projects. The component business has successfully passed the designated audit by key customers, achieving 48 new product designation projects throughout the year, with an additional RMB 100 million in revenue. The projector business has secured orders for overseas versions of complete machines and self-developed optical engines from key customers. The delivery schedule of these orders and the gradual release of new product capacity are the key underlying drivers supporting the reduction in losses in the first half of the year.

For this "veteran" in the optoelectronics industry with deep-rooted optical technology expertise, reducing losses is merely the first step; achieving profitability is the ultimate goal. The company states that various production and operation plans are actively progressing, with product capacity progress in line with expectations.

It is worth noting that the company completed a 100% equity asset restructuring of COST in 2018 by issuing 38.5225 million shares to its controlling shareholder, China South Industries Group Corporation, and has since undergone multiple share capital changes.

As of the first quarter of 2026, the company's total share capital stands at approximately 261 million shares, providing a stable share capital structure that supports subsequent business expansion. When the revenue contribution from the new quality and new domain businesses can cover their own costs and begin to contribute positive profits, it will be time for the market to re-evaluate its value.

Until then, what the company needs is time to comprehensively transition its strategic new products from designated validation to mass production. All signs indicate that the turning point may not be far away, but every step through this challenging period must be taken with solid footing. OFweek Optoelectronics will continue to closely monitor its subsequent financial reports.