On July 12th, Beijing Time, Seres, a company listed on both the A and H stock exchanges, unveiled its mid-year performance forecast for 2026.

According to Seres' announcement, the net profit attributable to shareholders for the first half of 2026 is estimated to range between -1.8 billion and -1.5 billion yuan.

The announcement pointed out that the primary reason for this downturn was the fluctuating performance of its core subsidiary, AITO's automotive business, which transitioned from profitability to losses. AITO's net profit attributable to shareholders for the first half of the year is projected to range from -1.3 billion to -1.05 billion yuan. Additionally, the non-recurring net profit after deducting non-recurring items for the second quarter is estimated to range from -1.95 billion to -1.7 billion yuan.

Indeed, Seres, a key partner of Huawei's HarmonyOS Intelligent Mobility, reported a net profit of 754 million yuan in the first quarter. However, by the second quarter of 2026, it projected a loss ranging from -1.8 billion to -1.5 billion yuan. This marks the first quarterly loss since Seres achieved profitability in the first quarter of 2024, following its collaboration with Huawei.

The announcement further elaborated that the transition of AITO's automotive business from profit to loss was attributed to the escalating prices of key raw materials, including memory chips, industrial metals, and lithium carbonate, which drove up production costs. Based on prudent principles and to further strengthen overall asset quality, taking into account subsequent asset return expectations, the book value of certain inventory assets (existing assets) with limited adaptability due to technological iterations and model upgrades was adjusted.

For current or potential investors in Seres, the main concern is how this forecast will affect Seres' stock price. After all, Seres' latest closing price for its A-shares was 59.90 yuan, with the lowest point of this adjustment being 57.50 yuan. In June alone, it experienced the largest monthly decline of 24.06% during this downturn.

Will Seres' stock price continue to decline following this performance loss announcement, or will it rebound?

According to the announcement, the second-quarter loss may stem from a one-time inventory write-down, indicating that such losses are likely isolated. This could be linked to the sequential upgrades of 896-line LiDAR in AITO's M9, M7, and M8 models in March 2026, especially since the M7 and M8 architectures could not directly upgrade to 896-line LiDAR. This incident may prompt Huawei to reconsider the upgradable module design in its vehicle models.

However, the impact of rising prices for key raw materials, such as memory chips, industrial metals, and lithium carbonate, as mentioned in the announcement, is expected to be long-lasting. Particularly for memory chips, NIO's William Li has publicly stated that the price increase alone has raised the cost per vehicle by 20,000 yuan.

More pessimistically, the upward trend in memory chip prices persists.

Nevertheless, for Seres, the technological and brand premium brought by Huawei's technological support has resulted in extremely high gross margins for AITO models. In the first quarter, Seres' gross margin reached the industry's highest level of 27%-28%. Such a high gross margin provides AITO with more leeway to absorb costs.

From a vehicle delivery standpoint, Seres' core AITO brand delivered 70,200 vehicles in the first quarter and 90,600 vehicles in the second quarter, indicating increased deliveries but also amplified losses.

A detailed performance report is necessary to evaluate Seres' loss situation and operating cash flow. Furthermore, it will be intriguing to observe the performance guidance provided by Seres' management for the third quarter or the second half of the year during the financial report conference.

Whether Seres' loss in the second quarter of 2026 is a temporary setback or a long-term trend remains to be seen.