Sungrow's H1 Profit Falls 32% as Stock Hits One-Year Low Days After Trump's Grid Equipment Ban

Since President Trump signed an executive order on August 27 banning certain foreign-made transformers and critical grid equipment from the U.S. power system, shares of Sungrow Power Supply have kept sliding. Monday's release of the company's first-half 2026 earnings piled on more damage, sending the stock down as much as 8.4% in Shenzhen to its lowest level in more than a year, according to Bloomberg. The stock is now down over 40% this quarter.

The two events are connected in timing but not in cause. Sungrow's earnings cover January through June 2026, weeks before Trump's order existed. The profit collapse came from problems inside China and the Middle East, not from Washington.

The Numbers

Sungrow's revenue fell 28.99% year-over-year to 30.912 billion yuan in the first half, while net profit attributable to shareholders dropped 32.01% to 5.259 billion yuan, according to the company's interim report as summarized by TradingView and All Weather Finance. Profit excluding one-time items fell even harder, down 42.96% to 4.275 billion yuan.

The damage was concentrated at home. Domestic revenue nearly halved, falling 55% to 8.2 billion yuan, according to aibid.live, as China's PV installations dropped from 212 gigawatts to 72 gigawatts and the company walked away from money-losing projects. Middle East revenue plunged 91% to 1.1 billion yuan, largely because a large Saudi project delivered in 2025 simply wasn't repeated this year.

Energy storage held up best, falling just 13.18% to 15.456 billion yuan and now accounting for half of total revenue, up from 40.89% a year earlier, per All Weather Finance. PV-related revenue fell 44.83%, and new energy investment and development revenue cratered 85.02%.

Margins told a mixed story. Overall gross margin actually improved to 35.92%, up 1.56 percentage points, which the company credited to a better product mix. Inverter margins jumped to 42.72%, up nearly 7 points, but storage system margins fell to 32.43%, down 7.49 points, as competition squeezes that segment even as it grows.

Currency losses hurt too. Financial expenses jumped 239.94% as the dollar, euro and Australian dollar all weakened against the yuan, since most of Sungrow's overseas sales are settled in those currencies, according to aibid.live.

Not everything was bad. Operating cash flow rose 8.75% to 3.735 billion yuan, R&D spending rose 2.85% to 2.095 billion yuan, and TradingView noted the company announced a share buyback and dividend alongside the results. Sungrow is also pushing into power supply for AI data centers, with its EnerNeo solid-state transformer reaching commercial deployment, small-batch shipments of 800V high-voltage DC products, framework deals with Dongyangguang and Zhonglian Data, and a joint innovation center with Alibaba Cloud, according to All Weather Finance.

The U.S. Ban

Trump's August 27 order bars certain foreign-made transformers and other critical grid equipment on national security grounds and directs the Department of Energy to write implementing rules within 120 days, with authority to restrict equipment already installed on the grid. Chinese inverter and power equipment stocks sold off sharply on the news, with Sungrow plunging more than 12% intraday, according to BigGo Finance, marking the third sharp swing in its stock tied to U.S. policy in three months.

The stakes for Sungrow are real. The U.S. contributed roughly 15% to 20% of the company's revenue in 2025, part of 53.99 billion yuan in overseas sales that made up 60.54% of the total, per BigGo Finance. The European Union has separately barred Chinese inverters from publicly funded projects since May 2026.

Sungrow's own management response, described in its interim filing per aibid.live, is to gradually shrink its U.S. business and shift focus to channel sales and other regions. The company explicitly ruled out building U.S. manufacturing capacity, citing what it called unfair competition and no cost advantage.

The national security case for the ban isn't hypothetical. U.S. officials across administrations have flagged that grid transformers and inverters with remote software access, built by companies tied to a foreign adversary, create a real vulnerability if that equipment can be manipulated or disabled remotely. That concern predates this specific executive order and isn't unique to Trump.

On the other side, Zhou Mi, a researcher at the Chinese Academy of International Trade and Economic Cooperation, a think tank under China's Ministry of Commerce, told the South China Morning Post that markets may have overreacted. He said the real-world impact depends on how strictly Washington enforces the rule, since U.S. officials will have to weigh restrictions against potential disruption to American utilities and end users who already rely on this equipment. Zhou is describing his own government's trade interest, so his read should be weighed as one side of the argument, not a neutral verdict.

BigGo Finance's coverage frames the U.S. order as part of an unwavering push for manufacturing self-reliance regardless of controversy or cost, a framing that leans toward treating the policy as protectionism rather than engaging with the stated security rationale. Neither framing has been tested yet, because the Department of Energy hasn't issued implementing rules.

That rulemaking window runs through roughly late December 2026. Until DOE spells out what equipment gets banned, how existing installations are treated, and how strictly the order is enforced, Sungrow and any U.S. utilities that already use its equipment are both operating without clarity on what happens next.