UOB Kay Hian has released a research report stating that Lens Technology (06613) delivered third-quarter 2026 results that fell short of expectations. The broker maintains its "Buy" rating but significantly cut its H-share target price from HK$21.5.
The weaker-than-expected third-quarter performance was mainly attributed to orders from a major customer being deferred to the fourth quarter, along with notable foreign exchange losses and rising operating expenses. Revenue declined 8.1% year-on-year to RMB 19.035 billion, gross margin narrowed 2.3 percentage points year-on-year to 16.8%, operating profit fell 45.8% year-on-year to RMB 1.183 billion, and net profit dropped 50.4% year-on-year to RMB 843 million, missing market expectations by approximately 13.0%, 2.7 percentage points, 56%, and 65.8%, respectively.
The broker noted that earnings growth is expected to improve markedly from the fourth quarter of this year through the first quarter of next year, as orders related to a major customer's foldable model are pushed to the fourth quarter and will further ramp up in the first quarter of 2027. The customer has also adjusted its product cycle from a single key launch in the third quarter to two launches 鈥?one in the third quarter of this year and another in the first quarter of next year.
The broker sharply lowered its earnings forecasts for Lens Technology for 2026 to 2028 by 40%, 15.9%, and 7.9% to RMB 2.844 billion, RMB 5.407 billion, and RMB 7.876 billion, respectively, reflecting downgraded assumptions for the smartphone business and higher ratios of research and development and talent-related operating expenses.
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