Key Takeaways:
Bank of America Securities lifted Lens Technology's H-share target to HK$27 from HK$24 after the glassmaker swung to a RMB726 million second-quarter profit that beat expectations.
The upgrade reflects steady expansion of core businesses and business diversification, the bank said in a research note, reiterating a Buy rating.
Lens's first-half revenue fell 12 percent year over year to RMB28.9 billion, 4 percent below the broker's estimate and 8 percent below market expectations. Gross margin of 14.7 percent beat both forecasts, while operating profit rose 9 percent to RMB881 million, 41 percent above BofA's projection but 19 percent below market consensus.
The bank raised its 2026 earnings forecast for Lens by 6 percent and made minor adjustments to 2027-28 estimates. It also lifted the A-share target to RMB30 from RMB27, a 30 percent premium to the H-shares, but kept an Underperform rating on valuation of 30 times forward next-year earnings.
Lens reported interim results on Aug. 23 showing first-half revenue of RMB28.87 billion, down 12.4 percent year over year, and net profit of RMB577 million, down 49.5 percent, with earnings per share of RMB0.11. The company declared an interim dividend of RMB1 per 10 shares.
BofA also trimmed its target on Zhuzhou CRRC Times Electric to HK$43 from HK$44, reiterating a Neutral rating. Times Electric's second-quarter revenue rose 4 percent year over year to RMB8 billion, 5 percent below the bank's estimate, while net profit of RMB1.1 billion came in 14 percent below forecast on higher research and development expenses and foreign exchange losses. The bank cut its 2026-28 earnings forecasts by 5 percent, 4 percent and 3 percent.
Separately, BofA raised NetEase's Hong Kong-listed target to HK$272 from HK$268 and its U.S. ADR target to US$174 from US$172, reiterating a Buy. The bank lifted 2026-28 adjusted operating profit forecasts by 7 percent to 9 percent on stronger game gross margins. NetEase reported second-quarter revenue up 10 percent year over year on Aug. 20, with adjusted operating profit up 29 percent.
The divergent calls show how operational efficiency and cost control have become the key metrics for investment institutions in the current macro environment. Lens's H-shares carry upside from the earnings beat and target raise, while investors will watch whether the A-share valuation premium narrows as the company expands beyond smartphone glass into automotive electronics and smart wearables.
This article is for informational purposes only and does not constitute investment advice.
