Key Takeaways:
Lens Technology shares plunged more than 14% after the company reported a net loss of RMB150 million for the first quarter on weak smartphone demand.
CLSA cut its target price on the Hong Kong-listed shares to HKD24 from HKD31.5, noting the company faces near-term challenges but still possesses multiple long-term growth drivers.
The electronics component maker’s revenue for the first quarter declined 17% year-over-year to RMB14.1 billion, impacted by lower Android smartphone shipments and foreign exchange losses. The net loss compares to a profit in the year-ago period, though the company did not disclose the prior-year profit figure.
The stock drop reflects investor concern over the immediate outlook, though the company expects shipments of ultra-thin glass for foldable smartphones from a major client to ramp up in the second quarter. Lens Technology’s acquisition of YuanShi Technology is also expected to close between April and May.
Despite the weak quarter, CLSA maintained an Outperform rating on the stock, pointing to several long-term growth areas. The broker highlighted the potential from foldable smartphones, smart glasses, and AI servers as key future catalysts.
However, the research firm lowered its earnings forecasts for 2026 and 2027 by 12% and 4% to RMB4.8 billion and RMB6.6 billion, respectively, to account for the current headwinds. The new HKD24 target price implies a forecast price-to-earnings ratio of 16 times for next year. The firm's target for Lens Technology's A-shares (300433.SZ) was trimmed slightly from RMB32.7 to RMB32.6.
The sharp earnings miss and subsequent stock plunge highlight significant headwinds in the Android market. Investors will be closely watching for the successful integration of YuanShi Technology and a material revenue contribution from new foldable phone contracts in the second half of the year to restore confidence.
This article is for informational purposes only and does not constitute investment advice.
