Where did third-quarter results fall short?

  • In the third quarter of 2026, Bear Electric reported revenue of 1.039 billion yuan and net profit of 31 million yuan, down 10% and 25% year over year, respectively, and 6% and 8% below Goldman Sachs' previous forecasts. Goldman Sachs attributed the main drag to weak demand.
  • Gross margin for the period was 36.1%, down 1 percentage point year over year; net margin was 2.9%, down 0.6 percentage points. Both were in line with Goldman Sachs' expectations. Rising costs and exchange rates created pressure, only partly offset by an improved product mix.

How is the company responding to weak domestic demand?

  • Management continues to see domestic demand as subdued and has shifted its operational focus to avoiding low-price competition, upgrading the product mix and improving returns on spending. Average product selling prices improved in the third quarter, but revenue still fell year over year.
  • Channel performance diverged: management said Pinduoduo grew rapidly, while JD.com saw a larger decline, partly because last year's trade-in incentives raised the comparison base for the JD.com channel.

What could product upgrades and overseas expansion deliver?

  • Management said an improved product mix offset some of the cost increases, particularly pressure from petrochemical raw materials; the company also plans to maintain expense discipline during promotional events such as Double 11. Third-quarter gross margin still fell year over year, showing that the cost and currency pressures facing these two adjustments remain.
  • For overseas business, management said the contract manufacturing business is under pressure and expects expanding branded sales to generate more growth; it will also explore overseas acquisition opportunities.

Why did Goldman Sachs cut its earnings forecasts and target price?

  • Considering the latest results and weak demand, Goldman Sachs cut its earnings-per-share forecasts for 2026 through 2028 by 6%–13%. Its 2026 forecast fell from 1.90 yuan to 1.65 yuan, and its 2027 forecast from 2.30 yuan to 2.12 yuan.
  • Goldman Sachs cut its 12-month target price from 36 yuan to 34 yuan and maintained its neutral rating. The target price remains based on 17 times average forecast earnings per share for 2026 and 2027. The bank sees weak near-term demand and intensifying competition, and believes the company's valuation premium over peers already reflects its product and channel advantages.