CVTE’s third-quarter revenue and recurring net profit attributable to shareholders both exceeded HSBC Qianhai Securities’ previous expectations. The firm raised its profit forecasts for the next three years, citing optimism about growth in smart control components while monitoring the overseas expansion of interactive flat panels.
Original source：汇丰前海证券有限公司First published on Unhidea：Original source date：
Key takeaway
Cost pass-through and gross margin improvement in LCD control boards underpin HSBC Qianhai’s higher earnings forecasts for CVTE, a view that depends on whether cost pass-through can continue and on progress in expanding new businesses.
What stood out in third-quarter results?
CVTE’s revenue in the third quarter of 2026 was 10.863 billion yuan, up 44% year on year; recurring net profit attributable to shareholders was 995 million yuan, up 149% year on year. Both exceeded HSBC Qianhai’s previous expectations. Revenue and profit both reached single-quarter records.
The company’s contract liabilities also reached a record high. HSBC Qianhai believes this supports future revenue inflows.
Why were revenue forecasts raised only slightly while profit forecasts rose more?
HSBC Qianhai believes both the ability to pass LCD control-board costs downstream and the improvement in gross margin were better than previously expected. The firm raised each of its revenue forecasts for 2026–2028 by 0.2%, while raising its overall gross margin forecasts by 0.3, 0.3 and 0.5 percentage points, respectively.
The improvement in gross margin drove larger increases in profit forecasts: net profit attributable to shareholders forecasts for 2026–2028 were raised by 1.3%, 3.4% and 5.2%, respectively. The firm’s forecasts are 14%, 20% and 18% above the Wind market consensus, respectively, because it believes the consensus has yet to fully reflect revenue growth and gross margin improvement in smart control components.
This profit projection depends on costs continuing to be passed on to customers. If rising control-chip and memory costs cannot be passed on in full, the company’s gross margin will be squeezed.
Where will future growth come from?
Smart control components are the main driver of growth. HSBC Qianhai expects strong memory demand to keep LCD control-board prices high, and revenue from home appliance controllers, automotive electronics and power electronics to expand rapidly; it forecasts a revenue compound annual growth rate of 14% for this segment over 2026–2028.
A turnaround in the smart devices business depends on overseas channels maturing. The firm expects revenue from own-brand interactive flat panels and related devices to grow faster, returning the smart devices segment to revenue growth; it is also monitoring the progress of monetising Seewo’s AI education products in domestic schools.
Expansion into new businesses faces competition and pressure to build sales channels. The company is still raising brand awareness in the corporate meeting services market, and could lose market position if its research and development or operational capabilities fail to keep pace.
How does the firm value the company after raising its earnings forecasts?
HSBC Qianhai maintained its buy rating and raised its target price from 68.70 yuan to 70.90 yuan, implying approximately 61.5% upside from the closing price of 43.89 yuan on 22 October 2026.
The firm maintained its target price-to-earnings ratio of 17 times for 2027, 35% below the company’s average of 26 times for 2018–2022. It expects recurring net profit attributable to shareholders to grow at a compound annual rate of 14% over 2026–2028, below the 20% compound annual growth rate in net profit for 2018–2022.
