Why did third-quarter revenue miss expectations while profit met them?

  • In the third quarter of 2026, Anker’s revenue rose 17% year over year but was 12% below J.P. Morgan’s forecast. The bank attributed the shortfall mainly to slower-than-expected inventory clearance and product replacement in cleaning products; the security business also faced cost pressures.
  • Compared with 2025, Prime Day was held earlier, shifting some sales from the third quarter to the second. Meanwhile, smart charging and energy storage and smart audio grew rapidly; J.P. Morgan estimates that revenue from these businesses rose more than 20% year over year.
  • Recurring net profit was RMB 840 million, up 61% year over year and in line with the bank’s forecast; reported net profit fell 27% year over year because of fair-value losses on equity investments. The two profit measures showed different changes.

What changed as products moved upmarket?

  • The company improved margins by moving products upmarket and focusing on profitable growth. Management said that, excluding the impact of IEEPA tariff refunds, gross margin rose by 0.5 to 1 percentage points year over year in the first nine months of 2026.
  • The company’s One Anker plan, announced in September, will gradually unify five brands. J.P. Morgan expects this to strengthen brand loyalty and improve channel efficiency, particularly benefiting new product launches.

Which businesses will drive fourth-quarter growth?

  • J.P. Morgan expects revenue and earnings to grow 18% and 67% year over year, respectively, in the fourth quarter of 2026. Supporting factors include improved deliveries of energy storage products, the European launch of Solarbank Max, rapid growth in the mother-and-baby business, and a shift toward premium true wireless earbuds.
  • Despite its positive outlook for the fourth quarter, the bank cut its revenue forecasts for each year from 2026 to 2028 by about 6% and its earnings forecasts by 2% to 4%, reflecting current business headwinds.

How do cash flow and valuation look amid expectations of earnings growth?

  • J.P. Morgan forecasts adjusted net profit of RMB 3.284 billion in 2026, up from RMB 2.545 billion in 2025; it expects operating cash flow to move from an inflow of RMB 481 million in 2025 to an outflow of RMB 1.71 billion in 2026, with a working-capital outflow of RMB 4.033 billion in its model.
  • The bank maintained its Overweight rating and its June 2027 price target of HK$155, based on a rolling forward 12-month price-to-earnings multiple of 17 times, close to the global peer average. Risks listed in the report include insufficient competitiveness of new products, changes in relationships with e-commerce platforms, and trade policy and third-party supply or delivery disruptions.