Lens Technology’s third-quarter profit misses expectations: Foldable-screen growth still struggles to offset near-term earnings pressure

Where did third-quarter results fall short?

Lens Technology’s third-quarter 2026 revenue was RMB 19.035 billion, up 29% quarter over quarter and down 8% year over year. It was 9% below Morgan Stanley’s forecast of RMB 20.846 billion and 14% below the market consensus of RMB 22.242 billion.
Net profit was RMB 843 million, up 16% quarter over quarter and down 50% year over year. It was 56% below the bank’s forecast of RMB 1.899 billion and 63% below the market consensus of RMB 2.289 billion, a considerably larger miss than for revenue.
Management attributed weak revenue to softer end demand resulting from higher memory costs, appreciation of the renminbi, and differences in major customers’ product launch schedules.

Third-quarter gross margin was 16.8%, down 1.4 percentage points quarter over quarter and below Morgan Stanley’s forecast of 19.5%. The company attributed the decline mainly to foreign-exchange headwinds.
Expenses and margins further magnified the impact of the revenue miss: operating expenses were RMB 2.011 billion, 13% above the bank’s forecast, while operating margin was 6.2%, below the expected 11.0%. The bank also noted weakening operating leverage.
Although quarterly revenue grew sequentially, gross profit fell 19% year over year and operating profit fell 46%, indicating that the revenue recovery has yet to reverse the year-over-year pressure on profits.

Morgan Stanley considers Lens Technology one of the main beneficiaries of a foldable iPhone. In addition to conventional cover glass, the company can supply ultra-thin glass, inner glass support components and surface nanotexturing, giving it a higher supply value per device than for conventional flagship models.
The company says yield is no longer a bottleneck and capacity is sufficient to support demand through 2027. However, the strength of foldable-phone demand and execution of large-scale capacity expansion will still affect the growth outcome.

In July, the company announced a collaboration with Intel in through-glass vias (TGV). Management said product development continues to progress and customer feedback has been positive. It had previously sent samples to a South Korean company for qualification and collaborated with domestic companies. The Changsha pilot line has monthly capacity of 300 glass sheets; further expansion depends on customer demand.
The company previously announced plans to acquire Yuans Tech, seeking to use its own mechanical-component processing and mass-production capabilities to accelerate the development of Yuans Tech’s AI cabinet, chassis and liquid-cooling businesses. Three factories in Songshan Lake, Dongguan, have passed potential customers’ audits and are ready for mass production. The company expects them to begin contributing some revenue at the end of 2026, with a larger contribution in 2027.
In humanoid robotics, the company is working with domestic and overseas customers on mechanical components, subsystems and complete-unit assembly. It says it is the exclusive supplier of head modules to a major US customer and aims to substantially increase shipments in 2027.

Despite the growth drivers above, Morgan Stanley believes weak third-quarter results will weigh on near-term investor sentiment and that strong catalysts are also lacking over the next few quarters.
The bank considers the approximately 20 times 2027 forecast price-to-earnings ratio not cheap and maintains its Equal-weight rating and RMB 31 price target. Its base case uses a price-to-earnings multiple of 22 times forecast 2027 earnings and projects compound annual operating profit growth of 26% over 2025–2028.