How strong was third-quarter growth, and why did profit decline quarter over quarter?

  • In the third quarter of 2026, OPT reported revenue of 482 million yuan, up 46% year over year and 13.3% above BofA’s forecast. Net profit attributable to shareholders was 61 million yuan, up 67% year over year and 4.4% below the bank’s forecast, broadly in line with its expectations overall.
  • Year over year, operating expenses as a share of revenue fell 7.2 percentage points to 42.3%, driving operating profit excluding special items up 159% to 68 million yuan. Gross margin, however, fell 1.1 percentage points year over year to 56.5%.
  • Compared with the second quarter, third-quarter revenue fell 11.8%, operating profit excluding special items fell 46.1%, and operating margin declined from 23.2% to 14.2%. The expense ratio rose from 36.0% to 42.3%, while gross margin fell from 59.2% to 56.5%.

Which businesses drove growth, and which weakened?

  • Third-quarter semiconductor revenue rose 265% year over year and accounted for 19% of total revenue, up from 14% in the second quarter. Battery revenue rose 64% year over year to 149 million yuan.
  • Growth was uneven: third-quarter 3C revenue rose just 2% year over year, while automotive revenue fell 14% year over year, compared with growth of 243% in the first half.
  • In the first three quarters of 2026, revenue from AI-related system solutions rose 157% year over year to 301 million yuan, accounting for 22% of the company’s total revenue; more than 90% of that came from the 3C and battery sectors. Total company revenue rose 37% year over year to 1.4 billion yuan over the same period.

Where will growth from the major 3C customer come from?

  • Company management expects revenue from its major 3C customer to grow approximately 50% year over year in 2027, driven by a greater contribution from AI-related revenue, gains in OPT’s share, and design changes.
  • BofA adjusted its business forecasts accordingly: it raised its 2027 battery and semiconductor revenue forecasts by 7.5% and 12.6%, respectively, and lowered its automotive revenue forecast by 6.1%. The bank raised its 2027 total revenue forecast by 3.3% to 2.286 billion yuan and its forecast for net profit attributable to shareholders by 2.2% to 458 million yuan.

Why does the rating remain cautious despite the higher price target?

  • BofA raised its price target from 84 yuan to 97 yuan while maintaining its Underperform rating. The bank believes the company’s expansion into 3D printing, optical transceivers, PCBs and robotics will pressure near-term profitability.
  • The price target is the average of discounted cash flow and price-to-earnings valuations. BofA rolled the reference period for its price-to-earnings valuation from the second half of 2026 through the first half of 2027 to 2027, while keeping its target price-to-earnings multiple at 30 times. The higher discounted cash flow valuation reflects the bank’s higher expectations for long-term sales growth.
  • The reference share price in the report was 148.48 yuan; BofA’s price target of 97 yuan implies approximately 34.7% downside.