Why did profit fall despite revenue growth?

  • Aier Eye reported third-quarter 2026 revenue of 6.4 billion yuan, up 7.1% year on year and broadly in line with JPMorgan’s expectations. Net profit attributable to shareholders was 941 million yuan, down 11.6% year on year and below the bank’s expectations. Recurring net profit was 973 million yuan, down 9.8% year on year.
  • The earnings shortfall partly reflected impairment charges and taxes: asset impairment losses for the quarter were approximately 150 million yuan, mainly related to goodwill, while fair-value losses on financial assets amounted to 28 million yuan.
  • Changes to preferential tax treatment for some subsidiaries pushed the third-quarter effective tax rate up from 16.6% a year earlier to 26.9%, further depressing net profit.

What will drive growth after refractive surgery volumes stabilize?

  • Refractive surgery volumes were roughly flat year on year in the third quarter of 2026, stabilizing after weaker performance earlier in the year but showing no clear rebound yet. JPMorgan believes sustained improvement in consumer demand is still needed for stronger volume growth.
  • An improved treatment mix and greater adoption of higher-value procedures increased average revenue per surgery. The bank estimates the increase at a mid-single-digit percentage and expects this pricing factor to be the main support for near-term refractive surgery revenue growth.
  • Cataract surgery volumes continued to decline, partly offset by higher charges per procedure as the share of premium self-paid treatments increased.

Which business provides another source of growth?

  • Optometry recorded the highest volume growth among the businesses in the third quarter, with average prices broadly stable, making it a relatively resilient part of the group’s organic growth. JPMorgan expects demand for myopia management and other recurring eye-care services to continue providing support.
  • Management is optimistic about presbyopia-related treatments and expects the business to generate approximately 100 million yuan in revenue in 2026. JPMorgan believes presbyopia treatment could contribute incremental growth as awareness rises, though it remains small relative to the group’s overall revenue.
  • Amid weak consumer spending and uncertainty over the timing of a recovery in refractive surgery volumes, the bank expects overseas growth opportunities and contributions from optometry to help the company navigate the current environment.

How has JPMorgan revised its earnings outlook?

  • With third-quarter revenue broadly in line with expectations, JPMorgan made no major changes to its revenue forecasts; however, weaker-than-expected earnings led it to lower its earnings-per-share forecasts. The bank’s model projects 2026 revenue of 23.545 billion yuan, up 5.3% year on year, and adjusted net profit of 2.555 billion yuan, below the 3.24 billion yuan recorded in 2025.
  • JPMorgan maintained its neutral rating and lowered its December 2027 price target to 9.50 yuan from 9.70 yuan. The bank considers the company fairly valued and wants to see evidence of an inflection point in elective procedures before adopting a more positive view.