Lens Technology Co., Ltd. (300433.SZ) experienced a significant downturn in the first half of 2026, with both revenue and net profit declining, and its net profit attributable to shareholders dropping by nearly half year-on-year. The financial results were negatively impacted by rising exchange losses and asset impairment charges. Furthermore, the company's consumer electronics business revenue suffered due to the dual pressures of surging memory chip prices and weak market demand, while its smart automotive business also showed signs of slowing growth momentum. In a bid to find new growth avenues, the company has actively ventured into emerging fields such as embodied intelligence, AI servers, and commercial aerospace, but these new ventures currently contribute less than 10% of total revenue and offer limited overall performance uplift. Meanwhile, despite the significant profit decline and the lack of any executed share purchases under the controlling shareholders' plan at its halfway point, the company has proposed a high dividend payout, with over half of it flowing to the controlling families.

Two Core Businesses Under Pressure

According to the 2026 semi-annual report, Lens Technology recorded a revenue of RMB 28.866 billion, a year-on-year decrease of 12.42%. Net profit attributable to shareholders was RMB 577 million, down 49.52% year-on-year. Net cash flow from operating activities was RMB 2.011 billion, a significant drop of 53.5%. In the second quarter alone, revenue reached RMB 14.727 billion, down 7.36% year-on-year, marking a third consecutive quarterly decline. Q2 net profit attributable to shareholders was RMB 726 million, roughly flat compared to the same period last year. However, net cash flow from operating activities turned negative to -RMB 2.7307 million.

The decline in net profit is largely attributed to the combined effect of exchange losses and asset impairment charges. Currency fluctuations led to a RMB 492 million loss in exchange gains/losses within financial expenses for the first half of the year. Concurrently, asset impairments reached RMB 437 million, a 21.58% increase year-on-year, primarily due to inventory write-downs. Further analysis reveals that government subsidies propped up over 30% of the company's net profit. In the first half of 2026, government subsidies included in current-period gains amounted to RMB 202 million, accounting for 35% of the period's net profit attributable to shareholders. Excluding non-recurring gains and losses, the company's deducted non-recurring net profit was merely RMB 278 million, down 70.45% year-on-year.

Looking at the business segments, the consumer electronics business, the company's cornerstone, performed weakly in the first half. The global memory chip market saw a rare supply-demand gap in H1 2026, causing storage prices to climb rapidly. This supply chain price hike cascaded down to raise end-product prices. Various research firms point to signs of weakening in the consumer electronics market, with entry-level and mainstream consumer products being particularly price-sensitive and consumers prolonging their phone replacement cycles. IDC data shows that global smartphone shipments dropped 4.1% year-on-year in Q1, with the decline expanding to 6.7% in Q2. Within this context, Lens Technology's smartphone and computer business revenue fell to RMB 22.382 billion, a 17.67% decrease year-on-year, constituting 77.54% of total revenue. It's worth noting that, amidst the industry-wide demand fluctuation, the company has proactively adjusted its product and customer mix to boost shipments of high-value-added, premium products, though this has struggled to fully offset the revenue decline from lower-value-added business lines.

Compared to the consumer electronics segment, the company's smart automotive and cockpit business performed relatively steadily. However, with the overall slowdown in the global automotive industry, this segment's growth momentum has weakened. According to SNE Research, 9.906 million electric vehicles were delivered globally in H1, a 5.5% increase year-on-year, indicating a shift from rapid expansion to a phase of stable growth. During this period, Lens Technology's smart automotive and cockpit business generated revenue of RMB 3.372 billion, representing 11.68% of total revenue, with its growth rate slowing to 6.56% from 16.45% in the previous year.

New Ventures Struggling to Drive Revenue

Seeking to broaden its growth avenues, Lens Technology has strategically invested in emerging industries like embodied intelligence, AI servers, and commercial aerospace, allocating substantial resources towards technology R&D, capacity building, and equity investments. The company has been active in investments over the past year: agreeing to acquire a 95% stake in Yuanshi Technology to enter the AI server cabinet and liquid cooling sectors, announcing the purchase of a 27.81% stake in Juteng International to strengthen its metal structural components capabilities, and completing the acquisition of an 89.98% stake in Tongsheng Optoelectronics to position itself in core optical communication technologies. Furthermore, capitalizing on the new wave of AI industry development, the company is heavily increasing strategic investments in new growth areas like AI on-device and AI computing power. R&D investment for H1 reached RMB 1.49 billion, with resources prioritized for high-end new materials, AI computing, and AI endpoints to accelerate the transition between old and new growth drivers.

In terms of financial performance, the 'other smart terminal' business revenue in H1 2026 reached RMB 534 million, a 46.92% increase year-on-year, but only accounting for 1.85% of total revenue. Revenue from smart head-mounted displays and smart wearables was RMB 1.777 billion, up 7.95% year-on-year – a slowdown from the 14.74% growth seen previously – representing 6.16% of total revenue. Notably, the gross margins for both of these segments declined during the reporting period. The gross margin for smart head-mounted/wearable devices and other smart terminals were 12.72% and 7.51% respectively, down by 10.55 percentage points and 0.64 percentage points year-on-year, with the former seeing a substantial drop. In the commercial aerospace field, the company's self-developed aerospace-grade UTG ultra-thin flexible glass has passed multiple rounds of reliability testing. A satellite using their aerospace-grade UTG solar wing solution has been launched and is undergoing in-orbit verification, currently progressing smoothly through the customer certification cycle. However, it will take time for certifications to convert into actual revenue. Overall, the company's new business segments (smart terminals and smart wearables) achieved combined revenue of RMB 2.311 billion in H1, representing only 8.01% of total period revenue, indicating a limited performance contribution.

Another Delay for Fundraising Projects

It has also come to light that some of the fundraising projects from the company's 2021 private placement have faced another delay. That year, the company successfully raised RMB 15 billion (net proceeds of RMB 14.91 billion after issuance fees) for the construction of four projects and working capital replenishment. Since the funds were received, the projects have been delayed multiple times and their intended uses have been altered. The most recent delay occurred in March, when the company pushed back the expected completion dates for the Changsha (II) Park Vehicle Glass and Large-Size Functional Panel Construction Project and the Changsha (II) Park 3D Touch Functional Panel and Production Support Facility Project to December 31, 2026. The 2026 semi-annual report indicates that another fundraising project – the Changsha (II) Park Smart Wearable and Touch Functional Panel Construction Project – is facing operational pressure due to factors like memory chip price hikes affecting market demand, rising raw material costs, and exchange rate volatility, generating only RMB 23.524 million in income during the reporting period.

On April 17, 2026, Lens Technology announced an increase-in-holdings plan by its actual controllers. The announcement stated that Qunxin Company, controlled by actual controllers Zhou Qunfei and Zheng Junlong, would increase its shareholding in the company through competitive bidding, with the purchase amount not less than RMB 100 million, funded by its own or self-raised funds. Qunxin Company directly holds 284 million A-shares of Lens Technology, representing 5.4% of the total share capital, with Zhou Qunfei and Zheng Junlong owning 97.9% and 2.1% of Qunxin Company respectively. However, as of July 28, 2026, with the deadline for the plan having passed its halfway point, Qunxin Company had made no purchases. In stark contrast, Lens Technology has been exceptionally generous with its dividends. The 2026 interim dividend plan proposes a cash dividend of RMB 1 (pre-tax) for every 10 shares to all shareholders (including A-share and H-share holders), totaling RMB 526 million – a payout ratio as high as 91% of the period's net profit. As of the end of June 2026, the Zhou couple collectively held 3.092 billion shares of the company, representing 58.58% of the total shares. In other words, nearly 60% of this dividend is slated to go directly into the pockets of the controlling shareholders.