Shenzhen Envicool Technology (002837.SZ) First Take: 3Q26 sales inline with GSe, NP miss; Record contract liabilities and inventories point to accelerating revenue bookings ahead; Buy

Post market close on Oct 26, 2026, Envicool announced 3Q26 results with accelerating sales growth and surging order intakes and inventories. Net profit missed GSe and Visible Alpha consensus on FX losses and higher minority interest mostly driven by the 55%-owned Smart Connection subsidiary, despite sequential firmwide GPM improvement on a higher overseas sales mix. 3Q26 sales/gross profit/EBIT/net profit were Rmb1,933mn/538mn/233mn/184mn (+33%/+26%/+18%/0% yoy), -1%/+2%/-4%/-13% vs GSe. Accelerating sales were driven by data center room cooling and server cooling, while ESS cooling growth was stable with segment GPM under pressure from product mix change and domestic competition. Contract liabilities rose to a record Rmb665mn (+104% yoy/+106% qoq) and inventories to Rmb2,507mn (+103% yoy/+62% qoq), indicating strong order intake and revenue recognition in the upcoming 1-2 quarters. We remain Buy-rated with a 12-month target price of Rmb79.0, based on 42x 2028E P/E discounted back to 2