Zhejiang Dahua Technology (002236.SZ): 3Q26 Results Missed on Margin Pressure and Investment Loss

Dahua's 3Q26 revenue rose 8.7% YoY to Rmb8.4bn, 9.3% below BBGe; net profit of Rmb520mn fell 50.9% YoY, 56.4% below BBGe. The miss stemmed from RMB appreciation hurting overseas margins and driving FX losses, rising storage/component costs, a faster-growing but lower-margin overseas revenue mix, and a large fair-value loss on financial products. Yet 4Q26 margins likely recover to reflect price hike effect. We raise 2026E/2027E/2028E revenue by 1.0%/2.0%/3.0% and gross profit by 0.0%/0.8%/1.8%, reflecting resilient domestic government/enterprise demand and double-digit USD growth overseas; we cut 2026E net profit by 4.1% to Rmb3.5bn on higher expected fair-value and exchange losses in 2H26, leaving 2027/28E broadly unchanged, and trim gross margin by 0.4-0.5ppts. We lower the TP to Rmb16.1 (from 16.6) to reflect lower NTM EPS, with target PE unchanged at 13.3x (5-year mean). Maintain Neutral.