HANGZHOU FIRST APPLIED MATERIAL (603806.SS): 3Q26 miss; Mgmt. lowered FY26 guidance and introduced FY27 target; reiterate Buy as constructive earnings outlook remains intact

HZ First reported 3Q26 EBITDA of Rmb510mn, down 25% qoq but up 121% yoy, 27% below GSe of Rmb699mn, mainly due to lower-than-expected shipment and pricing in the solar film business. 3Q26 solar film shipment rose 13% qoq to 640mn sqm (vs. +30% qoq guided) and pricing fell 14% qoq to Rmb5.2/sqm, dragging unit net profit to Rmb0.4/sqm from Rmb0.7/sqm in 2Q26. DRF shipment rose 5% qoq to 60mn sqm with GPM at ~30%. Management lowered FY26 guidance (solar film shipment to -10% yoy from flat, GPM to 15% from ~20%; DRF GPM to ~30% from 30%-35%) and introduced FY27 targets of 10%-20% yoy solar film shipment growth and 30% DRF growth with margin improvement, plus initial shipments of space solar products including LSR and UTG. We cut 2026E-2030E EBITDA by an average of 18% and lower our 12m target price to Rmb18.2 from Rmb21, still based on 17X 2027E EV/EBITDA discounted to 2026E at a 10.7% CoE. Reiterate Buy.