Hainan Drinda New Energy Technology (Drinda) has reported 3Q26 revenue of RMB2.04bn, up by 1.17% YoY and 37.38% QoQ, and an attributable net loss of RMB175mn, widening by 12.92% YoY but narrowing by 34.41% QoQ. For 9M26, revenue was RMB5.22bn, down by 8.08% YoY, while the attributable net loss widened by 2.25% YoY to RMB428mn. The sequential loss reduction in 3Q26 mainly reflected lower asset-impairment charges, with the gross profit broadly flat QoQ. We see three potential inflection points converging: 1) solar anti-involution measures are entering substantive implementation, with cell profitability already recovering. The cell segment’s greater exposure to technology upgrades could support earnings upside potential; 2) solar technology export controls have been introduced, potentially reinforcing the company’s technological moat given its high-efficiency cell capacity and substantial overseas business exposure; and 3) commercial space is entering a new phase centered on computing, with the company’s end-to-end presence and complete-satellite manufacturing capabilities potentially positioning it among the first to realize a second growth engine. Maintain OVERWEIGHT on both the A- and H-shares.
Mainly reflecting revised assumptions for 2026 cell shipments and the timing of earnings contributions from commercial space, we lower our 2026/2027/2028 attributable NP forecasts to -RMB117mn/RMB578mn/RMB1.19bn (previously RMB29mn/678mn/1.200bn), with a 92% YoY loss reduction in 2026, a turnaround to profitability for 2027, and 106% YoY earnings growth in 2028, with EPS of -RMB0.38/ RMB1.86/RMB3.82. We forecast solar EPS of -RMB0.24/RMB1.71/RMB3.37 for 2026/2027/2028. With reference to its solar peers’ median of 20.32x 2027E PE on iFinD consensus (previously 18.72x), we apply 20.00x 2027E PE to the solar business (previously 19.00x). We forecast commercial space EPS of -RMB0.14/ RMB0.15/RMB0.45. With its peers trading at a median 2027E PE of 36.66x (previously 43.30x 2027E PE), we apply 36.66x 2027E PE to commercial space (previously 43.30x). We lower our A-share target price to RMB39.56 (previously RMB45.55), implying 21.32x 2027E PE (previously 20.91x), and maintain OVERWEIGHT. Using the current average A/H share price ratio of 3.80 and an average exchange rate of RMB0.86 per HKD (previously a trailing three-month average A/H share price ratio of 2.96 and an average exchange rate of RMB0.87 per HKD), we lower our H-share target price to HKD12.11 (previously HKD17.69), implying 5.61x 2027E PE (previously 7.06x), and maintain OVERWEIGHT.