Core Insights - Goertek is strengthening its control over the supply chain for Meta's AI-powered smart glasses, Hypernova, while Meta seeks to diversify its supply chain beyond China [1][3] - Goertek has acquired optical device manufacturer Shanghai OmniLight and financed the takeover of optics supplier Plessey [2] - Meta's Hypernova smart glasses are expected to be announced soon, featuring a small display in the right lens and a wristband for gesture control, with a price point of $800 [3][5] Company Developments - Goertek is recognized as the most reliable supplier for key components of Meta's latest smart glasses [3] - Meta has stated that it maintains a robust and diversified supply chain, actively exploring global opportunities [4] - The introduction of Hypernova smart glasses is anticipated at Meta's Connect conference [4] Market Trends - Sales of Ray-Ban Meta glasses have surged over 200% in the first half of the year, indicating a growing market for smart glasses [6] - The smart glasses market is experiencing a boom driven by AI, with both tech giants and smaller competitors investing in these devices [6]

Group 1 - Meta is set to hold Meta Connect 2025 on September 17-18, where CEO Mark Zuckerberg will share updates on AI glasses and the company's vision for AI and the metaverse [1] - Two new smart glasses are expected to be unveiled, one of which will feature a display and is anticipated to launch later this year at a price of approximately $800, positioning it as a higher-end product compared to the $300 Meta Ray-Ban glasses [1] - Zuckerberg believes that smart glasses will be an essential part of the AI field, with Meta integrating AI deeply into its smart glasses, potentially disrupting the $10 billion smart glasses market [1] Group 2 - GoerTek's main products include VR, MR, and AR technologies, indicating a strong presence in the immersive technology sector [2] - Crystal Optoelectronics is actively collaborating with major clients on AR glasses, focusing on near-eye display systems and 3D sensing components [2]

Core Viewpoint - Jinan Silicon Vision Technology Partnership Enterprise (Limited Partnership) has been established with GoerLife (Goer Group) as the executing partner, focusing on technology services and investment activities in new materials and related applications [1][4]. Company Summary - Goer Group is a significant supplier of precision components and complete solutions in acoustics, optics, and microelectronics, actively expanding into advanced materials and new display fields [4]. - The partnership structure includes Goer Group and Jinan Zhixian Industrial Investment Development Partnership (Limited Partnership), with Goer Group as the leading party [2][4]. Industry Summary - New materials have become a crucial support for strategic emerging industries such as electronic information and intelligent manufacturing [4]. - The increasing demand for high-performance materials in downstream markets is expected to attract substantial capital, promoting the localization and industrialization of key materials [4]. - The establishment of the partnership allows Goer Group to gain more flexibility in technology incubation, industrial collaboration, and capital operations, further solidifying its strategic position in the supply chain [4].

Core Viewpoint - Meta's CEO Mark Zuckerberg has shifted from a contentious relationship with the Trump administration to becoming a favored guest at the White House, while simultaneously navigating complex supply chain dynamics with Chinese manufacturer Goertek [1][2]. Group 1: Meta's Supply Chain and Partnerships - Goertek has strengthened its control over Meta's AI glasses supply chain through significant transactions, including acquiring 100% of Shanghai Aolai's optical device production [1][2]. - Despite Meta's efforts to diversify its hardware supply chain away from China, Goertek remains a key partner, producing Meta's upcoming Hypernova smart glasses and continuing to supply components for the Quest VR headsets [2][4]. - Meta claims to have a robust and diversified supply chain, not solely reliant on any single manufacturer, while Goertek's role as a stable supplier is emphasized by industry insiders [4]. Group 2: Zuckerberg's Positioning and Market Challenges - Zuckerberg is positioning himself as an "AI leader," developing AI-driven wearable devices and collaborating with the U.S. government on military technology modernization [5]. - Despite his strong anti-China rhetoric, Zuckerberg's attempts to expand Meta's business in China have faced significant challenges, with potential partners wary of his past comments [7][10]. - The competitive landscape for Meta's VR devices in China includes major players like ByteDance, Apple, and Sony, which could hinder Meta's market entry despite any potential opportunities [9][10].

Core Insights - Meta's CEO Mark Zuckerberg has shifted from being threatened by the Trump administration to becoming a welcomed guest at the White House, indicating a change in his relationship with the U.S. government [1] - Goertek, a leading Chinese hardware manufacturer, is strengthening its control over Meta's AI glasses supply chain through strategic acquisitions, enhancing its influence in the smart glasses industry [1][2] - Meta is diversifying its hardware supply chain and has begun production in Vietnam, but Goertek remains a key partner for Meta's hardware needs [2][4] Group 1 - Goertek has acquired 100% of the shares of Shanghai Aolai Micro-Nano Optics and Shanghai Aolai Optoelectronic Information Technology, which produce micro-nano optical devices for smart glasses, through a capital increase of 530 million yuan [1] - Goertek is also involved in the production of Meta's upcoming new generation smart glasses, Hypernova, which is expected to be unveiled soon [2] - Meta's response to reports emphasizes its robust and diversified supply chain, indicating it does not rely solely on any single manufacturer [4] Group 2 - Zuckerberg is positioning himself as an "AI leader," developing AI-driven lightweight wearable devices and collaborating with the U.S. government on military technology modernization [5] - Despite his hardline stance towards China, Meta's ongoing reliance on Goertek for next-generation wearable devices highlights a contradiction in Zuckerberg's approach [7] - Previous attempts by Zuckerberg to expand Meta's business in China have faced challenges due to his past comments and the geopolitical climate [7][11]

Summary of Goertek (A) Research Report Company Overview - **Company**: Goertek - **Sector**: Technology - **Description**: Goertek is a leading acoustics supplier in China, providing speaker-box and MEMS microphones, with a diverse customer base including Apple, Samsung, and Huawei. The company has been involved in AirPods assembly since 2018 and VR system ODM assembly since 2016, being the sole supplier for Facebook Oculus and Sony PS VR [12][13]. Key Points Upgrade and Price Objective - **Rating Change**: Upgraded to Buy from Underperform - **Price Objective**: Increased to CNY42 from CNY17, reflecting a target multiple of 34x 2026E P/E, which aligns with historical averages and previous XR demand upticks [1][16]. Earnings Forecast - **Earnings Growth**: Expected structural earnings recovery starting in 2026, driven by smart glasses adoption, AirPods market share recovery, and acoustic ASP expansion. Earnings estimates for 2025-2027 have been raised by 4-51% [1][15][22]. - **Net Income Projections**: - 2025E: CNY3,084 million - 2026E: CNY4,300 million - 2027E: CNY5,574 million [4][10]. Smart Glasses Market Potential - **Market Growth**: Anticipated shipments of smart glasses to rise from 2 million in 2024 to 10 million and 18 million in 2025 and 2026, respectively, with a forecast of 55 million units by 2030 [2][27][30]. - **Total Addressable Market (TAM)**: Expected to exceed USD14 billion by 2030, up from less than USD1 billion in 2024 [32]. Competitive Position - **Assembly Dominance**: Goertek is positioned as a key beneficiary in the smart glasses market due to its assembly capabilities for major brands like Meta, Xiaomi, Amazon, and Huawei [2][27]. - **Core Competencies**: The company’s expertise in core components such as waveguides and micro-displays is expected to facilitate its transition from a pure EMS to a comprehensive supplier, enhancing margins and earnings [29]. Legacy Business Recovery - **AirPods Market Share**: After losing assembly share in 2022-2023, Goertek has rebuilt its relationship with Apple, with expectations to recover market share to 35% by 2H26 following new model launches [3][35]. - **Acoustic Business**: The high-margin acoustic segment is undergoing a specification upgrade cycle, supporting ASP expansion [3][40]. Financial Metrics - **Revenue Estimates**: - 2025E: CNY96,530 million - 2026E: CNY119,697 million - 2027E: CNY137,326 million [10][22]. - **EPS Growth**: Expected EPS growth from CNY0.88 in 2025 to CNY1.60 in 2027, with significant year-on-year increases [4][22]. Risks and Opportunities - **Downside Risks**: Include slower-than-expected margin recovery, further AirPods market share loss, and adverse macroeconomic conditions [47]. - **Upside Risks**: Faster margin improvement and market share expansion in AirPods and AR/VR business [47]. Conclusion - Goertek is positioned for significant growth driven by the smart glasses market and recovery in legacy businesses. The upgrade to a Buy rating reflects confidence in the company's ability to capitalize on emerging opportunities and improve financial performance in the coming years [1][13][15].

Core Viewpoint - The company reported a decrease in revenue but an increase in net profit, indicating a strategic shift towards high-margin products and cost optimization in a challenging market environment [1][3]. Revenue Summary - The company achieved operating revenue of 37.549 billion, a year-on-year decrease of 7.02% [1]. - Revenue breakdown by product: - Smart hardware business generated 20.341 billion, a year-on-year increase of 2.49%, accounting for 54.17% of total revenue with a gross margin increase of 2.27 percentage points to 11.51% [2]. - Smart acoustic device business generated 8.324 billion, a year-on-year decrease of 34.92%, accounting for 22.17% of total revenue with a gross margin increase of 0.1 percentage points to 9.93% [2]. - Precision components business generated 7.604 billion, a year-on-year increase of 20.54%, accounting for 20.25% of total revenue with a gross margin increase of 1.03 percentage points to 23.49% [2]. - Other business revenue was 1.280 billion, a year-on-year decrease of 11.01%, accounting for 3.41% of total revenue [2]. Profitability Summary - The net profit attributable to shareholders was 1.417 billion, a year-on-year increase of 15.65% [1]. - The net profit attributable to shareholders after deducting non-recurring gains and losses was 1.033 billion, a year-on-year decrease of 12.72% [1]. - Operating costs were 32.491 billion, a year-on-year decrease of 9.08% [1]. Regional Revenue Breakdown - Overseas business generated 32.061 billion, a year-on-year decrease of 13.28%, accounting for 85.38% of total revenue [2]. - Domestic business generated 5.488 billion, a year-on-year increase of 60.95%, accounting for 14.62% of total revenue [2]. Strategic Developments - The company invested 2.135 billion in R&D, accounting for 5.69% of operating revenue, focusing on emerging fields like XR optics and AI glasses [4]. - The company is deepening partnerships with leading tech firms such as Meta, Xiaomi, and Samsung, positioning itself for growth in consumer smart terminals [4]. - Recent acquisitions, including Hong Kong Mia and Changhong Limited, aim to enhance core component capabilities and reduce supply chain costs [4]. - A planned share issuance by the subsidiary Goer Optical to acquire 100% of Shanghai Aolai is expected to strengthen competitive advantages in the micro-nano optics field [4]. Future Profit Projections - Expected net profits attributable to shareholders for 2025-2027 are projected to be 3.572 billion, 4.209 billion, and 5.044 billion respectively [5].

Market Overview - The Shanghai Composite Index closed at 3860.50 points, down 0.26%, with a trading volume of 986.2 billion yuan [1] - The Shenzhen Component Index closed at 13005.77 points, up 0.63%, with a trading volume of 1291.248 billion yuan [1] - The ChiNext Index closed at 3066.18 points, up 1.52%, with a trading volume of 620.841 billion yuan [1] - The STAR 50 Index closed at 1340.40 points, up 0.18%, with a trading volume of 97.6 billion yuan [1] - Total trading volume for both markets was 2277.448 billion yuan, a decrease of 243.47 billion yuan from the previous trading day [1] Sector Performance - Sectors with notable gains included electric power equipment, media, agriculture, automotive, coal, and construction decoration [3] - Active concepts included pork, online gaming, nano-silver, genetically modified organisms, laser radar, and prepared dishes [3] - Sectors with significant declines included telecommunications, defense, banking, non-ferrous metals, textiles, insurance, steel, and chemicals [3] Stock Performance - A total of 1787 stocks rose, while 3231 stocks fell, with 130 stocks remaining flat and 6 stocks suspended [3] - 82 stocks hit the daily limit up, while 13 stocks hit the daily limit down [3] Fund Flow - The net outflow of main funds from the Shanghai and Shenzhen markets was 34.054 billion yuan, with the ChiNext experiencing a net outflow of 16.36 billion yuan [6] - The computer sector saw the largest net outflow of 5.924 billion yuan, followed by electronics and telecommunications [7] Individual Stock Highlights - BYD saw the highest net inflow of main funds at 811 million yuan, with a price increase of 2.63% [11][12] - The stock with the largest net outflow was Zhongji Xuchuang, with a net outflow of 1.387 billion yuan, down 3.33% [15][16] Institutional Activity - Institutions had a net selling of approximately 599 million yuan, with Cambridge Technology being the top net buyer at 338.43 million yuan [19][20] - The most sold stock by institutions was Weichai Power, with a net outflow of 2849.606 million yuan [19][20]

Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Views - The company reported a revenue of 37.549 billion yuan for the first half of 2025, a year-on-year decrease of 7.02%. However, the net profit attributable to shareholders increased by 15.65% to 1.417 billion yuan, demonstrating effective cost optimization and expansion into high-margin businesses despite revenue pressure [2][4]. - The company is strategically positioned in emerging fields such as AI smart hardware and AR/VR, which are expected to drive long-term growth. The global smart glasses market saw a 110% year-on-year increase in shipments in the first half of 2025, indicating strong demand for AI-enabled products [9]. Summary by Sections Financial Performance - For the first half of 2025, the company achieved a revenue of 37.549 billion yuan, down 7.02% year-on-year. The net profit attributable to shareholders was 1.417 billion yuan, up 15.65%. The net profit excluding non-recurring gains and losses was 1.033 billion yuan, down 12.72%. Operating costs were 32.491 billion yuan, a decrease of 9.08% year-on-year [4][9]. - Revenue breakdown by product: - Smart hardware business: 20.341 billion yuan, up 2.49%, accounting for 54.17% of total revenue with a gross margin increase of 2.27 percentage points to 11.51% - Smart acoustic products: 8.324 billion yuan, down 34.92%, accounting for 22.17% of total revenue with a gross margin increase of 0.1 percentage points to 9.93% - Precision components: 7.604 billion yuan, up 20.54%, accounting for 20.25% of total revenue with a gross margin increase of 1.03 percentage points to 23.49% [9]. Geographic Performance - Revenue from overseas operations was 32.061 billion yuan, down 13.28%, accounting for 85.38% of total revenue. Domestic revenue was 5.488 billion yuan, up 60.95%, accounting for 14.62% of total revenue [9]. Strategic Initiatives - The company is investing in R&D, with 2.135 billion yuan allocated in the first half of 2025, representing 5.69% of revenue. Focus areas include XR optics, AI glasses, and smart wearable devices. The company is deepening partnerships with leading tech firms like Meta, Xiaomi, and Samsung [9]. - The acquisition of Shanghai Aolai aims to enhance the company's core component capabilities and reduce supply chain costs, positioning the company favorably in high-growth sectors like AI glasses and AR [9]. - Forecasted net profits for 2025-2027 are 3.572 billion, 4.209 billion, and 5.044 billion yuan, respectively [9].

Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies Core Insights - The intelligent vision industry is experiencing significant growth, with optical technology undergoing unprecedented innovation and expanding application scenarios [1][33] - The CIOE Precision Optics Exhibition showcased the latest products and technological advancements in the optical industry chain [1][33] Summary by Relevant Sections Sunny Optical - Sunny Optical launched several globally debut products under the theme of "All-Scenario Optical Innovation" and conducted technical lectures on various hot fields including mobile optics, automotive optics, lidar, AR/VR, and machine vision [2][34] - A breakthrough was achieved in global shutter sensors with ultra-small pixel sizes, reducing pixel size to below 1.0μm while maintaining low smearing characteristics at 120fps, suitable for high-speed imaging scenarios [4][35] - The new-generation automotive lidar optical solution offers ±2 cm ranging accuracy and a detection distance of 190 meters, enabling reliable environmental perception for advanced intelligent driving [4][36] Phoenix Optical - Phoenix Optical presented a diversified product matrix covering medical care, intelligent imaging, instruments, infrared detection, and intelligent control, emphasizing vertical integration of optomechatronics and computing [3][40] - Key medical products include a fluorescence laparoscope with 4K output and high-temperature sterilization capabilities, a 3D endoscope lens group for enhanced surgical experience, and a flexible endoscope lens for improved diagnostic accuracy [4][40][44] Goertek Optical - Goertek Optical introduced a differentiated product matrix for AR/VR, including silicon carbide optical waveguides and ultra-small full-color light engines, supporting the entire AR/VR scenario [5][45] - The SiC-etched full-color diffractive optical waveguide F30Se addresses stray light issues, enhancing the design of lightweight AR glasses [7][46] Industry Trends - The report highlights the emergence of various technological breakthroughs in MicroLED microdisplay, diffractive optical elements, and infrared materials, enriching application options in intelligent vision, AR/VR, and infrared detection [5][50] - The optical industry is moving towards deeper segmentation, with companies focusing on specific applications and technological advancements to meet market demands [5][50]