SUNNY OPTICAL(HK:02382) First Shanghai Securities·2024-04-08 16:00Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 45.00, representing a potential upside of 16.73% from the current price of HKD 38.55 [3][4]. Core Insights - The company's profitability continues to be under pressure, primarily due to a decline in smartphone demand and a trend towards lower specifications in optical products, leading to a decrease in average selling price (ASP) and gross margins [2]. - Future expectations include a recovery in the smartphone business, growth in automotive optics, and advancements in VR/AR segments, indicating a stable outlook for these areas [2][3]. - The company anticipates a slight increase in smartphone lens ASP and a 5% growth in shipment volume as the smartphone market gradually recovers [2]. Financial Summary - Total revenue for 2023 is reported at RMB 31.68 billion, a decrease of 4.6% year-on-year, with a gross margin of 14.5%, down approximately 5.4 percentage points from the previous year [2][8]. - The net profit attributable to shareholders for 2023 is RMB 1.10 billion, reflecting a significant decline of 54.3% compared to the previous year, aligning with prior profit warnings [2][8]. - The company projects revenues of RMB 34.03 billion, RMB 37.24 billion, and RMB 40.84 billion for 2024, 2025, and 2026, respectively, indicating a recovery trend with growth rates of 7.4%, 9.4%, and 9.7% [8]. - Earnings per share (EPS) are expected to rise from RMB 1.08 in 2024 to RMB 1.74 in 2026, with corresponding growth rates of 7.7%, 30.5%, and 22.7% [8]. Segment Performance - The optical components business saw a slight revenue increase of 0.9% to RMB 9.56 billion, although the segment's gross margin fell from 33.4% to 28.4% [2]. - Shipments of smartphone lenses reached 1.17 billion units, a minor decline of 1.8%, with high-end market demand remaining sluggish [2]. - The automotive lens segment experienced a 15.1% increase in shipments, totaling 90.81 million units, although growth is expected to slow down in 2024 [2]. - The VR/AR business is projected to grow by 15% in 2024 as the company becomes a preferred supplier for key clients [2].