Core Viewpoint - The acquisition of TDK's micro motor assets by the controlling shareholder is expected to enhance the company's product line in high-end micro drive motors, positioning it as a leading global supplier across all product ranges [2][3]. Group 1: Acquisition Details - The controlling shareholder, Qiutai Investment Co., Ltd., signed a framework agreement with Japan's TDK to acquire its micro motor assets, which includes over 2,000 patents, more than 2,000 employees, a skilled R&D team, specialized production equipment, and facilities in the Philippines [2]. - The final completion of the acquisition is anticipated in early 2026, with TDK remaining responsible for business operations until the deal is finalized [2]. Group 2: Product Line and Market Position - Micro drive motors are critical components for camera modules, influencing autofocus, optical zoom, and module size. The controlling shareholder previously invested in two companies focusing on mid-to-low-end products, while high-end suppliers remain dominated by overseas firms like TDK and Alps [3]. - This acquisition is expected to allow the controlling shareholder to cover the entire product line from high to low-end, enhancing its competitive position in the market [3]. Group 3: Vertical Integration and Profitability - The company and its controlling shareholder have emphasized vertical integration across the entire camera module supply chain, from upstream optical components to downstream modules and complete devices [4]. - The integration of key components internally or through affiliated suppliers is projected to improve cost structures and leverage technological synergies, thereby enhancing long-term profitability [4]. Group 4: Market Performance and Trends - From January to April, the shipment volume of camera modules decreased by 16.5% year-on-year, but the proportion of shipments for 32MP and above camera modules increased by 9.1 percentage points to 56.5%, indicating a significant optimization in product structure [5]. - The penetration rate of high-end OIS (Optical Image Stabilization) modules is increasing, and the share of high-end products in shipments is expected to rise, which may drive continuous improvement in profitability [6]. - The shipment volume of fingerprint recognition modules surged by 83.1% year-on-year, benefiting from improved supply-demand dynamics and product structure optimization, suggesting ongoing enhancements in profitability [6].

Investment Rating - The report maintains a "Buy" rating for the company [5] Core Viewpoints - The controlling shareholder has signed a framework agreement with Japan's TDK to acquire its micro motor business, which includes over 2,000 patents, more than 2,000 employees, and a well-experienced R&D team [1] - The acquisition is expected to enhance the controlling shareholder's high-end micro motor product line, positioning it as a global leader covering the entire product range from high to low-end micro motors [1] - The company's vertical integration capabilities in the camera module supply chain are expected to improve, enhancing long-term profitability [2] - The company has initiated the "Apollo" plan to promote vertical integration of core components in camera modules through partnerships and resources from the controlling shareholder [2] Summary by Sections Camera Module Shipment and Product Structure - From January to April, the shipment volume of camera modules decreased by 16.5% year-on-year, but the proportion of 32MP and above camera modules increased by 9.1 percentage points to 56.5%, indicating a significant optimization in product structure [3] - The fingerprint recognition module shipment increased by 83.1% year-on-year, driven by improved supply-demand dynamics and product structure optimization [3] Financial Forecasts and Valuation - The net profit forecasts for 2025 and 2026 have been raised by 24% and 17% to RMB 602 million and RMB 713 million, respectively, with a new forecast for 2027 at RMB 840 million [3] - Revenue projections for 2023 to 2027 are as follows: RMB 12,530.8 million in 2023, RMB 16,151.3 million in 2024, RMB 19,377.2 million in 2025, RMB 21,701.0 million in 2026, and RMB 23,936.3 million in 2027 [4][10]