Core Viewpoint - The company reported strong financial performance for the first half of 2025, with significant growth in revenue and net profit, driven by advancements in camera module and fingerprint recognition module businesses [1][2][3]. Group 1: Financial Performance - In the first half of 2025, the company achieved revenue of RMB 8.832 billion, a year-on-year increase of 15.07% [1] - The net profit attributable to shareholders reached RMB 308 million, up 167.59% year-on-year [1] - The non-GAAP net profit attributable to shareholders was RMB 259 million, reflecting a substantial increase of 512.40% year-on-year [1] Group 2: Camera Module Business - The smartphone camera module segment saw a shift towards high-end specifications, with modules of 32 million pixels and above accounting for approximately 53.4% of total smartphone modules, an increase of about 5.5 percentage points year-on-year [1] - Sales of periscope camera modules reached approximately 10.6 million units, a year-on-year increase of about 5.9 times [1] - The average selling price of camera modules rose to approximately RMB 41.5, up 27.2% year-on-year and 16.1% quarter-on-quarter [1] Group 3: Non-Smartphone Camera Module Business - The company’s non-smartphone camera module business, particularly in automotive and IoT sectors, showed robust growth with shipments of 8.084 million units, a year-on-year increase of 47.9% [2] - The company has established partnerships with seven leading global automotive Tier 1 manufacturers and received supplier qualifications from 34 first-line automotive brands [2] - The sales guidance for non-smartphone camera modules has been revised from a year-on-year growth of no less than 40% to no less than 60% [2] Group 4: Fingerprint Recognition Module Business - The fingerprint recognition module business generated revenue of RMB 830 million, a year-on-year increase of 109.3% [3] - Shipment volume reached 94.36 million units, reflecting a year-on-year growth of 59.7% [3] - The average selling price increased by 31.1% year-on-year, contributing to improved sales revenue and gross margin [3] Group 5: Strategic Investments and Partnerships - The company increased its stake in New Giant Technology to 41.8%, enhancing its capabilities in smartphone, IoT, and NB lens technology [4] - New Giant Technology reported a revenue increase of 19.8% year-on-year, with a gross margin improvement from approximately 7.9% to 12.3% [4] - The company became the largest shareholder of Norwegian listed company poLight, focusing on TLens and semiconductor piezoelectric motors [4]

Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [1]. Core Insights - The company has shown strong growth in its camera module business, particularly in the automotive and IoT sectors, with a significant increase in both revenue and profit margins [3][4][5]. - The company reported a revenue of RMB 8.832 billion for the first half of 2025, representing a year-on-year increase of 15.07%, and a net profit of RMB 308 million, which is a remarkable increase of 167.59% [3]. - The average selling price of camera modules has increased by approximately 27.2% year-on-year, driven by the optimization of product structure [4]. Company Overview - The latest closing price is HKD 14.16, with a total market capitalization of HKD 168.44 billion [2]. - The company has a debt-to-asset ratio of 65.06% and a price-to-earnings ratio of 32.96 [2]. Business Segments - The smartphone camera module segment has seen a shift towards high-end specifications, with modules of 32 million pixels and above accounting for about 53.4% of total sales, an increase of 5.5 percentage points year-on-year [4]. - In the non-smartphone sector, the company shipped 8.084 million camera modules for automotive and IoT applications, marking a year-on-year growth of 47.9% [5]. - The fingerprint recognition module business also experienced significant growth, with revenue reaching RMB 830 million, a year-on-year increase of 109.3% [6][8]. Financial Projections - The company is projected to achieve revenues of RMB 19.124 billion, RMB 21.705 billion, and RMB 24.472 billion for the years 2025, 2026, and 2027, respectively [10]. - The net profit forecast for the same years is RMB 745 million, RMB 938 million, and RMB 1.102 billion, indicating strong growth potential [10]. Strategic Developments - The company has deepened its vertical integration in smart vision systems, enhancing its capabilities in smartphone, IoT, and NB sectors through strategic investments [9]. - The company has established partnerships with seven leading automotive Tier 1 manufacturers, which supports its growth in the automotive camera module market [5].