Investment Rating - The report maintains a "Buy" rating for the company and raises the target price to HKD 15.6, indicating a potential upside of 20% from the current price of HKD 13.06 [1][3]. Core Insights - The company is expected to sustain its growth momentum in the second half of 2025, driven by significant growth in its IoT camera module business, propelled by consumer drone clients, and expansion in mobile and automotive camera segments [10][30]. - The company has revised its revenue forecasts upward for 2025, anticipating a 60% year-on-year increase in non-mobile IoT and automotive module sales, and a 30% increase in fingerprint recognition module sales [10][30]. - The financial performance for the first half of 2025 shows a strong revenue growth of 15% year-on-year, with net profit increasing by 168% compared to the same period last year [14][10]. Financial Projections - Revenue is projected to grow from RMB 12,531 million in 2023 to RMB 21,683 million by 2027, with a compound annual growth rate (CAGR) of approximately 9% [2][11]. - The net profit is expected to rise significantly from RMB 82 million in 2023 to RMB 1,510 million in 2026, reflecting a substantial increase in profitability [2][11]. - The gross margin is forecasted to improve from 4.1% in 2023 to 7.8% in 2027, indicating enhanced operational efficiency [2][11]. Valuation - The report employs a sum-of-the-parts valuation method, assigning target price-to-earnings (P/E) ratios of 20.0x for mobile camera modules, 27.0x for other camera modules, and 22.0x for fingerprint recognition modules, leading to a target price of HKD 15.6 [10][19]. - The current P/E ratio of the company is noted to be 20.5x, which is considered attractive for potential investors [10].

Summary of Key Points from Conference Call Records Industry Overview - The PCB industry is benefiting from increased demand for computing power, with a steady recovery in high-end board demand. The global PCB market is expected to grow by 5.8% year-on-year in 2024 and by 6.8% in 2025. High-layer and HDI product categories are projected to grow by 40% and over 10% respectively in 2025, reflecting optimistic expectations for AI computing power demand [1][4]. Core Insights and Arguments - Increased investment in the AI industry has positively impacted the PCB sector. The total addressable market (TAM) for data centers has been revised upward by 29% to $55.4 billion. Major overseas FSP manufacturers reported a 60% year-on-year increase in capital expenditure in Q1 2025, with Meta raising its 2025 capital expenditure forecast to between $64 billion and $72 billion [1][5]. - High-layer HDI products have a significant competitive advantage in AI servers, requiring low cost, high yield, and stable mass delivery. High-end HDI products must maintain a layer error of within 20 microns, which demands advanced technical research and experienced teams [1][6]. - CCL materials like PTFE are suitable for high-speed interconnect applications due to their low dielectric constant and low loss factor, which help maintain signal integrity, especially for GPU high-speed interconnects [1][8]. - The upstream copper-clad laminate market is experiencing a shortage of high-end materials, leading to price increases. For instance, the price of copper-clad laminates has risen by approximately $5 per unit due to rising raw material costs [1][9]. Investment Opportunities - Current investment opportunities in the PCB sector are primarily driven by structural trends related to computing power, particularly the steady recovery in high-end board demand. The PCB market is projected to reach approximately $73.6 billion in 2024, with significant growth expected in high-layer and HDI products [1][4]. - The PCB industry is currently in a critical upward cycle of computing power demand, suggesting that some leading PCB companies still have investment value despite previous lower valuations during downturns [1][11]. Mobile Optical Industry Insights - The mobile optical industry has seen a recovery in market size after a period of adjustment, with expected growth driven by technological upgrades and a more favorable competitive landscape. The market for mobile camera modules is projected to grow by over 7%, primarily driven by an increase in average selling prices (ASP) [3][12]. - Future technological upgrades in mobile optics will focus on innovations in lenses, voice coil motors, and image sensors. The industry is expected to return to a healthy competitive state, with mainland Chinese manufacturers likely to increase their market share [3][14]. Price Trends and Market Dynamics - Recent price increases in general products are attributed to inventory reduction, capacity removal, and improved competitive dynamics, alongside strong demand from AI and automotive electronics for mid-to-high-end products. This price increase trend is expected to continue [3][10]. - The mobile optical sector is experiencing a recovery in profit margins and revenue, with the potential for sustained improvement depending on technological advancements and competitive dynamics [3][13]. Company Recommendations - Companies to watch in the mobile optical sector include Sunny Optical, GoerTek, and others involved in lens and module production. Additionally, upstream suppliers like Lante Optics and Crystal Optoelectronics are also recommended for further investigation [3][19][20].