Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 87.70 [1][6]. Core Insights - The company reported FY25 revenue of RMB 43.23 billion, representing a year-on-year increase of 12.9%, and a net profit of RMB 4.64 billion, up 71.9% year-on-year, aligning with Bloomberg consensus expectations [1]. - The gross margin for FY25 was 19.7%, an increase of 1.4 percentage points year-on-year, driven by an optimized product mix in mobile lenses and modules, as well as a higher proportion of high-margin automotive product revenue [1]. - The company is transitioning towards becoming an "optical perception intelligent entity," focusing on diverse areas including perception, transmission, processing, storage, and display [1]. Mobile Segment - Mobile revenue for FY25 was approximately RMB 27.32 billion, up 8.6% year-on-year, with significant ASP increases driving revenue growth despite declines in shipment volumes [2]. - High-end products such as glass-plastic hybrid lenses and periscope modules saw revenue growth of 95.8% and 55.9% respectively [2]. - The company expects overseas client revenue to grow by over 100% in 2026, despite IDC predicting a 12.9% decline in global smartphone shipments [2]. Automotive Segment - Automotive revenue reached RMB 7.33 billion in FY25, a 21.3% year-on-year increase, with a gross margin of 31.9% [3]. - The company has successfully launched several products, including a 17MP ADS camera and long-range lidar modules, which have been validated by key clients [3]. - Plans for a spin-off listing of the automotive business on the Hong Kong Stock Exchange are underway, which is expected to enhance strategic value and collaboration within the supply chain [3]. XR Segment - XR revenue was RMB 2.39 billion in FY25, down 7.1% year-on-year, primarily due to weak demand in the VR/MR sector [4]. - Revenue from smart glasses modules surged by 800% year-on-year, effectively offsetting declines in VR/MR sales [4]. - The company completed a share swap transaction with GoerTek, acquiring approximately 31% equity to jointly develop an AR waveguide production platform [4]. Other Products - Revenue from other products, including robotics and IoT, grew by 36.7% year-on-year to RMB 6.18 billion [5]. - The company anticipates over 60% revenue growth in the IoT segment for 2026, driven by the successful mass production of lawnmowers and automated warehousing solutions [5]. - The company is focusing on CPO layouts, aiming to launch new products in the optical interconnect space by 2027-2028 [5]. Financial Projections - The company has adjusted its net profit forecasts for 2026 and 2027 upwards by 16% and 14% respectively, projecting RMB 5 billion and RMB 5.8 billion [6]. - The target price of HKD 87.70 corresponds to a 17x FY26E PE ratio, reflecting the company's growth potential across its various segments [6][18].

Financial Data and Key Metrics Changes - In 2025, the company achieved revenue of CNY 3.23 billion, representing a year-on-year increase of 12.9% [6] - The net profit attributable to shareholders for the full year stood at CNY 5.64 billion, a year-on-year increase of 71.9% [7] - The overall expense ratio for 2025 was 11.6%, down 0.8 percentage points compared to 2024 [8] - Gross margins stood at 19.1%, driven by premiumization and an increased revenue share from the high-margin vehicle business [7] Business Line Data and Key Metrics Changes - Handset products achieved revenue growth of 8.6% year-on-year, driven by a premiumization strategy [9] - Vehicle revenue increased by 21.3% year-on-year, capitalizing on the rise in advanced intelligent drives [11] - XR business revenue declined year-on-year, but revenue from AR smart glasses camera modules surged by 800% [12] - Pan-IoT revenue grew rapidly, exceeding 60% growth in 2026 [30] Market Data and Key Metrics Changes - The global handset market is forecasted to contract by 12.9% in 2026, yet the company expects its handset business to grow against this trend [19] - Revenue from major overseas clients is projected to grow by over 100% in 2026 [21] - The vehicle optics sector is entering a period of rapid growth, driven by AI technology and software-defined vehicles [22] Company Strategy and Development Direction - The company has set a new round of its 100 billion strategy, focusing on AI-enabled wearable smart hardware and robotics as high-certainty growth opportunities [4] - Plans to spin off the vehicle business to maximize its value and deepen collaboration across the industrial chain [5][22] - The company aims to leverage optical perception as a core starting point for strategic deployment across various information domains [4] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving high-quality growth in 2026 despite external challenges and industry fluctuations [1] - The company anticipates continued growth in the handset business driven by sustained ASP increases and optimization of customer structure [19] - Management highlighted the importance of AI technology in transforming the vehicle business and enhancing product offerings [22] Other Important Information - The company achieved significant improvements in R&D capabilities, establishing a full-stack software algorithm and integrated hardware-software solution capabilities [3] - ESG commitments include reaching carbon peak emissions by 2028 and achieving carbon neutrality by 2050 [40] Q&A Session Summary Question: Future R&D plans and revenue from transmission-based products - Management indicated plans for establishing research institutes and focusing on semiconductor production and packaging [44][45] Question: XR market outlook and volume changes - Management noted that while VR is stable, AR is evolving and expects significant growth in AR glasses within the next few years [54] Question: Investment strategy and cooperation with external parties - Management emphasized the importance of ecosystem collaboration and plans to bring in new partners for development [58] Question: Value layout and long-term focus areas - Management discussed the integration of optics and AI, focusing on perception intelligent agents and expanding optical capabilities [66] Question: Optical communication direction - Management confirmed a shift towards CPU packaging technology rather than traditional optical modules [70] Question: Handset revenue growth related to overseas customers - Management acknowledged growth from major overseas clients but refrained from disclosing specific details [75] Question: Impact of storage issues on handsets - Management acknowledged challenges in the handset business but expressed confidence in achieving growth through strong relationships with key clients [80]

2026.3.31 1 Disclaimer 本文件为舜宇光学科技（集团）有限公司专有之财产，非由书面许可，不得以其他形式使用。 This document is the exclusive property of Sunny Optical Technology (Group) Company Limited, and shall not be used in other forms without written permission. 2 The information contained in this presentation is intended solely for your personal reference. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning Sunny Optical Technology (Group) Company Limited ...

Core Viewpoint - Ningbo, despite its low profile compared to other cities, is a manufacturing powerhouse with a strong foundation in specialized manufacturing, evidenced by its status as the city with the highest number of national manufacturing champions for eight consecutive years [8][9]. Group 1: Manufacturing Strength - Ningbo has the largest port in the world, Ningbo-Zhoushan Port, with a cargo throughput exceeding 1.4 billion tons last year, ranking first globally for 15 years [7]. - The city's GDP reached 1.6 trillion yuan, ranking 12th among Chinese cities and second in Zhejiang province [7]. - Ningbo is home to 11 companies listed in the Hurun China 500, ranking 10th among all cities [7]. - The number of high-tech enterprises in Ningbo exceeds 10,000, maintaining the highest growth rate in Zhejiang for four consecutive years [7]. Group 2: Specialized Manufacturing Champions - Ningbo has a significant number of national manufacturing champions, which are defined as companies that focus on specific manufacturing sectors with advanced technology and a leading market share globally [8]. - These champions play a crucial role in the global supply chain, often operating in niche markets that are not widely recognized but are essential for various industries [9][17]. Group 3: Innovation and R&D - Over 90% of R&D platforms, talent, and investment in Ningbo come from enterprises, with more than 80% of invention patents generated by these companies [25]. - The local government supports innovation through platforms like the Yongjiang Laboratory and various industry funds to enhance competitiveness [26][31]. Group 4: Industrial Ecosystem and Collaboration - Ningbo's industrial clusters provide a complete local supply chain, which reduces R&D and production costs, fostering deep specialization in key technologies [23]. - The collaboration among leading enterprises drives the transformation and upgrading of local industries, with many companies acting as "chain masters" to support smaller firms [24]. Group 5: Challenges and Future Plans - Ningbo faces structural challenges with a lack of large-scale leading enterprises, which limits its ability to compete with other major cities in the Yangtze River Delta [38]. - The local government aims to develop a "361" modern industrial system by 2027, targeting three trillion-level industrial clusters and six hundred billion-level clusters [34]. - Efforts are underway to attract leading enterprises and enhance the robotics industry, with several local companies already recognized among the top in China for robotics components [39][40].

Investment Rating - The report maintains an "Outperform" rating for Sunny Optical Technology [2][10][17] Core Insights - Sunny Optical is expected to achieve attributable net profit of RMB 45.89–47.24 billion in 2025, representing a year-on-year increase of 70% to 75%, significantly above Bloomberg consensus of RMB 35.39 billion. This upside is primarily driven by a one-off investment gain of approximately RMB 9.19 billion from an equity transfer for a stake in Goertek Optics. Excluding this non-recurring item, the core attributable net profit is estimated to be RMB 36.7–38.05 billion, supported by the ongoing premiumization of smartphone camera specifications [3][13] - The company continues to benefit from the upgrade of camera specifications in flagship and mid-to-high-end smartphones, which is expected to enhance both average selling price (ASP) and gross margin for handset lenses and camera modules [4][14] Summary by Relevant Sections Handsets - Despite ongoing headwinds from rising memory costs, the trend of optical upgrades remains intact. The company is well-positioned to benefit from the adoption of higher-value products such as variable aperture and periscope cameras, which will drive ASP and margin expansion [4][14] Automotive - The adoption of intelligent driving technologies is expected to significantly boost the company's automotive lens and module businesses. The average number of cameras per vehicle is projected to increase, with high-end vehicles already equipped with around 12 cameras [5][15] XR & IoT - The company maintains its global leadership in imaging modules for smart glasses, with strong growth in revenue from handheld imaging devices. The rapid expansion of AI and AR glasses is anticipated to be a key growth driver in the coming years [6][16] Valuation - The estimated EPS for 2025-2027 is revised to RMB 4.23, 3.86, and 4.19 respectively. Based on a P/E ratio of 19.6x for 2026, the target price is set at HKD 85.24 [6][17]

Core Viewpoint - Sunny Optical Technology Group announced a projected over 100% growth in net profit attributable to shareholders for the year ending December 31, 2025, compared to the previous year [2][3]. Financial Performance - The expected net profit for the year 2025 is estimated to be between RMB 4,588,600,000 and RMB 4,723,500,000, representing an increase of approximately 70% to 75% from the previous year's profit of about RMB 2,699,200,000 [3][4]. Growth Drivers - The anticipated profit increase is primarily attributed to: 1. The high-end specifications of smartphone camera modules driving improvements in product mix, leading to higher average selling prices and gross margins for mobile camera lenses and modules [4]. 2. The transfer of equity in certain subsidiaries in exchange for shares in GoerTek Inc., generating an investment income of approximately RMB 919,000,000 [4]. Future Outlook - The company is in the process of finalizing its consolidated financial results for the year ending December 31, 2025, with the final audited results expected to be published by the end of March 2026 [4].

Core Viewpoint - Sunny Optical Technology (02382) expects a significant increase in profit for the fiscal year ending December 31, 2025, projecting a profit attributable to shareholders of approximately RMB 4.5886 billion to RMB 4.7235 billion, representing an increase of about 70.0% to 75.0% compared to the previous fiscal year [1] Group 1 - The expected profit increase is primarily attributed to the high-end specifications of smartphone cameras, which have driven improvements in the company's product mix, leading to higher average selling prices and gross margins for mobile lenses and camera modules [1] - The company also anticipates investment income of approximately RMB 919 million from the transfer of all equity interests in certain subsidiaries in exchange for shares in GoerTek Optical Technology Co., Ltd [1]

Core Viewpoint - Sunny Optical Technology (02382) expects a significant increase in net profit attributable to shareholders for the fiscal year ending December 31, 2025, projecting a profit of approximately RMB 4.5886 billion to RMB 4.7235 billion, representing an increase of about 70.0% to 75.0% compared to the previous fiscal year [1] Financial Performance - The projected net profit for the fiscal year ending December 31, 2025, is between RMB 4.5886 billion and RMB 4.7235 billion, compared to approximately RMB 2.6992 billion for the fiscal year ending December 31, 2024 [1] - This indicates a substantial year-on-year growth of approximately 70.0% to 75.0% [1] Factors Contributing to Growth - The board attributes the expected profit increase to the high-end specifications of smartphone camera modules, benefiting from advanced technology and product iterations, leading to improved product mix and higher average selling prices and gross margins for mobile lenses and camera modules [1] - Additionally, the company realized an investment gain of approximately RMB 919 million from transferring the entire equity of several subsidiaries in exchange for shares in GoerTek Inc [1]

Market Overview - Hong Kong stocks continued to lead, closing up 0.51% with a trading volume of 332 billion [1] - The FOMC meeting minutes indicated that the federal funds rate target range remains at 3.5% to 3.75%, with a voting result of 10 to 2 against a rate cut [1] - Oil prices are rising due to ongoing tensions in Iran, with WTI crude touching $65 per barrel, up 2.83%, marking a new high since September 2025 [1] Gold Market - International gold prices reached a historical high, with London gold nearing $5,600, leading to a rise in domestic gold jewelry prices to around 1,700 yuan per gram [2] - Despite the price increase, gold retail stocks did not see a corresponding rise, with concerns about potential profit-taking if prices decline [2] Commodities and Metals - Copper prices on the London Metal Exchange approached $14,000 per ton, a historical high, benefiting companies like Jiangxi Copper, which rose over 6% [3] - Nickel resources are rebounding, with Zhongwei New Materials securing significant nickel ore supply and establishing a nickel raw material industrial base in Indonesia [3] Real Estate Sector - The Chinese government is encouraging local policies to digest existing real estate stock, leading to a surge in real estate stocks, with companies like Agile Group rising nearly 41% [4] - Real estate brokerage firms also saw gains, with Beike rising over 7% [4] Consumer Goods - The liquor market is experiencing price increases, with Moutai's original box price rising to 1,610 yuan per bottle [4] - There are rumors of Kweichow Moutai participating in SpaceX's Series A financing, which the company denied, yet it contributed to a surge in liquor stocks [5] Financial Performance - Dongfang Zhenxuan reported a 5.7% increase in total revenue to 2.3 billion yuan and a net profit of 239 million yuan, up 14.5% [6] - Nine Dragons Paper expects a profit of 2.15 billion to 2.25 billion yuan for the six months ending December 31, 2025, a significant increase from 680 million yuan the previous year [6] Automotive Sector - The State Council released a plan to accelerate the development of service consumption in the automotive sector, which is expected to benefit automotive dealers like Meidong Automotive and Zhongsheng Holdings [7] Individual Stock Highlights - Sunny Optical Technology expects a net profit of approximately 4.589 billion to 4.723 billion yuan for 2025, representing a year-on-year growth of 70% to 75% [8] - The growth is attributed to high-end smartphone camera specifications and improved product mix, despite a recent decline in stock price due to fluctuations in smartphone demand [8]

Earnings Forecast - The company expects a net profit attributable to shareholders of approximately RMB 4.589 billion to RMB 4.724 billion for the fiscal year 2025, representing a year-on-year growth of 70% to 75% [2] - The net profit attributable to shareholders for the fiscal year 2024 is projected to be RMB 2.699 billion [2] Growth Drivers - Improvement in core business is driven by the high-end specifications of smartphone camera modules, benefiting from technological advancements and product iterations, leading to an increase in average selling prices of mobile lenses and camera modules, as well as improved gross margins [2] - Investment income is expected from the transfer of all equity interests in several subsidiaries in exchange for equity in GoerTek Optical Technology, generating an investment income of approximately RMB 919 million [2] Additional Information - The above data is based on preliminary assessments of unaudited management accounts [2] - The audited comprehensive performance for the fiscal year 2025 is expected to be announced by the end of March 2026 [2]