Core Viewpoint - Morgan Stanley maintains a "neutral" rating on Sunny Optical Technology (02382) due to a conservative outlook on its future smartphone business growth potential, citing low market share in high-end projects and the need for longer timeframes for contributions from new businesses like robotics [1] Financial Performance - The company’s earnings per share forecasts for 2025 and 2026 have been raised by 19% and 10% respectively, to RMB 3.2 and RMB 3.4, reflecting stronger smartphone profit margin improvements [1] - The target price has been increased from HKD 65 to HKD 75 [1] Smartphone Business - Sunny Optical's performance in the first half of the year was primarily driven by strong improvements in smartphone profitability [1] - The company is expected to sustain better average selling prices and gross margins for smartphones until the second half of 2025 and beyond, as market share distribution stabilizes and competition becomes healthier despite a decline in shipment volumes [1] Automotive Products - The outlook for the company's automotive product business is stronger than expected and is projected to be a major growth driver in 2025, supported by higher ADAS penetration rates and increased per-vehicle value [1] - Sunny Optical is gaining more high-margin projects in international markets [1]