Investment Rating - The report upgrades the investment rating to "Buy" with a target price not specified [5] Core Views - The company demonstrates strong resilience in operations despite external market pressures, with a focus on optimizing product matrix and advancing smart technology [5] - The company has successfully launched new high-end products, including the Tianji series, which enhances its competitive edge in the high-end lens market [3] - The company has established itself as the exclusive optical partner for Xiaomi's AI glasses, contributing to significant revenue growth in this segment [4] Financial Performance Summary - In Q3 2025, the company achieved revenue of 230 million yuan, a year-on-year increase of 14.6%, and a net profit of 50 million yuan, up 11.6% year-on-year [1] - For the first three quarters of 2025, total revenue reached 630 million yuan, reflecting a 7.4% year-on-year growth, while net profit was 150 million yuan, up 8.8% year-on-year [1] - The company's main business growth rate improved in Q3, indicating robust business model stability and market competitiveness [1] Product Strategy Summary - The company maintains growth in its major products, with the PMC Ultra Bright series seeing a 53.7% revenue increase in Q3 2025 compared to the same period last year [2] - The "Easy Control" series generated sales of 50.8 million yuan in Q3 2025, a 10.5% year-on-year increase, with cumulative sales for the first three quarters reaching 132 million yuan, up 8.5% year-on-year [2] - The newly upgraded 1.74 series product received positive consumer feedback, with sales increasing by 112.4% year-on-year in Q3 2025 [2] Market Positioning Summary - The company is positioned as a leading domestic brand in the lens market, focusing on high-end product development to meet market demands [3] - The partnership with Xiaomi enhances the company's visibility and credibility in the smart wearable technology sector [4]

Financial Performance - Q3 revenue reached 227 million CNY, a year-on-year increase of 14.6%, with a cumulative revenue of 626 million CNY for the first nine months, up 7.4% year-on-year [2] - Net profit attributable to shareholders for Q3 was 53.59 million CNY, with a cumulative net profit of 149 million CNY for the first nine months, reflecting an increase of 11.6% and 8.8% year-on-year respectively [2] - R&D expenses in Q3 amounted to 13.29 million CNY, marking a record high for a single quarter, with a cumulative R&D expense of 33.22 million CNY for the first nine months [2] Product Performance - PMC Ultra Bright series saw a revenue increase of 53.7% year-on-year in Q3, while the 1.71 series grew by 13.7% [3] - The newly upgraded 1.74 series achieved a remarkable sales growth of 112.4% year-on-year in Q3, with a cumulative growth of 171.5% for the first nine months [3] - Sales of the Xiaomi AI glasses collaboration reached 6.51 million CNY by the end of September 2025, with a gross margin of 78.6% for smart glasses lenses [3] Strategic Initiatives - The company is focusing on the high-end market with the launch of the Tianji series, targeting the 5-8 score market segment, which is currently underserved [8][9] - The company is actively expanding its presence in the medical channel, collaborating with leading eye care institutions to enhance product distribution [10] - The gradual introduction of progressive multifocal lenses is seen as a significant growth opportunity, especially as the population ages [6] Market Trends - The demand for high-quality products is increasing, with consumers willing to invest in better options, reflecting a trend of consumption upgrade [4] - The aging population in China, particularly those over 45 years old, is expected to drive demand for progressive lenses, with a potential market size of nearly 700 million people [6][12] - The company is committed to maintaining its brand positioning and product quality amidst industry price wars, focusing on long-term growth strategies [11] Future Outlook - The company is optimistic about the industry’s growth potential, driven by domestic market expansion and the shift towards premium products [12] - Strategic changes implemented in product, channel, and customer service are beginning to show positive results, with expectations for continued improvement [12] - The company aims to leverage its technological advancements and market positioning to capture emerging opportunities in the smart eyewear segment [4][5]

Core Viewpoint - The company reported a revenue of 399 million yuan for the first half of 2025, reflecting a year-on-year growth of 3.68%, with a net profit attributable to shareholders of 96 million yuan, up 7.35% year-on-year, and a non-recurring net profit of 83 million yuan, increasing by 9.57% year-on-year, indicating that the performance is in line with expectations despite weak industry demand and product recall impacts [1] Group 1: Financial Performance - In Q1 and Q2 of 2025, the company achieved revenues of 197 million yuan and 202 million yuan respectively, with year-on-year growth rates of 2.63% and 4.71% [1] - The gross profit margin for the first half of 2025 was 57.87%, a decrease of 1.52 percentage points year-on-year, primarily due to intensified industry competition [2] - The net profit margin for the first half of 2025 was 23.93%, an increase of 0.82 percentage points year-on-year, attributed to improved efficiency in expense allocation [2] Group 2: Product Development and Market Trends - The company is experiencing rapid growth in products such as defocus lenses and PMC, with the PMC ultra-bright series seeing a revenue increase of 31.8% year-on-year, and the new 1.74 series products achieving a remarkable growth of 258% [2][3] - The company is well-positioned to benefit from the growth of the smart glasses industry, having partnered with Xiaomi as the exclusive optical partner for their AI glasses, leveraging its technological and channel advantages [3] Group 3: Profit Forecast and Valuation - Due to weak industry demand and product recall impacts, the company has revised its net profit forecasts for 2025 and 2026 down by 14% and 15% to 196 million yuan and 226 million yuan respectively, corresponding to price-earnings ratios of 50 and 43 times [4] - The target price is maintained at 60.00 yuan, reflecting a potential upside of 23% from the current stock price, based on improved market risk appetite and the growth prospects of new businesses like AI smart glasses [4]

Core Viewpoint - Mingyue Lens achieved steady growth in revenue and profit for 2024, but the growth rate has slowed compared to previous years, and some business segments face challenges [1][4]. Revenue and Profit - The total revenue for Mingyue Lens in 2024 was 770 million yuan, representing a year-on-year increase of 2.88%, a significant decline from the 20.17% growth rate in 2023 [4]. - The net profit attributable to shareholders was 177 million yuan, up 12.21% year-on-year, while the net profit excluding non-recurring items was 152 million yuan, increasing by 11.67% [4]. - The gross profit margin improved to 58.56%, an increase of 0.98 percentage points from the previous year, indicating effective product structure optimization and cost control [4]. - Research and development expenses rose to 34.99 million yuan, a 24.96% increase, reflecting ongoing investment in technology and product development [4]. Products and Market - The core product "Mingyue" brand performed well in 2024, particularly the PMC Ultra Bright series, which saw a revenue increase of 45.6%, accounting for 54.6% of regular lens revenue [5]. - The myopia prevention product "Qing Song Kong" series achieved annual sales of 172.72 million yuan, a year-on-year growth of 29.5% [5]. - The company launched the new generation Qing Song Kong Pro 2.0 series, increasing the number of micro-lenses from 1,295 to 1,329, with an efficiency rate of 73.82% [5]. - Despite strong performance from star products, the company faces challenges in market expansion, with 2,707 direct sales customers and 66 distribution customers, indicating a need for better coverage of small and medium clients [6]. Dividends and Shareholder Returns - Mingyue Lens plans to distribute cash dividends of 100 million yuan for 2024, representing 56.77% of net profit attributable to shareholders, marking the fourth dividend distribution since the company went public [7]. - The proportion of dividends to net profit has increased from 37.97% in 2023, indicating a stronger focus on shareholder returns alongside improved profitability [7]. - However, concerns about the company's growth potential remain due to slowing revenue growth and challenges in market expansion, which may pressure long-term development [7].

Summary of Mingyue Lens Conference Call Company Overview - **Company**: Mingyue Lens - **Industry**: Optical Lens Manufacturing Key Financial Performance - **2024 Revenue**: Increased by 1% YoY to 5.86 billion RMB, with net profit rising by 12% to 176 million RMB, and net profit margin improving by 1.9% to 23% [1][4] - **Q1 2025 Revenue**: Increased by 0.4% YoY to 584 million RMB, with net profit growing by 11.7% to 47.15 million RMB, and net profit margin at 23.9% [1][4] - **Sales Expenses**: Decreased by 4.4% YoY to 141 million RMB in 2024, with a sales expense ratio of 18.3% [1][5] - **R&D Expenses**: Increased by 25% YoY to 34.99 million RMB in 2024, with a R&D expense ratio of 4.5% [1][5] Product Performance - **PMC Series**: Revenue increased by 45.6% YoY, accounting for 54.6% of conventional lens revenue [1][7] - **Myopia Control Products**: Sales of the "Easy Control" series grew by 22.7% YoY, reaching 41.58 million RMB in Q4 2024 [1][7] Strategic Initiatives - **R&D Investment**: The company plans to increase R&D spending to drive product innovation and explore cutting-edge technologies [1][8] - **Strategic Partnerships**: Collaboration with Leica to expand high-end independent stores and explore markets in Hong Kong and Macau [1][8] Market Dynamics - **Industry Penetration**: The penetration rate of defocus lenses is below 10%, with challenges including price wars and high service costs [3][9][10] - **Competitive Landscape**: Price wars have been prevalent, but the situation is stabilizing as foreign brands adjust pricing strategies [11][12] Future Growth Expectations - **Defocus Lens Business**: Expected to maintain reasonable growth over the next three years, focusing on retail price control and marketing optimization [3][13] - **AI Smart Glasses**: Anticipated large-scale market promotion by 2025 or 2026, with a focus on providing comprehensive solutions [3][20] Challenges in Smart Glasses Market - **Key Challenges**: Include prescription needs, channel penetration, and providing comprehensive service solutions [17][18] Brand Strategy - **High-End Market Focus**: Mingyue Lens aims to position itself in the mid to high-end market, avoiding the low-end segment due to intense competition [26][27] - **Collaboration with Leica**: Aimed at enhancing brand image and market competitiveness while maintaining a broad consumer base [29] Product Innovations - **High Refractive Index Products**: Launching a range of high refractive index products targeting middle-aged consumers [25][32] - **1.74 Product Launch**: Sales increased by approximately 120% YoY in Q1 2025, with plans for further development [32][34] Conclusion Mingyue Lens is strategically positioned for growth through innovation, strategic partnerships, and a focus on high-end markets while navigating challenges in the optical lens industry and the emerging smart glasses segment.