Summary of Sunny Optical Technology Group Conference Call Company Overview - **Company**: Sunny Optical Technology Group (2382.HK) - **Established**: 1984 - **Business Segments**: 1. Optical components (DC lens, handset lens, vehicle lens) 2. Optoelectronic products (handset camera modules) 3. Optical instruments (microscopic and analytical instruments) [24][25] Industry Insights - **Handset Market**: Anticipated decline in global handset camera lens shipment by 4% in 2026, following a 2% increase in 2025, due to a forecasted 5% decrease in global smartphone shipments [3][14] - **Vehicle Lens Market**: Strong demand in Advanced Driver Assistance Systems (ADAS) contributing to a 27% year-over-year growth in vehicle lens shipments [2] Financial Performance - **December 2025 Shipments**: - Handset Camera Modules (HCM): 37.7 million units (-29.3% YoY, -9.0% MoM) - Handset Lens Sets (HLS): 95.6 million units (-8.9% YoY, -20.0% MoM) - Vehicle Lens Sets (VLS): 7.5 million units (+17.7% YoY, -40.8% MoM) [2] - **Earnings Estimates**: - 2026 earnings estimates lowered by 11% and 2027 by 3% due to handset market headwinds [7] - Target price adjusted from HK$103 to HK$91 based on a 23x historical average P/E [5][7] Key Financial Metrics - **Net Profit**: - 2023: RMB 1,099 million - 2024: RMB 2,699 million - 2025E: RMB 3,482 million - 2026E: RMB 3,948 million - 2027E: RMB 5,038 million [4] - **Diluted EPS**: - 2023: RMB 1.006 - 2024: RMB 2.470 - 2025E: RMB 3.187 - 2026E: RMB 3.613 - 2027E: RMB 4.611 [4] Investment Strategy - **Rating**: Maintain Buy rating due to strong non-handset business growth potential, which constitutes 50% of profits [7][25] - **Growth Drivers**: - Increased focus on vehicle lens, AI glasses, handheld cameras, and robotics [7] - Anticipated new smartphone models and product launches as near-term catalysts [7] Risks - **Market Risks**: - Slower-than-expected shipments of domestic-brand smartphones - High inventory levels in the smartphone supply chain impacting volume growth - Intensifying competition leading to potential gross margin erosion [27] Conclusion Sunny Optical is positioned to navigate challenges in the handset market while leveraging growth in non-handset segments. The company’s strategic focus on high-margin products and emerging technologies is expected to sustain its profitability despite market headwinds.

Summary of Sunny Optical (2382.HK) Conference Call Company Overview - **Company**: Sunny Optical Technology Group Co., Ltd. (2382.HK) - **Industry**: Optical components and optoelectronic products Key Financial Highlights - **1H25 Revenue**: CNY 19.652 billion, a 1% increase HoH and a 4% increase YoY [6] - **Gross Margin (GM)**: Improved to 19.8% in 1H25 from 19.3% in 2H24, with optoelectronic products GM at 10.6% (up from 8.2% in 1H24) [6][13] - **Operating Income (OP)**: Increased by 18% HoH to CNY 1.484 billion, 5% ahead of Bloomberg consensus [6][7] - **Net Income**: CNY 1.646 billion, a 2% increase HoH and a 53% increase YoY [6] - **Operating Expense (Opex) Ratio**: Improved to 12.3% in 1H25 from 12.9% in 2H24 [6] Segment Performance - **Optoelectronic Products**: Revenue growth of 2% YoY to CNY 13.4 billion, accounting for 68% of total revenues; driven by vehicle modules [13] - **Optical Components**: Revenue growth of 11% YoY to CNY 6.1 billion, representing 31% of total revenues; supported by handset lens and vehicle lens sales [9][13] Margins and Ratios - **Gross Profit (GP)**: CNY 3.894 billion in 1H25, a 20% increase YoY [6] - **Operating Profit Margin (OPM)**: Increased to 7.6% in 1H25 from 6.5% in 2H24 [6] - **Net Margin (NM)**: Improved to 8.4% in 1H25 from 8.3% in 2H24 [6] Future Outlook and Valuation - **Target Price**: HK$89.00, implying an upside of 18.7% from the current price of HK$74.95 [10][16] - **Valuation Methodology**: Based on a target P/E of 21.6x for 2026E, consistent with historical trading range [10][14] - **Risks**: Include competition in handset lens, shipment growth variability in camera modules, and currency fluctuations [15] Additional Insights - **Product Mix Improvement**: The better product mix in optoelectronic products contributed to margin improvements [1] - **Market Position**: The company maintains a strong position in the optical components market, particularly in vehicle and handset lenses [9][13] - **Growth Drivers**: Increased demand for AR/VR cameras and vehicle modules are key growth drivers for the company [13] This summary encapsulates the essential financial metrics, segment performance, and future outlook for Sunny Optical, providing a comprehensive overview for potential investors and stakeholders.