Sunny Optical_ December Handset CCM Saw Strong MoM Recovery; Handset and Vehicle Lenses Both on Track

Summary of Sunny Optical Conference Call Company Overview - Company: Sunny Optical (2382.HK) - Industry: Greater China Technology Hardware - Market Cap: RMB 64,507 million - Stock Rating: Overweight - Price Target: HK$72.00, with a 15$62.70 as of January 10, 2025 Key Takeaways - Handset CCM Shipments: Experienced a strong month-over-month (MoM) recovery in December 2024, indicating potential for new orders in 2025 to maintain industry leadership [1] - Segment Performance: - Handset lens growth was slightly above target - Vehicle lens growth was within the target range [1] Shipment Data - Handset CCM Shipments: - January 2023: 40,720 k units, YoY -19% - December 2023: 47,089 k units, YoY -9% - January 2024: 62,256 k units, YoY +32% [2][10] - Handset Lens Shipments: - January 2023: 66,673 k units, YoY -49% - December 2023: 106,916 k units, YoY -9% - January 2024: 103,237 k units, YoY -3% [2][10] - Vehicle Lens Shipments: - Growth of 13% in 2024, within the target range of 10-15% [10] Financial Metrics - Revenue Projections: - FY23: RMB 31,681 million - FY24e: RMB 36,300 million - FY25e: RMB 40,514 million [7] - Earnings Per Share (EPS): - FY23: RMB 0.99 - FY24e: RMB 2.39 - FY25e: RMB 2.75 [7] - Valuation: - P/E ratios projected to decrease from 65.3 in FY23 to 19.4 in FY26 [7] Risks and Opportunities - Upside Risks: - Improvement in handset lens gross margin due to larger scale - Faster-than-expected growth in vehicle lens/module - Gaining market share with new international clients [18] - Downside Risks: - Component shortages affecting gross margin and supply - Increased competition in the CCM market leading to potential oversupply - Weaker-than-expected demand for handset lenses [18] Conclusion Sunny Optical is positioned for growth in 2025, with a strong recovery in handset CCM shipments and solid performance in both handset and vehicle lens segments. The company aims to secure new orders to sustain its market leadership, while also navigating potential risks associated with competition and supply chain challenges.