20210817-招银国际-舜宇光学科技-02382.HK-1H21_in-line__Remain_HOLD_on_volume_ASP_downside_7页_1mb

Sunny Optical (2382 HK) Company Update Summary

Core Content Overview

Sunny Optical's 1H21 results showed a net profit growth of 54% YoY, largely in line with expectations. However, revenue growth was 5% YoY, slightly below both CMBIS and consensus estimates, primarily due to a 17% and 26% YoY decline in HCM and HLS ASPs, respectively. The company's auto lens segment saw a strong performance with a 70% YoY increase, while the HCM segment improved its gross profit margin (GPM) to 14.8%, compared to 12.0% for CMBI, driven by better utilization and O-Film weakness.

Despite the positive auto lens growth, the company faces headwinds in 2H21E, including a slowdown in HLS revenue due to reduced demand for high-end lenses (notably from Samsung and Huawei) and ongoing ASP pressures from the camera de-spec trend and AAC's aggressive pricing strategy. Additionally, the recent outbreak of the pandemic in Vietnam is expected to disrupt the supply chain for Samsung, Sunny's largest handset lens client.

Key Financial Highlights

Revenue and Profit Growth

• 1H21 Revenue: RMB 19,833 million (up 5% YoY)
• 1H21 Net Profit: RMB 2,688 million (up 54% YoY)
• FY21E Revenue: RMB 43,335 million (up 14% YoY)
• FY21E Net Profit: RMB 5,758 million (up 18% YoY)
• FY22E Revenue: RMB 49,509 million (up 14.2% YoY)
• FY22E Net Profit: RMB 6,982 million (up 21.2% YoY)
• FY23E Revenue: RMB 57,336 million (up 15.8% YoY)
• FY23E Net Profit: RMB 8,416 million (up 20.5% YoY)

Earnings Per Share (EPS)

• 1H21 EPS: RMB 2.46 (up 54% YoY)
• FY21E EPS: RMB 6.39
• FY22E EPS: RMB 7.70
• FY23E EPS: RMB 9.677

Valuation Metrics

• P/E (FY21E): 34.1x
• P/E (FY22E): 28.1x
• P/E (FY23E): 23.3x
• P/B (FY21E): 7.1x
• P/B (FY22E): 5.6x
• Target Price (HK$): 215.2 (based on SOTP valuation, 28x FY22E P/E)

Forecast and Outlook

• 2H21E Revenue Growth: Expected to grow 16% YoY
• 2H21E Net Profit Growth: Expected to grow 1% YoY
• Challenges: Lower shipment demand and ASP pressures in 2H21E due to camera de-spec and intense competition
• Recommendation: Maintain HOLD due to lower visibility in 2H21E and potential for HLS ASP to stabilize

Business Segments

• Optical Components (Auto/Handset Lenses):
  • Revenue: RMB 12,271 million (1H21)
  • GPM: 41.1% (1H21)
  • Expected growth: 15.9% (1H21E) and 14.2% (FY21E)
• Optoelectronic Products (HCM, 3D):
  • Revenue: RMB 30,830 million (1H21)
  • GPM: 12.8% (1H21)
  • Expected growth: 23% (1H21E) and 10% (FY21E)
• Optical Instruments:
  • Revenue: RMB 234 million (1H21)
  • GPM: 40.0% (1H21)
  • Expected growth: 21% (1H21E) and 10% (FY21E)

Valuation Methodology

• SOTP Valuation:
  • Target P/E for CCM: 20x
  • Target P/E for Vehicle Lenses: 40x
  • Target P/E for Handset Lenses: 30x
  • Target P/E for Others: 25x
• Total Implied P/E: 28.0x (FY22E)
• Target Price (HK$): 215.2

Risk Factors

• HLS Revenue Slowdown: Due to lower high-end lens demand and ASP pressures
• Camera De-spec Trend: Expected to continue affecting HCM/HLS shipments and ASPs
• AAC Pricing Strategy: Aggressive pricing may further pressure HLS
• Supply Chain Disruption: Pandemic in Vietnam impacting Samsung, Sunny's largest client

Analysts and Contact Information

• Analysts: Alex Ng, Lily Yang
• Contact:
  • Alex Ng: (852) 3900 0881 | alexng@cmbi.com.hk
  • Lily Yang: (852) 3916 3716 | lilyyang@cmbi.com.hk

Company Overview

• Market Cap (HK$ million): 237,578
• Avg 3-Month Turnover (HK$ million): 1,435.27
• 52-Week High/Low (HK$): 259.40/112.10
• Total Issued Shares (million): 1,097

Shareholding Structure

• SUN XU LTD: 35.47%
• JPMORGAN CHASE: 5.75%
• WENJIAN WANG: 3.04%

Key Ratios

• Gross Margin (FY21E): 23.2%
• Operating Margin (FY21E): 15.8%
• Net Profit Margin (FY21E): 13.3%
• ROE (FY21E): 26.5%
• Current Ratio (FY21E): 2.2x
• Inventory Turnover Days (FY21E): 60.0
• Receivable Turnover Days (FY21E): 85.7
• Payable Turnover Days (FY21E): 116.0

CMBIS Ratings

• HOLD: Stock with potential return of +15% to -10% over next 12 months
• BUY: Stock with potential return of over 15% over next 12 months
• SELL: Stock with potential loss of over 10% over next 12 months
• NOT RATED: Stock not rated
• OUTPERFORM: Industry expected to outperform the market
• MARKET-PERFORM: Industry expected to perform in-line with the market
• UNDERPERFORM: Industry expected to underperform the market

Disclaimer

• The report is for informational purposes only and not investment advice.
• CMBIS does not provide individually tailored investment advice.
• Investors should consult with a professional financial advisor before making investment decisions.
• The report is prepared for CMBIS clients and should not be construed as an offer or solicitation to buy or sell any security.