Sunny Optical (2382 HK) Company Update Summary
Core Content
Sunny Optical is a key player in the optical components and optoelectronic products industry, with a diversified business model spanning handset lenses, vehicle cameras, LiDAR, and Metaverse cameras. Despite challenges in the smartphone market, the company maintains a strong technology leadership position and is positioned for growth in long-term segments such as automotive and extended reality (XR) devices.
Main Points
1. Market Outlook and Strategy
- Smartphone demand weakness in 2H22E is confirmed, with global shipments expected to decline by 7.9% YoY and China shipments by 16.9% YoY.
- The de-spec trend and declining camera count per phone will continue due to weak demand and intense competition.
- Foldable smartphones are emerging as a market trend, with Sunny Optical focusing on ultra-thin cameras and image performance improvements.
- The company is improving profitability through integrated design of lens/VCM/modules, global supply chain expansion (Vietnam and India), and product diversification into XR and AIoT.
2. LT Opportunities
- Vehicle cameras: Sunny Optical forecasts strong growth in 2022 with a similar shipment rate to 2021, and expects a rebound in 2H22E. It holds a 70%+ market share in Chinese NEV vehicle lens.
- LiDAR: The company is working with over 20 global Tier-1 players and has more than 10 LiDAR projects in mass production by 2022-2023, with significant revenue expected in 2024.
- XR Devices and Cameras: Forecasts indicate 35% CAGR for XR devices and 48% CAGR for XR cameras, reaching 50mn and 350mn shipments respectively by 2025E, with up to 12 cameras per device.
3. Valuation and Recommendation
- Target Price (TP) is revised down to HK$117.9 (22.6x FY22E P/E), from the previous TP of HK$125.7.
- The stock is considered fairly valued at 20.9x FY22E P/E, and the recommendation remains HOLD.
- The TP is derived from SOTP (Sum of the Parts) valuation, factoring in different growth profiles across segments.
Key Financial Highlights
Revenue
| Year |
Revenue (RMB mn) |
YoY Growth (%) |
| FY20A |
38,002 |
0.4% |
| FY21A |
37,497 |
-1.3% |
| FY22E |
35,752 |
-4.7% |
| FY23E |
41,632 |
+16.4% |
| FY24E |
49,104 |
+17.9% |
Net Profit
| Year |
Net Profit (RMB mn) |
YoY Growth (%) |
| FY20A |
4,882 |
+22.3% |
| FY21A |
4,993 |
+2.3% |
| FY22E |
4,730 |
-5.3% |
| FY23E |
5,745 |
+21.5% |
| FY24E |
6,866 |
+19.5% |
EPS (RMB)
| Year |
EPS |
YoY Growth (%) |
| FY20A |
4.47 |
+22.3% |
| FY21A |
4.57 |
+2.3% |
| FY22E |
4.33 |
-5.3% |
| FY23E |
5.26 |
+21.5% |
| FY24E |
6.28 |
+19.5% |
P/E and P/B
| Metric |
FY22E |
FY23E |
FY24E |
| P/E |
20.9 |
17.2 |
14.4 |
| P/B |
4.0 |
3.4 |
2.8 |
Key Ratios
- Gross Margin: 23.0% (FY22E), expected to rise to 24.6% (FY24E).
- Operating Margin: 15.7% (FY22E), projected to increase to 16.7% (FY24E).
- Net Margin: 13.2% (FY22E), expected to reach 14.0% (FY24E).
- ROE: 19.1% (FY22E), projected to stabilize at 19.6% (FY24E).
Shareholding and Stock Data
- Market Cap: HK$119,447 million
- Avg 3 mths t/o: HK$809.52 million
- 52w High/Low: HK$259.40 / HK$93.55
- Total Issued Shares: 1,097 million
- Shareholding Structure:
- SUN XU LTD: 35.47%
- JPMORGAN CHASE: 4.86%
- WENJIAN WANG: 3.04%
Earnings Revisions
| Metric |
New (RMB mn) |
Old (RMB mn) |
Change (%) |
| Revenue |
35,752 |
40,226 |
-11% |
| Gross Profit |
8,236 |
9,024 |
-9% |
| Operating Profit |
5,605 |
6,064 |
-8% |
| Net Profit |
4,730 |
5,128 |
-8% |
| EPS |
4.33 |
4.69 |
-8% |
Valuation Comparison with Peers
| Company |
FY22E P/E |
FY23E P/E |
CMBIGM TP (HK$) |
12M P/E Band |
12M P/B Band |
ROE (%) |
| Sunny Optical |
20.9 |
17.2 |
117.9 |
11.5–10.5 |
2.0–1.7 |
19.1–19.5 |
| Q tech |
6.4 |
7.7 |
8.6 |
11.4–9.6 |
1.0–0.9 |
15.8–11.4 |
| Cowell |
12.6 |
9.3 |
NA |
11.4–9.6 |
1.4–1.3 |
20.3–23.2 |
| Truly |
5.2 |
4.3 |
NA |
12.2–13.4 |
- |
12.2–13.4 |
| Catcher |
14.8 |
15.2 |
NA |
11.4–9.6 |
0.8–0.8 |
5.3–5.2 |
| Largan |
16.1 |
15.2 |
NA |
11.4–9.6 |
1.4–1.3 |
12.4–11.4 |
| Lite-on |
58.3 |
1615.0 |
NA |
11.4–9.6 |
- |
15.9–19.6 |
| Primax |
56.6 |
56.6 |
NA |
12.2–13.4 |
1.6–1.4 |
17.1–17.2 |
| O-film |
5.9 |
1615.0 |
NA |
12.2–13.4 |
2.4–2.3 |
-9.5–6.7 |
Key Assumptions for FY22E–FY24E
- Handset lens sets: Expected to decrease slightly in FY22E, then increase in FY23E and FY24E.
- Vehicle lens sets: Expected to grow significantly, from 78mn in FY22E to 124mn in FY24E.
- Handset camera modules: Expected to grow steadily with a slight dip in FY22E.
- 3D sensing: Expected to grow at a consistent 45% CAGR across FY22E–FY24E.
Conclusion
Despite the headwinds from the smartphone sector, Sunny Optical is well-positioned to benefit from growth in vehicle cameras, LiDAR, and XR markets. The company’s strong technology leadership and diversified business model support its long-term growth potential. However, due to its high exposure to the smartphone market, the recommendation remains HOLD, with a revised target price of HK$117.9.
