20230321-招银国际-舜宇光学科技-02382.HK-2H22_first_take__weakness_in-line__awaiting_recovery_7页_1mb

Sunny Optical (2382 HK) Summary

Core Content

Sunny Optical reported its 2H22 results, with a net profit decline of 54% YoY, which was in-line with expectations. Revenue exceeded both the company's and consensus estimates by 25% and 9% respectively, driven by improved average selling prices (ASP) and product mix. The gross margin (GPM) for 2H22 dropped to 19.0% from 21.5% in 2H21, primarily due to margin pressure in HCM, HLS, and VLS segments. Despite weak shipment volumes, HCM and VLS ASP performed better than expected, while HLS ASP declined significantly.

Key Financials

• Revenue (RMB mn): 16,225 (2H22E)
• Net Profit (RMB mn): 1,050 (2H22E)
• EPS (Reported): 0.96 (2H22E)
• Consensus EPS: 0.99 (2H22E)
• P/E (FY23E): 24.2x
• P/B (FY23E): 3.3x
• ROE (FY23E): 14.9%

Outlook

The company's 1H23E outlook is expected to remain under pressure due to ongoing inventory correction, uncertain smartphone demand recovery, and a slowdown in global electric vehicle (EV) sales. However, the firm is optimistic about long-term growth from VCM, periscope cameras, and AR/VR segments. The stock is currently trading at 24.2x FY23E P/E and is considered fairly valued.

Key Concerns

• Inventory correction: Continues to impact shipment volumes.
• Smartphone demand: Uncertain recovery in 2023.
• HLS and HCM shipment: Expected to remain weak in 1H23E due to a high base and competitive pressures.
• High exposure to handset segment: A risk factor for the company's performance.

Key Questions for Management

1. HLS market share and upgrade progress with US major customers.
2. Outlook for periscope camera adoption in the Android market.
3. Sunny's view on VLS demand amid slower auto sales.
4. Auto module order wins and capacity expansion plans.
5. AR/VR growth prospects with major customer challenges.

Valuation

• Target Price (TP): HK$92.51 (Maintain HOLD)
• SOTP-based TP: Derived from a weighted-average P/E of 23.6x FY23E EPS.
• Segment Valuation:
  • Camera modules: 15x P/E
  • Handset lenses: 25x P/E
  • Vehicle lenses: 35x P/E
  • Others: 25x P/E

Financial Highlights

Stock Data

• Market Cap (HK$ mn): 98,730.0
• Average 3-month total return (HK$ mn): 97.0
• 52-week High/Low (HK$): 144.60 / 67.55
• Total Issued Shares (mn): 1,097.0

Share Performance

Analyst Ratings

• CMBIGM Rating: HOLD
• Target Price (HK$): 92.51
• Up/Downside: 6.4%
• Current Price (HK$): 86.95

Peer Comparison

Summary

Sunny Optical's 2H22 results show a net profit decline of 54% YoY, but revenue exceeded expectations. The company is facing margin pressure in key segments, including HLS and HCM, but remains optimistic about long-term growth in VCM, periscope cameras, and AR/VR. The stock is trading at 24.2x FY23E P/E and is considered fairly valued. Despite the challenges, the firm is maintaining a HOLD rating with a target price of HK$92.51. The report highlights the importance of monitoring shipment guidance and the company's performance in key growth areas.