20180612-广发证券_香港_-舜宇光学科技-02382.HK-Strong_order_demand,_high_growth_expected_in_June_3页_471kb

Sunny Optical (2382 HK) Equity Research Summary

Core Content

Sunny Optical (2382 HK) is a key supplier of optical components for Chinese branded Android handsets. The report provides an equity research analysis with a Buy rating, maintained from previous recommendations, and a target price of HK$224.3. The analysis covers recent order demand, shipment trends, financial forecasts, and key financial ratios.

Main Points

Handset Lens Sets

• Order demand remains strong, with handset lens set shipments rising 70% YoY in May, compared to 61% YoY in April.
• High growth is expected in June, based on current production capacity and yield.
• The company is well-positioned in the smartphone optical sector, contributing to the upcycle seen in 1Q17-3Q17.

CCM (Camera Component Module)

• CCM shipments reached 34.1k units in May, up 58% YoY and 19% MoM.
• Growth in May was close to management guidance for the year (15-20%).
• The rapid growth is attributed to:
  1. A normal ramp-up in orders as shipments of Chinese branded Android handsets return to normal.
  2. Capturing orders from competitors due to its technological strength.

Vehicle Lens Sets

• Vehicle lens set shipments in May were 3.03k units, up 20% YoY but down 7% MoM.
• 5M18 shipment growth was 17% YoY, slightly below expectations.

Financial Forecasts

Earnings Growth

• Revenue growth is expected to continue, with a CAGR of 45.5% from 2018 to 2020.
• EPS growth is forecasted at Rmb4.13/6.48/8.80 for 2018/19/20, respectively.
• P/E ratio is projected to decrease from 33.2x (2018E) to 15.6x (2020E), reflecting improved profitability and increased earnings.

Profitability

• EBITDA margin is expected to increase from 11.6% (2016A) to 18.02% (2020E).
• Pre-tax profit margin is forecasted to rise from 9.9% (2016A) to 18.26% (2020E).
• Net profit margin (NPM) is expected to grow from 8.7% (2016A) to 16.11% (2020E).

Liquidity

• Current ratio is projected to increase from 1.4 (2016A) to 1.85 (2020E).
• Quick ratio is expected to rise from 0.97 (2016A) to 1.56 (2020E).
• Net debt-to-equity is forecasted to decrease from 20.37% (2016A) to -3.26% (2020E), indicating improving financial structure.

Returns

• Dividend payout ratio remains constant at 25%.
• ROE is expected to increase from 25.96% (2016A) to 53.37% (2019E).
• ROA is projected to rise from 13.19% (2016A) to 32.24% (2019E).

Key Information

Rating and Target Price

• Rating: Buy
• Target Price: HK$224.3
• Based on 45.5x 2018E P/E and a 1x PEG (1x PEG on 45.5% 2018-20 EPS CAGR).

Risks

• US-China trade frictions may intensify.
• Downstream smartphone sales may fall short of expectations.
• Lower-than-expected penetration of dual cameras.
• 3D sensing R&D may be slower than anticipated.

Stock Performance

• The stock has shown positive performance relative to the Hong Kong Hang Seng Index over the past 12 months, with expected outperformance by more than 15%.

Analyst Certification and Disclosure

• The research analyst certifies that the views expressed reflect personal opinions and that no remuneration was directly or indirectly linked to the recommendations.
• No proprietary trading or investment banking relationships exist with the mentioned companies in the past 12 months.
• No financial interests in the securities discussed are held by the analyst or their associates.

Disclaimer

• This report is solely for informational purposes.
• It does not constitute an offer to buy or sell any securities.
• The research report may be inconsistent with other communications issued by GF Securities (Hong Kong).
• No liability is accepted for losses arising from the use of this report.
• Investments involve risks, and past performance does not guarantee future results.