20230111-招银国际-舜宇光学科技-02382.HK-Shipment_weakness_likely_to_persist_into_1Q23E_Maintain_HOLD_8页_1mb

Sunny Optical (2382 HK) Summary

Core Content Overview

Sunny Optical is a company primarily involved in the production of optical components and optoelectronic products, with a significant portion of its revenue coming from the handset lens segment. The report highlights the company's financial performance, market position, and future outlook, with a current recommendation of HOLD and a revised target price of HK$96.3.

Key Financial Highlights

• Revenue Trends:

  • FY20A: RMB 38,002 million
  • FY21A: RMB 37,497 million
  • FY22E: RMB 32,136 million (YoY decline of 14.3%)
  • FY23E: RMB 36,324 million (YoY growth of 13.0%)
  • FY24E: RMB 41,303 million (YoY growth of 13.7%)

• Net Profit Trends:

  • FY20A: RMB 4,950.3 million
  • FY21A: RMB 5,061.1 million
  • FY22E: RMB 2,704.5 million (YoY decline of 46.6%)
  • FY23E: RMB 3,833.9 million (YoY growth of 41.8%)
  • FY24E: RMB 4,641.7 million (YoY growth of 21.1%)

• EPS Trends:

  • FY20A: RMB 4.47
  • FY21A: RMB 4.57
  • FY22E: RMB 2.43
  • FY23E: RMB 3.45
  • FY24E: RMB 4.17

• P/E and P/B Ratios:

  • FY22E: 34.2x P/E, 3.9x P/B
  • FY23E: 24.1x P/E, 3.5x P/B
  • FY24E: 19.9x P/E, 3.0x P/B

• Dividend Yield:

  • FY20A: 0.6%
  • FY21A: 0.5%
  • FY22E: 0.6%
  • FY23E: 0.8%
  • FY24E: 1.0%

• ROE:

  • FY20A: 33.5%
  • FY21A: 26.8%
  • FY22E: 12.3%
  • FY23E: 15.6%
  • FY24E: 16.5%

• Net Gearing:

  • FY20A: -4.6%
  • FY21A: -16.1%
  • FY22E: -21.2%
  • FY23E: -21.5%
  • FY24E: -30.6%

Main Points and Analysis

• Shipment Weakness:

  • Dec 2022 HLS/HCM shipment declined by 40%/29% YoY, worse than expectations, due to Android inventory destocking and a weak holiday season.
  • VLS shipment decelerated to 1% YoY in Dec, compared to 47% YoY in Nov.
  • The company's iPhone HLS business is growing but remains a minor contributor to overall sales (6% of full-year shipment).

• Auto Lens and AR/VR:

  • Auto lens momentum faded in Dec, but the company is optimistic about auto cam module and AR/VR opportunities.
  • Management guided for RMB10bn revenue for auto camera module due to LiDAR/AU-HUD order wins.
  • AR/VR segment is expected to grow by 50% YoY in 2022.

• Earnings Revision:

  • CMBIGM revised FY22-24E EPS down by 3-7% due to slower demand recovery.
  • The company is trading at 34.2x/24.1x FY22/23E P/E, which is considered fairly valued.

• Target Price and Valuation:

  • The new target price is HK$96.3, derived from SOTP (Sum of the Parts) valuation with a weighted average P/E of 23.2x on FY23E EPS.
  • The P/E for the camera modules segment is set at 15x, for the handset lens at 25x, and for the vehicle lens at 35x, reflecting different growth profiles and market dynamics.

• Market Position:

  • Sunny Optical holds a significant market share in the optical components and optoelectronic products segments.
  • It is positioned as a leader in the China market for camera modules.

Key Risks and Concerns

• Inventory Destocking:

  • Ongoing destocking in the Android segment continues to be a drag on shipments and margins.
  • Potential order cuts from Apple may further impact the company.

• Sales Exposure:

  • High exposure to the handset segment (79% of sales), which is more volatile compared to auto-related segments (8%).
  • This concentration may limit growth potential in the near term.

• Demand Recovery:

  • The demand recovery is expected to be slower than anticipated, leading to downward revisions in earnings forecasts.

Shareholding and Stock Performance

• Shareholding Structure:

  • Sun Xu Ltd: 35.5%
  • JP Morgan Chase & Co: 4.9%

• Stock Performance:

  • 1-month: -10.7%
  • 3-month: +29.3%
  • 6-month: -17.8%
  • 12-month: Not provided in the text, but a chart is referenced.

Valuation Comparison with Peers

• The company is compared to peers such as Q tech, Cowell, Truly, Catcher, Largan, Lite-on, and Primax.
• The P/E and P/B ratios are used to assess relative valuation.
• CMBIGM's valuation methodology considers the company's diversified business segments and growth prospects.

Analyst Certification and Disclosure

• The analyst certifies that the views expressed are based on personal analysis and not influenced by compensation or prior trading activity.
• The report includes important disclosures about the risks associated with investing in securities and the lack of individualized investment advice.

Conclusion

• Despite the company's strong industry leadership and positive outlook for auto cam modules and AR/VR, the current recommendation remains HOLD due to continued shipment and margin pressures.
• The stock is considered fairly valued at the current P/E ratios, with a new target price of HK$96.3.
• The valuation model takes into account the different growth profiles of the company's segments and their respective P/E multiples.