Conet Optics is deeply involved in the eyewear industry. As a leading manufacturer of resin lenses in China, it is committed to becoming a global lens product and service provider. The company uses personalized, functional and differentiated high-end customized products to create a new C2M business standard for factories facing terminals to meet the one-stop needs of end customers. The company is expected to achieve revenue of 18.1/20.8/2.38 billion in 2023E/24E/25E, 15.0%/14.8%/14.5%; it is expected to achieve net profit of 3.3/37/4.3 billion, 30.9%/14.1%/14.9% year-on-year, corresponding PE is 12.0/10.5/9.2 times, respectively. The first coverage was given a “Highly Recommended” rating.
Conet Optics is deeply involved in the lens industry and has a complete product line to meet the one-stop needs of customers. The company was founded in 1996 and initially developed the production and sale of standardized lenses in the ODM model. In 2012, the production and sales business of customized lenses gradually took shape. In 2016, a fully automated customized production line was introduced, and the customized business model ushered in a breakthrough. In 2021, the company completed the shareholding system reform and was listed on the Hong Kong Stock Exchange. Connett Optics has a product network of over 7 million SKUs, forming a multi-functional and complete product line, which can cover almost all types of resin lenses, and can also customize lenses based on individual needs to meet the different needs of customers. Giving full play to the complementary and collaborative production capacity layout of the three production bases in Shanghai, Qidong, and Japan, focusing on differentiated markets, and optimizing the product structure using the industry's top innovation and technical capabilities will help the company to continuously improve its profit level.
Glasses have both immediate demand and fashion attributes, and the market size continues to expand. First, refractive errors have led to rigid demand for glasses. The global myopia rate continues to rise, and demand in the eyewear market is expanding day by day. Approximately 4.7 billion people around the world will need vision correction in 2020, accounting for 61.04% of the total population. Of these, only 2.7 billion people wear glasses or have their eyesight corrected, and there is a huge demand for glasses. Second, the smart glasses market is booming, and XR lenses are leading future technology trends. The smart glasses market (including XR lenses) is valued at $1.2 billion in 2022 and is expected to grow at a CAGR of 27.1% from 2023 to 2030.
Again, the progressive lens market has great potential, and personalized and fashionable consumption is gradually becoming a mainstream trend. In 2023, the progressive lens market reached USD 5.61 billion, and is expected to grow at a CAGR of 7.9% between 2024-2030 and $9.55 billion in 2030, showing huge growth potential.
Products and technology create a leading position, and advanced models improve service levels. Conet's optical products are diverse and rich, and are deeply rooted in the international market. With a product network of more than 7 million SKUs, Connett Optics is one of the most comprehensive companies involved in the global lens industry. It is one of the few domestic manufacturers that can produce 1.74 refractive index resin eyeglass lenses. The company's market share is about 7.3% based on the export value of resin eyeglass lenses in 2020, making it the largest exporter in China. The company is vigorously developing the C2M model. 95% of products can be produced within 6 to 8 hours, shortening the entire process from order acceptance to delivery to 48 to 72 hours.
The company is expected to achieve revenue of 18.1/20.8/2.38 billion in 2023E/24E/25E, 15.0%/14.8%/14.5%; it is expected to achieve net profit of 3.3/37/4.3 billion, 30.9%/14.1%/14.9% year-on-year, corresponding PE is 12.0/10.5/9.2 times, respectively. The first coverage was given a “Highly Recommended” rating.
Risk warning: risk of downstream customer demand fluctuations, raw material price fluctuation risk, exchange rate fluctuation risk.