The company's recent situation
Shunyu Optical Technology released May shipment data: 1) Mobile phone optics: the company shipped 454.09 million pieces of mobile phone camera module products, down 6.9% year-on-year/ 0.4% month-on-month; mobile lens products shipped 104 million pieces, up 9.6% year-on-year and 1.8% month-on-month. Considering the low base for the same period last year, the company's mobile lens products have all achieved positive year-on-year growth since the beginning of the year, with YTD growing 25% year-on-year. We believe that the mobile phone lens industry is gradually gaining momentum. Investors are advised to actively pay attention to the extent of promotion of 2H24 glass plastic hybrid lenses in the industry and the profit recovery opportunities corresponding to the company's lens products during the peak collection season. In terms of mobile phone modules, we believe that the bottom of the industry signal is clear. The company's YTD shipments in January-May increased 22% year-on-year, which may drive the gross margin level of Shunyu Optoelectronics products to be superior to market expectations. We believe that the bottom of the mobile phone optical business since 3Q23 is clear. Coupled with the increase in production capacity utilization, it is recommended to actively pay attention to the company's valuation repair opportunities. 2) Vehicle-related products: The company shipped 8.339 million pieces of automotive lenses in May, down 7.0% month-on-month and up 9.9% year-on-year. Against the backdrop of intense cost competition in the industry, we believe the company's automotive lens business is growing steadily.
reviews
Mobile phone optical business: continue to pay attention to industrial chain valuation repair opportunities. We believe that the mobile phone optical industry is gradually breaking out of the bottom: from a quantitative perspective, the total shipments of Shunyu mobile phone camera modules/mobile phone lenses increased 22%/25% year on year from January to May 2024; Daliguang's total revenue from January to May increased 25% year on year, and leading companies all experienced varying degrees of supply recovery. At the same time, from a price perspective, we believe that the competitive situation in the mobile phone lens industry has eased somewhat in the short term after fierce price competition in the past two years.
Considering Sunyu Optics' low performance base last year, in the context of the overall recovery of the industry, we believe that the company's shipment performance in the first half of the year may exceed market expectations, and investors are advised to pay close attention to corresponding profit and valuation repair opportunities.
Restricted share award scheme limits were updated to demonstrate confidence in long-term growth. On June 7, the company revised and announced the current plan limit for the limited share award scheme, updating and adding 20 million shares for share awards. We believe that the share reward program can effectively stimulate the subjective activism of the company's management and core employees, and help promote the company's long-term healthy growth in the optical industry.
Profit forecasting and valuation
Shunyu Optical Technology is currently trading at 27.2 times the 2024/23.1 times 2025 price-earnings ratio. We maintain the company's 2024/2025 net profit forecast of 1.74 billion yuan/2.04 billion yuan. We maintain our target price at HK$63.4. Investors are advised to actively pay attention to industry valuation repair opportunities, corresponding to 36.2 times 2024/30.8 times 2025 price-earnings ratio, with 33% upside compared to the current stock price.
risks
Demand for global terminals continues to weaken, and the progress of intelligence in the automotive industry falls short of expectations.