The company's recent situation

Shunyu Optical Technology announced September shipment data: 1) Mobile phone optics: The company shipped 36.771 million pieces of mobile phone camera modules, down 29.6% year-on-year/7.2% month-on-month, mainly due to the high base of Android phones in the same period last year. At the same time, the company focused on middle and high-end projects, which led to a year-on-year decline in shipments but a significant improvement in product structure. Mobile phone lens shipments were 0.119 billion, up 6.3% year-on-year, down 4.3% month-on-month. Combined with Daliguang/Yu Jingguang's September revenue of -7%/-2% month-on-month, we believe that the centralized collection of new devices from major North American customers has come to an end. 2) Vehicle-related products: The company shipped 9.314 million automotive lenses in September, up 12.7% year-on-year/10.4% month-on-month, reflecting seasonal increases in customer demand.

reviews

The mobile phone optical product structure continues to be upgraded. Follow Q4 Android to start collecting goods. On the mobile camera module side, Shunyu's shipments fell 1% year on year, with a significant drop in June-September, mainly due to the high base for the same period last year, and the company's strategy of continuing to promote product structure upgrades. We estimate that the ASP and gross margin of Q3's mobile phone camera modules may increase further compared to the first half of the year; looking ahead to Q4, as new Android devices are released one after another, we expect the company's module shipments to pick up month-on-month, or still decline. The overall trend of volume reduction and price increase in Q3 is expected to continue to rise. On the mobile phone camera side, Shunyu's shipments from January to September increased 20% year-on-year. We expect the Q4 Android and North American customer delivery pace to be affected by this, and the annual shipment growth rate is expected to be higher than the company's previous guidance; in terms of price, North American customer models and some previous Android flagship models are already equipped with 7P or glass-plastic hybrid cameras. We expect the company's share of high-end lens shipments to increase further in the second half of the year, and drive a month-on-month increase in ASP and gross margin.

Automotive optics and XR applications are progressing steadily. Shunyu's car lens shipments increased 12% year over year in January-September. We see that the bicycle load capacity, average pixels, and localization level of vehicle cameras are increasing, and we are optimistic that the company will continue to benefit as a leading supplier of automotive lenses. In addition, Shunyu's shipments of other optoelectronic products increased by 42% year-on-year in January-September. We believe it was mainly due to the increase in AR/VR equipment shipments, and we are optimistic that the gradual release of AR/VR will drive the company's growth.

Profit forecasting and valuation

Shunyu Optical Technology is currently trading at 22.1 times 2024/18.5 times the 2025 price-earnings ratio. We maintain our 2024/2025 net profit forecast of 2.47 billion/2.87 billion yuan. We maintain our outperforming industry rating and target price of HK$63.4, corresponding 25.4 times 2024 and 21.2 times 2025 price-earnings ratio, up 15% from 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.