On October 25, the company announced the 2024Q1-Q3 results announcement. 24Q1-Q3 revenue reached 18.908 billion yuan (YoY +25.38%), higher than the median Q3 performance forecast and reached an all-time high; net profit to mother was 2.375 billion yuan (YoY +544.74%), which is close to the median expected Q3 performance. In the third quarter, the company achieved revenue of 6.817 billion yuan (YoY +9.55%, QoQ +5.73%) higher than the expected median value; net profit to mother reached 1.008 billion yuan (YoY +368.33%, QoQ +24.60%), which is close to the expected median value.

CIS mobile phone: The company launched the OV50H into the CIS field of high-end mobile phones, then launched the world's first OV50K40 equipped with LOFIC technology. Currently, 50MP products have entered some high-end flagship models such as Xiaomi and Huawei, and continue to break through and be introduced in other brands and models. It is expected that the company will launch the small pixel product OV50M40 next year. It will lay out the field of telephoto lenses and apply it to ultra-wide angle and front cameras by adjusting the parameters of the main camera and telephoto CIS to achieve full coverage of mobile cameras. The technical advantages are expected to help the company gain a large market share. In addition, it is expected that the company will launch a series of 200MP and 50MP high-end products next year. The product matrix is continuously improved, bringing great performance flexibility to the company's performance.

Automobile CIS: Tesla launched Robotaxi to accelerate the progress of autonomous driving, and major OEMs have followed suit. Huawei ADS 4.0 will be launched in 2025, and Xiaopeng expects to launch Robotaxi in 2026. The autonomous driving upgrade will drive an increase in the number of bicycle cameras and pixel upgrades. Combined with autonomous driving, it has a large market space. The company has been deeply involved in the automotive CIS industry for more than ten years and has deep technical accumulation. The OX02D10 launched in August '24 is a 2MP product. It has the characteristics of low power consumption and high performance, and is suitable for various application fields such as ADAS, DVR, and cabins.

With its technical advantages, the company has a large market share in the field of surround view, cabin, and 1.3-1.7MP low-end ADAS lenses. At the same time, it is expected to enter the market with front-view solutions introduced by companies such as Black Sesame and Horizon, leading to an increase in market share.

We forecast the company's 24-25 revenue of 26.11/31.94 billion yuan, net profit attributable to the parent company of 3.235/4.378 billion yuan, and EPS of 2.66/3.60 yuan/share. The corresponding PE is 42/31 times, respectively, maintaining a “buy” rating.

Risk warning

Upside risks: downstream prosperity accelerates; mobile CIS accelerates introduction into high-end markets; autonomous driving penetration rate accelerates

Downside risks: the introduction of new products falls short of customer expectations; downstream demand falls short of expectations; other systemic risks