Jitong Finance and Economics APP learned that Guotai Junan Securities issued a research report stating that it maintains a "buy" rating for Sunny Optical Technology (02382), with projected revenues of 38.2/44.2/48.3 billion yuan for 2024-2026, and net income attributable to its parent company of 2.541/3.246/3.645 billion yuan. The firm is bullish on the growth potential of the mobile business in the AI smartphone and high-end trends, and anticipates that under the AI drive, smart driving, intelligent cockpit, AI glasses will gradually increase demand for lenses and specifications.

Guosen Securities' main points are as follows:

24H1 performance review:

The company announced its mid-year financial results for 2024, achieving revenue of 18.86 billion yuan (RMB, the same below; +32.1% YoY), exceeding Factset's consensus expectation of 17.22 billion yuan, with revenue growth benefiting from the recovery in the smartphone market and increased revenue from in-car and VR businesses. The company's gross profit was 3.25 billion yuan (+52.4% YoY), net profit was 1.112 billion yuan (+142.0% YoY), higher than Factset's consensus expectation of 1.033 billion yuan, net margin was 5.9% (+2.7pcts YoY), benefiting from improved profitability of mobile lens and camera module business.

Mobile business:

In the first half of 2024, demand for smartphones rebounded, and the company's mobile camera module product structure improved. As of October 2024, the shipment volume of mobile lenses was 1.108 billion units (+17.1% YoY), and the shipment volume of mobile camera modules was 0.443 billion units (-5.4% YoY). Looking ahead to the full-year market performance, according to IDC, the full-year shipment volume of mobile phones in 2024 is expected to reach 1.24 billion units, higher than the initial forecast of 1.2 billion units. In the medium to long term, the company is optimistic about the role of AI smartphones in driving the replacement cycle and the trend of high-end smartphones, with the company as a leading player in mobile lenses and camera modules poised to benefit.

Carrying business:

By October 2024, the shipment volume of car lenses reached 88.5 million units (YoY +11.6%). Looking ahead to the annual market performance, according to the Chaoxin Intelligence Report, the global shipment volume of car cameras is expected to reach 0.34 billion units in 2024 (YoY +30.8%), and is projected to reach 0.42 billion units in 2025 (YoY +23.5%). In the medium to long term, the industry believes that the continued development of smart cabins, smart driving, and even Robotaxis will drive the improvement in specifications and quantity of single-vehicle cameras and sensors. The company is expected to maintain the competitiveness of the car-carrying business through product innovation.

XR business:

In 2024, AI glasses made initial progress. According to the WellsennXR Report, the annual sales volume of the representative product RayBanMeta in 2024 is expected to exceed 2 million units, with Sunny Optical Technology being the camera module supplier for this product. Looking ahead in the medium to long term, the industry believes that AI applications will drive the growth of the AR glasses market, with recent announcements from companies such as Baidu and Samsung about the layout of the new generation of AR glasses. The value of optical components is expected to become a significant part of the material costs of AR terminal devices.

Risk factors: 1) Consumer electronics recovery falls short of expectations; 2) Progress in emerging businesses such as car-carrying, VR/AR is lower than expected; 3) Geopolitical risks.