According to the Zhito Finance APP, SWHY released a research report stating that it maintains the net income of Kangnait Optics (02276) for 2024-2026 to be 0.418/0.5/0.593 billion yuan respectively, with year-on-year growth of 27.8%/19.6%/18.5%, and maintains a "Buy" rating. In recent years, the company has actively focused on the domestic market and independent brands, creating new growth momentum. The proportion of differentiated products has increased, driving continuous improvement in profitability. Smart glasses are booming, and the company is actively laying out to gain first-mover advantages. Goertek Inc. intends to continuously subscribe to and acquire company shares, demonstrating recognition from the Industry Chain, while also likely empowering related business development and opening up future growth space.

Event: On the morning of December 23, the company announced that Kangnait plans to place 53.325 million shares (accounting for 12.5% before placement and 11.1% after placement) to Hong Kong Goertek (a wholly-owned subsidiary of Goertek Inc.) at a placement price of 15.86 HKD/share; on the evening of December 29, the company announced that Hong Kong Goertek had negotiated to acquire no more than 42.8 million shares (accounting for 10.0% before placement and 8.9% after placement) from several existing shareholders of Kangnait (excluding the controlling shareholder).

Shenwan Hongyuan's main points are as follows:

The advantage positioned in XR is significant, and Goertek plans to continuously subscribe for and acquire company shares, demonstrating recognition in the Industry Chain.

Previously, the company announced successful cooperation with several leading Consumer Electronics companies in the USA, having received payments including R&D expenses and small trial orders. The demand for customer XR products is being validated and is moving into mass production. In addition, the company has established an XR department and has newly acquired land in Thailand for the production and processing of XR lenses. Goertek Inc. primarily provides vertically integrated product solutions composed of precision components and intelligent Hardware as well as R&D and manufacturing services, serving leading clients in the Global Technology and Consumer Electronics industry. This continuous subscription and acquisition of company shares by Goertek Inc. highlights the recognition of Kangnait by the Industry Chain, and the relevant placement funds will be used for the R&D, design, and manufacturing of lenses and visual solutions for smart glasses and XR head-mounted devices, further aiding the company's development. If Goertek completes all subscriptions and acquisitions subsequently, its shareholding in Kangnait may increase to over 20%, which is favorable for enhancing the strategic partnership between the company and Goertek, bringing more business development opportunities as well as collaboration chances with Goertek. Currently, smart glasses are in a booming development phase, with the second-generation Ray-Ban Meta explosive products igniting the market, where domestic and foreign Consumer Electronics companies, Internet giants, and AR specialists are scrambling to layout. The field is expected to expand rapidly, and the company has a significant positional advantage.

The company has continuously released Stock-based Incentive programs to achieve deep binding of interests, reflecting future development confidence.

On November 25, 2024, the company announced plans to grant 11.93 million shares (accounting for 2.8% of the total share capital, with senior management and employees accounting for 17% and 83%, respectively) to 7 senior executives and 148 employees, with a grant price of 4.58 yuan per share; this incentive will be unlocked in three phases of 33%/33%/34% annually, with performance assessment conditions requiring a year-on-year growth in the net income attributable to the parent company of no less than 21%, 17%, and 15% for the years 2025-2027 (excluding equity payment costs). This round of incentives marks the first since the company went public, fully covering senior management and core employees, deeply binding the interests of all parties, and demonstrating the company's strong confidence in future development. On December 20, 2024, the company announced a new round of the 2025 stock-based incentive plan, proposing to grant no more than 3% of the company's shares to further bind employee interests.

The company's manufacturing capability is outstanding, gradually strengthening its self-owned brands and domestic market, with the core business of lenses expected to maintain steady growth.

1) Products: Outstanding R&D capabilities with a continuously optimized product structure. The company maintains close cooperation with upstream raw material suppliers such as Mitsui and has its own mold production capacity, with over 7 million SKUs to meet differentiated customer needs; focuses on product R&D, with Hoya being the largest customer, and high-end products receiving market recognition, driving continuous iteration and upgrading of the product structure; 2) Channels: Diversified channel layout accelerating domestic market and independent brand development. The company initially focused on overseas OEM business, but in recent years has rapidly expanded its domestic market, pushing brand marketing both online and offline, with a domestic market share of 30.9% in the first half of 2024, an increase of 16.2 percentage points since 2018, with independent brand revenue accounting for over 50%; 3) Supply Chain: Significant manufacturing advantages with global capacity layout ensuring growth. Based on a strong supply chain, the company creates customized production capabilities, achieving a win-win situation for the company, small b clients, and consumers; lean management enhances operational efficiency, with workforce productivity and asset turnover efficiency leading the industry; the layout of three major bases ensures production, with the upcoming launch of the Thailand factory fully addressing potential trade risks and assisting the company in expanding into international markets.

Risk warning: risks related to the stability of raw material supplies, risks of XR business expansion falling short of expectations, risks of high-end product sales being lower than expected.