The company's closing price deviation exceeded 20% for three consecutive trading days on January 21, January 22 and January 25, 2021, and issued an "announcement on changes in the Company's Stock Price" on January 27, 2021. The company announced that it planned to sell all or part of the assets of the relevant subsidiary. Including Guangzhou Delta Image Technology Co., Ltd., Jiangxi Huiguang Microelectronics Co., Ltd., Nanchang Oufei display Technology Co., Ltd. And Jiangxi Jingrun Optics Co., Ltd. We predict that the company's EPS for 2020-2022 will be 0.32 soybean 0.56 yuan 0.74 yuan, maintaining the "overweight" rating.

The company intends to divest the business for A customers, and will further focus on the main business of Android optics in the future. Since 2019, the company has gradually spun off the related loss business of non-A terminal touch display. This divestiture plan is mainly aimed at Guangzhou Delta (A customer camera module business, 2019 revenue 5.1 billion yuan, net profit 110 million yuan), Jiangxi Huiguang Microelectronics (2019 revenue 2.5 billion yuan, net profit-13 million yuan), Nanchang Oufei display Technology (A customer touch business, 2019 revenue 2.9 billion yuan Net profit-92 million yuan), Jiangxi Jingrun Optics (2019 revenue of 870 million yuan, net profit of 13 million yuan), the four companies together accounted for 22% of the company's 2019 income and 3.5% of the return net profit. As the touch business and A customer camera module business require higher investment in fixed assets such as equipment, the company is expected to travel light after the spin-off and focus on Android optics (lenses, modules, 3D ToF, etc.) as the core business. On the whole, the company's current optical module business is highly recognized by Android customers, and its position as the main supplier of mainstream customers is stable. The lens business is gradually expanding and cutting into high-end products, which is expected to accelerate the penetration of mainstream customers.

The non-public offering plan has been approved by the CSRC, and the follow-up lens business is expected to actively expand production. The company acquired Fuji Tianjin at the end of 2018 to cut into the field of mobile phones and car lenses, and the 2020 non-public offering plan was approved by the CSRC. The funds raised are intended to invest 2.36 billion yuan in high-pixel optical lens construction projects, accounting for 30 per cent of the total investment. The company shipped 132 million lenses in the first three quarters of 2020, + 29% of the same period last year. We estimate that the current lens production capacity of the company is about 30kk/ month, and it is expected to reach 80kk/ month by the end of 2021. In terms of products, the company currently includes 3P/4P/5P/6P/7P lenses, and 7p 108m optical lenses successfully completed small batch verification in November 2020. We estimate that the company's lens revenue is expected to reach 1 billion yuan in 2020 and more than 2 billion yuan in 2021.

Focus camera module main business, epitaxial layout 3D ToF, fingerprint identification, intelligent vehicle. (1) camera business: the company shipped 21.81 to 553 million camera modules in the first three quarters of 2020 compared with the same period last year. Looking forward to the future, we expect that the penetration rate of "three photos" and above on the 2021 mobile phone is expected to reach about 56% compared with the same period last year, and the unit price is several times higher than that of double photos. The company plans to spin off the A customer business with low profit margin and focus on Android's main business, which is expected to gradually improve its profitability in the future. (2) 3D ToF:2020 shipments in the first three quarters of this year are + 38.96% to 79 million pieces compared with the same period last year. The company has the production capacity of 3D structured light and ToF modules, and is the main supplier of 3D ToF modules in China. (3) fingerprint identification business: 2020H1 shipments range from-9% to 116 million pieces compared with the same period last year, mainly due to the shrinking market of traditional capacitive fingerprints and the lower-than-expected penetration of off-screen fingerprints. (4) on-board business: the company's business includes ADAS and on-board cameras. at present, it has obtained the supplier qualification of more than 20 domestic automobile manufacturers, and the acquisition of Fuji Tianjin also further strengthens the company's layout in terms of on-board lenses, and the proportion of revenue from automobile business is expected to increase gradually in the future.

Risk factors: divestiture and non-public offering projects did not progress as expected; industry demand was lower than expected; core client income was lower than expected; increased competition led to a decline in gross profit margin and the consumer electronics industry continued to decline.

Investment suggestion: the company is the leader of domestic consumer electronics optical module. After divesting the loss touch business, the company will further focus on the main optical industry. In the future, with the continuation of optical innovations such as multi-photography, 3D sensing and off-screen fingerprints, the company's performance is expected to pick up. According to the company's performance forecast, taking into account the impact of the previous divestiture and the slowdown in optical innovation in the context of the epidemic, we slightly adjust the company's 2020-2022 EPS forecast to 0.32 EPS 0.56 shock 0.74 yuan (the original forecast is 0.35 shock 0.58 shock 0.76 yuan), maintaining the "overweight" rating.