Focusing on the resin lens industry, Chinese lens companies are the export champions.
Conet Optical Technology is a service provider focusing on resin eyeglass products. The company has a product network of more than 6 million SKUs, including various types of standardized lenses and customized lenses tailored to customer needs. The total sales volume of the company was 79.4 million pairs of lenses in 2023, and the sales CAGR for 2020-2023 was 9.89%. The company is deeply involved in overseas markets and provides products and services to more than 90 countries around the world. According to Frost & Sullivan, the company was China's largest lens exporter in 2020, with a market share of about 7.3% in terms of export value. At the same time, the company is the only Chinese company among the top ten lens companies in the world, ranking 9th in 2020 in terms of lens revenue.
Global market demand continues to rise, and new product opportunities are emerging in the Chinese market.
The global eyewear market is expected to reach US$148.6 billion in 2024, with lenses accounting for the largest share of the market, estimated at US$61.72 billion, accounting for 41.5%. The eyewear market is expected to hold 1.3 pairs/person per capita, and the compound growth rate is predicted to be 4.04% in 2024-2028. The retail sales of China's lens industry in 2023 was 34.81 billion yuan, and the compound annual growth rate from 2023 to 2028 is expected to reach 5.6%. Currently, as society is paying more attention to eye protection for the “one old, one young”, the Chinese eyewear market has ushered in growth opportunities for youth control lenses and progressive lenses designed for the two major groups.
The company's R&D and manufacturing advantages lay the foundation, and customized products and brand building strengthen profitability.
All of the company's lens molds are independently developed and produced, and have the core ability to independently design and develop lenses. At the same time, it also has advanced automated and intelligent production workshops. The product quality meets the US FDA and EU CE certifications. The company is currently the only Chinese manufacturer that produces 1.74 high refractive index lenses. The company's “tailor-made” customized products for consumers developed rapidly, and revenue from customized products increased by 16.7% in 2023; the company strengthened its own brand building, cooperated with hospitals to establish optometry centers, develop online channels for Douyin and WeChat applets, and promote the high-end sub-brand Asahi Fuji to explore the Chinese market.
Covered and given a buy rating for the first time, with a target price of HK$10.18.
The company's net profit to mother for 2023-2026 is estimated to be 404, 4.73, and 523 million yuan, respectively, corresponding increases of 23.4%, 17.3%, and 10.5%. The three-year compound growth rate of net profit to mother is 16.9%. After considering risk factors, the company was given a target valuation of 12 times PE (2023), corresponding to a share price of about HK$10.18. The expected room for the share price increase was 24.6%, giving it a “buy” rating.