In the first half of the year, the company's revenue also increased by about 32% to about 18.86 billion yuan, gross profit also increased by about 52% to 3.25 billion yuan, gross margin about 17.2%, up about 2.3 percentage points year on year; net profit to mother increased 147% year on year to about 1.08 billion yuan. Revenue from AR/VR and mobile phone-related products increased 111% and 34% year-on-year, respectively, to 990 million yuan and 13 billion yuan.

The revenue of the optical components business also increased 27% to approximately 5.48 billion yuan. 1) Vehicle lens shipments also increased by about 13% to 53.23 million pieces. The development of ADAS car lenses with automatic heating was completed and the project was targeted; the development of 3M pixel side-view glass-plastic hybrid ADAS vehicle lenses was completed. The company has obtained a number of targeted lidar product projects, breaking through equipment technology for mass production of lidar transmitter and receiver modules, and has completed research and development of long-range lidar modules and all-solid-state lidar platform-based products. PGU, the core optical engine based on the chip developed independently by the HUD leading manufacturer, has received designated projects from domestic customers, is expected to be mass-produced in 2H, and developed a multi-channel projection lamp product. 2) Mobile phone lens shipments also increased by about 24% to 0.63 billion pieces, leading the market share in the world. The company actively increases the ASP and gross profit margin of mobile lenses, and mass-produces a variety of one-inch glass-plastic hybrid main cameras and periscope mobile lenses with large image surfaces. Shipments of focus periscope mobile phone lenses within the dual group continue to increase, and development of various multi-group periscope mobile phone lenses has been completed.

The revenue of the optoelectronic products business also increased by about 36% to about 13.2 billion yuan. 1) Shipments of mobile phone camera modules also increased by about 14% to 0.289 billion units, ranking first in the world; the increase in the share of high-end products improved the product structure, ASP, and gross profit margin. Shipments of Periscope and large image modules also increased 67% to over 15 million units. Shunyu has mass-produced a one-inch main camera long-stroke guide motor, a dual-group focus periscope mobile phone camera module; completed the development of a 200 million pixel Periscope integrated mobile phone camera module equipped with a self-developed motor, a Periscope integrated mobile phone camera module equipped with a multi-folding prism and a self-developed motor, and a 1/2” main camera motor. 2) The market share of 8M pixel automotive modules is the highest in the world. 1H has been designated as a platform core project by leading European automakers; 8M pixel COB vehicle modules are recognized by many domestic automobile OEMs, and the shipment volume is absolutely leading in the industry. 3) Providing XR product SLAM modules, high-definition perspective camera modules, etc., robot navigation, obstacle avoidance, and AI recognition camera modules have begun to be widely used in the field of consumer robots, and have been mass-produced and shipped to mainstream customers. Self-developed biometric algorithm modules have been shipped in batches to smart door lock head customers.

We forecast the company's 24-26 earnings per share of $2.21/2.60/2.93, respectively (the original 24-25 forecast was $2.62 and $3.01, which mainly adjusted the gross margin of the main business, etc.). According to the comparable 24-year average PE valuation, we gave a target price of HK$79.56 (the exchange rate was 1:1.093) to maintain the purchase rating.

Risk warning

The automotive business falls short of expected risks, the recovery of the smartphone market falls short of expected risks, and competition in the industry increases the risk.