Introduction to this report:

The company's 202H1 performance is in line with expectations, the optical business has maintained high growth, and the company will continue to benefit from the development of intelligent automobiles in the future.

Key points of investment:

Maintain the increase rating and raise the target price to 24.8 yuan. Since the decline in mobile phone sales in 2022 had a certain impact on revenue and profits, we adjusted the company's EPS forecast for 2022-2024 to 0.29 (-0.06), 0.62, and 0.94 yuan. Since the market has fully anticipated a decline in performance in 2022, and the progress of the company's automotive products has exceeded our previous expectations and will enter a period of rapid growth in 2023, its valuation system was switched to 2023, and the target price was raised to 24.8 yuan (+9.06), corresponding to 40x PE in 2023.

The performance was in line with expectations, and the automotive optics business maintained high growth. The company achieved revenue of 4,873 billion yuan in 202H1, +1.3% year on year, and net profit of the mother was 103 million yuan, +6.13% year on year. 22H1's optical business was +49.43% year on year, gross margin was +9.55pcts year on year, and its business share further increased to 30.93%. Among them, revenue from automotive lenses and modules grew rapidly, +910.30% year on year, and profit share continued to increase.

8M lenses and modules continue to be released, and the profit share is expected to increase further. In the first half of 2022, the 8M ADAS module that the company collaborated with NIO Auto was successfully mass-produced and shipped. It is expected that two new projects will be mass-produced at Tesla in the second half of the year, and the scale of cooperation with car companies such as BYD and Geely continues to expand. We expect automotive lenses and modules to become the company's main source of profit in the next 2-3 years. As the penetration rate of intelligent automobiles continues to increase, the company has a significant first-mover advantage in the field of 8M lenses and modules, which will continue to benefit from the release of new models by customers and the continuous introduction of new customers.

catalysts. Introduction of new customers; introduction of new part numbers.

Risk warning. The risk of repeated outbreaks; trade frictions between China and the US affect supply to overseas customers