20210319-招银国际-舜宇光学科技-02382.HK-Entering_next_phase_of_growth__Lift_TP_to_HK_254_8页

Sunny Optical (2382 HK) Company Update Summary

Core Content

Sunny Optical (2382 HK) is entering the next phase of growth, with the target price (TP) raised to HK$254.3, based on a 32.0x FY22E P/E multiple. The company is expected to benefit from several factors, including industry consolidation, strong demand in ADAS (Advanced Driver Assistance Systems), and potential opportunities in VR/AR and robotic vision.

Main Points

FY20 Performance

• Revenue: RMB38,002 million, a 0.4% YoY increase.
• Net Profit: RMB4,882 million, up 22% YoY, beating both the CMBIS and consensus estimates.
• Gross Margin (GPM): Reached a record high of 22.9%, up 2.4 percentage points YoY.
• FX Gain: RMB225 million, contributing to the net profit growth.
• HCM/HLS ASP: Declined by 11%/-20% in 2H20 due to de-spec headwinds.
• Spec Upgrade: Expected to resume in 2H21E, driven by 5G SoC cost reductions.

2021 Guidance

• HLS: +15-20% YoY, with Sunny Optical becoming the Global No.1.
• HCM: +20-25% YoY, aiming for Global No.1 status.
• VLS: +20-25% YoY.
• ASP: Stable across all segments, with HLS showing resilience.
• GPM: Expected to remain stable.
• CAPEX: RMB3 billion, with RMB1 billion allocated to HLS, HCM, and VLS segments, and RMB1 billion for new plants in Yuyao, Vietnam, and India.

Capacity Plan

• HLS: 180kk/m (up from 160kk/m in FY20).
• HCM: 100k/m (up from 75kk in FY20).
• VLS: 7.5kk/m (up from 6kk/m in FY20).

Financial Outlook

• Revenue Growth: Expected to grow at 13.3% in FY21E, 19.6% in FY22E, and 18.3% in FY23E.
• Gross Profit Growth: Projected to increase by 14.8% in FY21E, 21.3% in FY22E, and 20.5% in FY23E.
• Net Profit Growth: Expected to rise by 18.7% in FY21E, 24.5% in FY22E, and 22.9% in FY23E.
• EPS Growth: Projected to be RMB5.30 in FY21E, RMB6.60 in FY22E, and RMB8.11 in FY23E.

Valuation

• SOTP-Based TP: Raised to HK$254.3.
• P/E Multiple: 32.0x FY22E EPS.
• Segment P/E Assignments:
  • Camera modules: 20x P/E.
  • Handset lenses: 35x P/E.
  • Vehicle lenses: 40x P/E.
  • Others: 25x P/E.

Market Position

• Global Leadership: Sunny Optical is well-positioned to become the Global No.1 in HCM, HLS, and VLS by 2021.
• Share Gain: Expected to gain market share from competitors like O-Film, Kantatsu, and Genius.
• Product Roadmap: Strong product roadmap in the next 2-3 years.

Share Performance

• Market Cap: HK$214,763 million.
• 1-Month Return: -23.0% (Absolute), -17.6% (Relative).
• 3-Month Return: +13.2% (Absolute), +4.0% (Relative).
• 6-Month Return: +43.3% (Absolute), +20.2% (Relative).
• 52-Week High/Low: HK$241.80 / HK$90.00.

Shareholding Structure

• SUN XU LTD: 35.47%.
• JPMORGAN CHASE: 5.66%.
• WENJIAN WANG: 3.08%.

Key Information

• Earnings Summary:

  • FY20 Net Profit: RMB4,882 million.
  • FY20 EPS: RMB4.47.
  • FY20 GPM: 22.9%.
  • FY21E Net Profit: RMB5,795 million.
  • FY21E EPS: RMB5.30.
  • FY22E Net Profit: RMB7,213 million.
  • FY22E EPS: RMB6.60.
  • FY23E Net Profit: RMB8,867 million.
  • FY23E EPS: RMB8.11.

• Growth Rates:

  • Revenue: 13.3% in FY21E, 19.6% in FY22E, 18.3% in FY23E.
  • Gross Profit: 14.8% in FY21E, 21.3% in FY22E, 20.5% in FY23E.
  • Net Profit: 18.7% in FY21E, 24.5% in FY22E, 22.9% in FY23E.

• Operating Margin:

  • FY20: 15.5%.
  • FY21E: 16.0%.
  • FY22E: 16.6%.
  • FY23E: 17.2%.

• Net Margin:

  • FY20: 12.8%.
  • FY21E: 13.5%.
  • FY22E: 14.0%.
  • FY23E: 14.6%.

• Investment:

  • CAPEX: RMB3 billion in FY21E.
  • Expansion: New plants in Yuyao, Vietnam, and India.

• Industry Trends:

  • Auto Lens Demand: Strong growth with a 27% CAGR.
  • ADAS: High demand with a 27% CAGR.
  • VR/AR: Emerging opportunities.
  • 5G SoC Cost Reduction: Expected to boost spec upgrades.

• Recommendation:

  • Rating: BUY (Maintain).
  • Target Price: HK$254.3.
  • Upside: +30% from current price (HK$195.8).
  • Recommendation: Add to the position during recent correction.

Summary

Sunny Optical is poised for growth in the coming years, driven by industry consolidation, strong demand in auto and ADAS, and expansion into Apple's supply chain. Despite some headwinds in FY20, the company has shown resilience with record-high GPM and is expected to maintain stable ASP and GPM in FY21E. The TP has been raised to HK$254.3, based on a 32.0x P/E multiple for FY22E, reflecting confidence in its ability to capture market share and benefit from various growth opportunities. The company is well-positioned to become the global leader in HCM, HLS, and VLS by 2021, with strong financials and a clear path to expansion.