20230823-招银国际-舜宇光学科技-02382.HK-1H23_first_take__in-line_with_profit_warning__Margin_pressure_remains_an_overhang_6页_1mb

Sunny Optical (2382 HK) Company Update Summary

Key Points from 1H23 Performance:

• Revenue and net profit declined by 16% and 68% YoY, respectively, aligning with the profit warning. Gross profit margin (GPM) of 14.9% in 1H23 was significantly lower than estimates of 17.2%–17.1%, primarily due to weak demand, lower utilization rates, and de-spec trends in divisions like HCM and HLS.
• Specific drivers included a record-low HCM GPM of 6.9% and worsened ASPs in handset lenses, offset by strong VLS ASP growth.

Short-Term Outlook:

• HCM/HLS shipment is expected to recover in H2FY23E due to restocking and a low base effect from 1H22, with potential seasonal strength in 3Q23E from product launches. However, margins remain pressured by slow demand recovery and limited spec upgrades.
• Analysts focus on management guidance during the upcoming briefing for clues on demand and ASP in H2FY23E.

Long-Term Growth:

• Positive on opportunities in automotive, LiDAR, HUD, AR, and VR markets driving future demand, despite current margin pressures.

Valuation and Recommendations:

• Stock trading at 36.5x FY23E and 23.1x FY24E P/E, with a buy recommend at 78.1 HK$/share based on SOTP valuation.
• Maintain HOLD position with unchanged target price; the stock is considered fairly valued, but slow recovery and margin issues persist as overhangs.

Key Questions for Analyst Meeting:

• HLS market share gain with US customers; periscope cam outlook in Android market; VLS outlook vs. auto sales slowdown; auto module client wins; AR/VR outlook amid customer challenges.

Financial Summary:

• Consistent performance in earlier years with steady revenue and profit growth, but 1H23 shows pressure; valuation peers include comparisons to other optical components companies.

Disclosures:

• This report includes analyst certifications and important disclaimers regarding investment risks and conflicts of interest.