20230315-招银国际-舜宇光学科技-02382.HK-FY22E_preview__Bumpy_recovery_in_2023_8页_1mb

Sunny Optical (2382 HK) Summary

Core Content Overview

Sunny Optical is a leading player in the optical components and optoelectronic products industry, with a significant portion of its revenue derived from the handset segment. The company is expected to report its FY22 results on 21 Mar. Based on current estimates, the company's revenue and net profit are projected to decline by 21% and 52% YoY, respectively, in FY22E. This decline is attributed to weak smartphone demand and a trend of camera de-specification. However, the company is anticipated to recover in 2023, with growth expected in VCM, periscope cameras, and AR/VR segments.

Main Points and Key Information

Revenue and Profit Trends

• FY22E Revenue: Estimated at RMB 29,813 million, down 20.5% YoY.
• FY22E Net Profit: Estimated at RMB 2,454.2 million, down 51.5% YoY.
• FY23E Revenue: Projected to increase by 8.0% YoY to RMB 32,213 million.
• FY23E Net Profit: Expected to rise by 47.7% YoY to RMB 3,625.5 million.
• FY24E Revenue: Forecasted to grow by 17.3% YoY to RMB 37,781 million.
• FY24E Net Profit: Projected to increase by 21.5% YoY to RMB 4,405.0 million.

Shipment Performance

• HCM/HLS: Shipment volumes are expected to remain weak in 1H23E, with a 39% and 26% YoY decline in February, respectively.
• VLS: Shipment growth in February was 40% YoY, but this is expected to slow due to NEV sales slowdown and the expiry of subsidies.
• HCM and HLS: The segment is expected to experience a flattish shipment in 1H23E due to high base effects and inventory correction.
• VLS: Shipment growth is anticipated to slow, but ASP is expected to rise due to high-end camera products.

Earnings and Profitability

• EPS (Reported): FY22E is expected to be RMB 2.20, below the consensus of RMB 2.71.
• Gross Margin: Estimated at 20.6% for FY22E, down from 22.9% in FY21A.
• Operating Margin: Expected to be 10.5% for FY22E, down from 15.6% in FY21A.
• Net Margin: Projected at 8.1% for FY22E, down from 13.3% in FY21A.

Valuation and Target Price

• Target Price (TP): Maintained at HK$92.51, implying a 23.6x FY23E P/E ratio.
• Current Price: HK$84.55, which is trading at 22.8x FY23E P/E and 19x FY24E P/E.
• P/B (Price-to-Book): Current P/B is 3.6x, down from 9.2x in FY21A.
• Dividend Yield: Current yield is 0.6%, with an expected increase to 0.9% in FY23E and 1.0% in FY24E.

Business Segments

• Camera Modules: Expected to contribute 33.7% of FY23E profit, with a P/E of 15x.
• Handset Lenses: To account for 45.0% of FY23E profit, with a P/E of 25x.
• Vehicle Lenses: Expected to contribute 19.3% of FY23E profit, with a P/E of 35x.
• Others: Represent 2.1% of FY23E profit, with a P/E of 25x.

Peer Comparison

• Q tech (1478 HK): Rated as BUY with a TP of HK$5.20.
• Cowell (1415 HK): No rating (NR), with a TP of NA.
• Truly (732 HK): No rating (NR), with a TP of NA.
• Catcher (2474 TT): No rating (NR), with a TP of NA.
• Largan (3008 TT): No rating (NR), with a TP of NA.
• Lite-on (2301 TT): No rating (NR), with a TP of NA.
• Primax (4915 TT): No rating (NR), with a TP of NA.
• O-film (002456 CH): No rating (NR), with a TP of NA.

Financial Highlights

• Net Debt to Equity: Negative in FY20A and FY21A, indicating strong equity position.
• Current Ratio: Increased to 3.4x in FY22E, indicating improved liquidity.
• Inventory Turnover Days: Expected to rise to 60.0 days in FY22E, reflecting inventory correction.
• Receivable Turnover Days: Stabilized at 76.2 days, indicating consistent receivables management.
• Payable Turnover Days: Increased to 116.0 days, suggesting extended payment terms.

Analyst Outlook

• Rating: HOLD, with a TP of HK$92.51.
• Reason for HOLD: Despite the company's leadership in various segments and a positive outlook for long-term growth in VCM, periscope, AR/VR, and vehicle cameras, the stock is still under pressure from inventory destocking and high exposure to the handset segment (70% of sales).
• Key Questions for Management: The report outlines five key questions to be addressed during the investor meeting, including market share, periscope cam outlook, VLS demand, auto module order wins, and AR/VR opportunities.

Conclusion

Sunny Optical is currently facing a challenging period due to weak smartphone demand and inventory correction. However, the company is well-positioned for long-term growth in multiple segments, particularly VCM, periscope cameras, and AR/VR. The stock is fairly valued at the current price, with a target price of HK$92.51. The analyst maintains a HOLD rating, considering the ongoing challenges in the handset segment and inventory issues. The company's diversified business model and technological capabilities offer growth potential, but the recovery is expected to be bumpy in 2023.