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DBS: Sunny Optical Technology Group Co Ltd – Buy Target Price HK$200

Posted on August 16, 2022August 16, 2022 By alanyeo No Comments on DBS: Sunny Optical Technology Group Co Ltd – Buy Target Price HK$200
Earning First Take : 1HFY22 net profit decreased 50% y-o-y, close to the lower end of the range warned in the profit alert in July
  • 1HFY22 Revenue declined slightly by 14.4% y-o-y to Rmb 16.9 bn, slightly missing the market consensus by 3.7%
  • Net profit decrease 49.5% y-o-y to, Rmb 1.36bn,close to the lower end of the range warned in the profit alert in July
  • The weak performance was mainly due to weak smartphone demand and fierce industrial competition
  • Expect a neutral share price reaction as the decline in profit has been largely priced in

What’s New
– Sunny Optical (2382 HK) announced 1HFY22 today result after market close.

– 1HFY22 Revenue declined by 14.4% y-o-y to Rmb16.9 bn, slightly missing the market consensus by 3.7%, primarily attributable to weaker demand for the android smartphone since end- 2021.

– Gross margin decreased to 20.8%, down 4.1ppts y-o-y due to the downgrading specification of smartphone cameras and fierce competition in the camera module market 

– Net profit was Rmb1.36 bn, down 49.5% y-o-y, still within the range of 45% to 50% decline as warned in July profit alert.

Our View:
– We expect a neutral share price reaction as the result is largely priced in as share price didn’t move much after releasing profit warning in July.

– We expect handset lens and module shipment to be impacted continuously at least for the 2H22 by the weak consumer sentiment on smartphones especially for high-end models.

– We expect the vehicle lens set to maintain a stable shipment growth under the supply tightness of auto chips and the optical instrument to remain in teens growth under the penetration into the industrial field. 

– We currently rate BUY on the counter with TP under review.

– Analyst call will be held at 9:30 am on 16 Aug.

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Research - Equities Tags:Sunny Optical

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