- Handset lens set shipments in June 2023 increased by 25.8% y-o-y, in line with market expectations
- Continuation of shipment growth reaffirms our view of smartphone recovery as we head into 2H23
- Maintain BUY on Sunny Optical on 19% revenue and 52% earnings growth in FY23, driven by improving smartphone consumer sentiment
June 2023 lens shipments continued the recovery seen in May. Handset lens set (HLS) shipments increased 25.8% y-o-y to 91.0m units vs. 94.4m units in May, in line with market expectations. The y-o-y decline in 6M23 HLS shipments narrowed to 21.3% from 5M23’s 27.2% decline. Camera module (CCM) shipments increased by 29.3% y-o-y, reversing the 1.4% decline in May. HLS’s and CCM’s performance point to a stabilising smartphone-related business. Vehicle lens set shipments continued to climb, rising by 19.2% y-o-y, supported by the sustainable growth in China’s EV shipments.
Expect neutral share price reaction. June’s shipment growth reaffirms our expectation of a smartphone market recovery in 2H23, backed by improving consumer sentiment. We expect HLS shipment to stabilise at over 90m units in July. We forecast revenue growth of 43% y-o-y in 2H23 and 19% y-o-y in FY24.The stock trades at 19.6x FY23F PE, vs. its historical average of 25.5x. Maintain BUY with TP of HK$115.0.
