【行业研究报告】舜宇光学科技-Investor Day takeaways: High-end upgrade to accelerate in 2H24E; Edge AI to drive long-term growth

20Jun202420Jun2024CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdateSunnyOptical(2382HK)InvestorDaytakeaways:High-endupgradetoacceleratein2H24E;EdgeAItodrivelong-termgrowthWeattendedSunnyOptical’sInvestorDayatitsYuyaoheadquarters.Overall,whileshipmentguidanceremainedunchanged,weareencouragedbySunny’spositiveviewonsmartphonerecoveryandacceleratedupgradeinhigh-endmodelsin2H24E.Keyhighlightsinclude1)globalNo.1positionacrosssmartphoneHCM/HLSandautolenssets,2)breakthroughsinhigh-endADAS/LiDAR/HUDmarkets(esphybridautolens),3)opportunitiesinvisualinputsandedgeAI(AIphone,robotics).Inaddition,mgmt.sharedinsightsoncomponentsupgradedrivenbyedgeAIinthelongterm.WearepositiveonSunny’stechnologyleadershipandproductroadmap,andwebelievebettershipmentandeasingcompetitionwilldriveGPMrecoveryin2H24E.Thestocknowtradesat39x/29xFY24/25E,andwemaintainHOLDwithSOTP-basedTPofHK$47.31,implying25.9xFY25EP/ESmartphoneshipmentrecoveryontrack;High-endupgradetoacceleratein2H24E.Keydiscussionsinclude:1)2024shipmentguidanceunchanged;2)HLS:expectglobalsmartphonedemandtorecovermildlyinFY24EdrivenbyAIphoneupgrade;2)HCM:next-genupgradewillfocusonvariableaperture,module/motor/lensintegration,1.4-inchlargebottomtelephotoandcontinuousopticalzoometc.3)VLS:No.1marketshareinADAS(~50%globally);8MhybridADASmassproductionin2024;17MautoADASlensarereadyformassproduction;15LiDARprojectsin2024-25;risingpenetrationofAU-HUDandfastgrowthinPGUbiz;4)smartphonemarket:Global/Chinamarkettogrow3.5%/0.4%YoYandfoldablephonetoclimb38.8%YoYin2024.PositiveonedgeAIopportunitiesinsmartphone/auto/ARVR/robots.Inthelongerterm,mgmt.ispositiveonedge-sideAItodrivetraditionalhardwareupgradeincluding:1)smartphone:upgradecycleofAIsmartphoneswhichrequirehigherlevelof2D/3Dimagedetailsanddynamicimagequality,andcomputingpowerupgradeforimagerecognitionandsemanticsegmentation,andusecasesforpersonalassistant,creativedesignandworksubstitution;2)smartcar:multiplesensorsforsmartdrivingandsmartcabinisthekeytrend;3)AR/VR:upgradeofend-to-endAIinMRasdailyproductivitytools;4)robotics:robotswithmovingorgans,generalAIandmulti-applicationadaptationandSunnyisworkingcloselywithcustomersfordevelopment.ProductupgradetodriveGPMrecoveryinFY24E.WearepositiveonSunny’stechnologyleadership,productroadmapandglobalclientbasewithApple/Huawei.Givenbettershipmentandeasingcompetition,weexpectGPMtorecoverin2H24Edrivenbydemandrecoveryandbetterproductmix.Thestocknowtradesat39x/29xFY24/25E,andwemaintainHOLDwithSOTP-basedTPofHK$47.31,implying25.9xFY25EP/E.TargetPriceHK$47.31Up/Downside(9.0%)CurrentPriceHK$52.00ChinaTechnologyAlexNG(852)39000881alexng@cmbi.com.hkHanqingLIlihanqing@cmbi.com.hkStockDataMktCap(HK$mn)57,044.0Avg3mthst/o(HK$mn)571.652wHigh/Low(HK$)80.30/34.45TotalIssuedShares(mn)1097.0Source:FactSetShareholdingStructureSunXuLtd35.5%JPMorganChase&Co4.9%Source:HKExSharePerformanceAbsoluteRelative1-mth18.3%25.5%3-mth-3.4%-13.4%6-mth-27.2%-34.8%Source:FactSet12-mthPricePerformanceSource:FactSetRelatedReports:1)Expectationsresetonconservativeguidance;MaintainHOLD–22Mar2024(link)2)2023profitwarningworsethanfeared;MaintainHOLDonearningsdownside–1Jan2024(link)3)Positiveonshipmentrecoveryandupgradetrend;MaintainHoldonfairvaluation-13Oct2023(link)EarningsSummary(YE31Dec)FY22AFY23AFY24EFY25EFY26ERevenue(RMBmn)33,19731,68136,54540,52443,473YoYgrowth(%)(11.5)(4.6)15.410.97.3Netprofit(RMBmn)2,407.81,099.41,351.21,837.92,193.6YoYgrowth(%)(51.8)(54.3)22.936.019.4EPS(Reported)(RMB)2.201.011.241.682.01ConsensusEPS(RMB)--2.212.974.20P/E(x)21.948.039.128.724.1P/B(x)2.42.32.22.12.0Yield(%)2.01.01.11.51.8ROE(%)11.24.95.87.68.6Netgearing(%)(22.6)(45.5)34.1(42.4)24.3Source:Companydata,Bloomberg,CMBIGMestimates