Sunny Optical (2382 HK)

Transcription

1 Equity Research Tech Hardware Optical (2382 HK) Industry leadership continues to strengthen on optical and optoelectronic products Ou Yafei SFC CE No. BFN GF Securities (Hong Kong) Brokerage Limited 29-3/F, Li Po Chun Chambers 189 Des Voeux Road Central Hong Kong World-leading optical and optoelectronic company As an optical and optoelectronic company with a history of more than 3 years, Optical currently takes industryleading global market shares for its main products such as handset camera modules, handset lens sets and vehicle lens sets. Handset camera module ASP rising on higher dual-camera penetration The company has leading technological strength in handset camera modules, and has maintained a leading market share in this business relying on a favorable product structure. We think that as a leading camera module player the company will continue to benefit from the rapid increase in the penetration of dual cameras over the next few year. Optical components: rapid upgrade in handset lens sets, vehicle lens sets maintaining leadership The company achieved a major technological breakthrough in 213 through an acquisition, putting its handset lens sets business onto a path of rapid growth. Its handset lens sets revenue exceeded Genius Electronic Optical (346 TP) in 216 and is further narrowing its gap with industry leader Largan Precision (38 TP). Separately, Optical is a leader in vehicle lens sets with a 3+% market share and shipment growth (4-5%) consistently higher than industry average (2-25%). We believe that the company s optical component segment is likely to maintain high revenue growth going forward given an improving handset lens sets production structure and exponential growth in the vehicle lens sets market. Earnings forecasts 1H17 net profit rose 149.2% YoY on revenue growth of 69.8%. Considering that its optical component and optoelectronic segments continued to demonstrate relatively high growth during Jun-Sept 217, we estimate EPS of Rmb2.35, 3.32 and 4.56, based on which the stock is trading at 43.1x, 3.5x and 22.2x P/E. Key risks include worse-than-expected smartphone sales downstream, lower-thanexpected dual camera penetration, and the risk of product price cuts failing to be passed on to suppliers which might hurt the company s profitability. Earnings forecasts Stock performance 舜宇光学科技 Optical HSI 恒生指数 217% 128% 39% -5% Source: Wind 215A 216A 217E 218E 219E Revenue (Rmb m) 1,696 14,612 23,837 32,778 39,617 YoY (%) EBITDA (Rmb m) 1,168 1,695 3,384 4,676 6,316 Net profit (Rmb m) 762 1,271 2,582 3,643 5,4 YoY (%) 35% 67% 13% 41% 37% EPS (Rmb) P/E P/B , GF Securities (Hong Kong) This is a summary of a report originally written in Chinese. Please contact us for more information of the original report. The Chinese version shall prevail in the event of any discrepancy between the two versions.

2 Figure 1: Camera module business gross margin at leading companies 19% 17% 15% 13% 11% 9% 7% 5% 14.7% 16.3% 16.6% 14.1% 12.8% 12.7% 13.6% 11.5% 11.1% 12.% 12.6% 1.9% 12.1% 11.3% 1.5% 1.8% 9.6% 8.5% 5.4% H1 Figure 2: Leading companies camera module sales O-Film 舜宇 Optical 欧菲光 Q Tech 丘钛 Tech Note: Listed companies in this chart include Optical (2382 HK), O-Film Tech (2456 CH), Q Tech (1478 HK). ASP Sales voluem (k) H H1 舜宇 O-Film Optical 欧菲光 Tech 丘钛 Q Tech O-Film Tech Q Tech Optical 舜宇欧菲光丘钛 Sales revenue (Rmb 1m) Overall % ASP%, 216 Volume%, % 8% % % % % 18.3% 2% % % 216 年价格变动幅度 216 年销量变动幅度 H1-2% -13.3% 舜宇欧菲光丘钛 Optical O-Film Tech Q Tech Optical 舜宇欧菲光 O-Film Tech 丘钛 Q Tech Sources: Wind, GF Securities Development & Research Center Sources: Wind, GF Securities Development & Research Center 2

3 Figure 3: Leading companies handset lens sets revenue (Rmb 1m, ) 玉晶光 Genius Elec Op 舜宇光学 Optical 大立光 Largan Precision 213 年 214 年 215 年 216 年 Sources: Wind, company data, GF Securities Development & Research Center Note: Date for Optical are estimates. Listed companies in this chart include Genius Electronic Optical (346 TP), Optical (2382 HK), Largan Precision (38 TP). Figure 4: Optical s internal handset lens sets supply Figure 5: Optical s handset camera module and handset lens sets pixel structures % 6% 5% 4% 3% 2% 1% % 6.7% 31.3% 24.7% 28.9% 9.1%.3%.% 4.2%.% 2.% Handset 手机镜头收入 lens sets revenue ( 亿元 ) 内供镜头收入 Internal supply revenue ( 亿元 ) (Rmb 1m) (Rmb 1m) % of 1M+ pixel handset camera 1M 以上手机照相模组占比 modules 1M % of 以上手机镜头占比 1M+ pixel handset lens sets Note: Handset lens sets revenue figures are estimates. 3

4 Figure 6: Optical s vehicle lens set shipments (m units) % % % % % 年 213 年 214 年 215 年 216 年 216H1 217H1 9% 8% 7% 6% 5% 4% 3% 2% 1% % 4

5 Figure 7: Revenue and profit breakdown and estimates ( ) Optoelectronics Optical Optical instruments Products E 218E 219E Handset camera modules Other optoelectronic products Revenue YoY 19.2% 42.6% 71.% 38.% 17.6% Revenue Revenue GPM 9.6% 1.5% 12.5% 11.5% 12.% NPM 5.7% 4.7% 7.9% 6.7% 6.9% Net profit Handset lens sets Vehicle lens sets Others Revenue YoY 161.1% 42.7% 55.2% 5.% 45.% Revenue YoY 52.3% 36.6% 45.9% 5.% 45.% Revenue Revenue GPM 35.1% 39.8% 45.% 5.% 52.% NPM 22.7% 28.5% 3.% 35.% 37.% Net profit Revenue GPM 37.5% 4.4% 38.% 38.6% 39.% NPM.7% 3.7% 1.3% 1.9% 2.3% Net profit Core business revenue (before excluding internal supply) Core business revenue (excluding internal supply) Net profit = (sum of segment profits share of associates earnings + undistributed income undistributed profit income tax)

6 Figure 8: Peer comparison (calculated based on closing prices on 1 Nov 217) Mkt HK Mainland China Taiwan Company Price EPS PE (local ccy) Ccy E 218E 219E E 218E 219E CAGR PEG Q Tech 1478 HK RMB %.4 Cowell 1415 HK 3.76 RMB %.21 AAC Tech 218 HK RMB %.8 BYDE 285 HK 2.95 RMB %.21 Average O-Film 2456 CH RMB % 1.45 Average Largan Precision 5,78. TWD % TP Lite-On Tech 41. TWD % TP Average Optical RMB % HK Sources: Bloomberg, Wind, GF Securities Development & Research Center 6

7 Figure 9: Financial statements Balance sheet (Rmb m) Cash flow statement (Rmb m) Year ended 31 Dec 215A 216A 217E 218E 219E Year ended 31 Dec 215A 216A 217E 218E 219E Cash & cash equivalents ,792 6,597 1,934 Pre-tax profit 862 1,446 2,924 4,131 5,674 Accounts receivables 3,8 3,721 5,721 6,556 7,923 Depreciation & amortization Inventories 897 2,828 1,996 2,745 3,318 Net interest expense Other CA 1,926 2,32 1,479 1,813 1,81 Change in working capital Total CA 6,17 9,318 11,988 17,711 23,986 Taxes Fixed assets 1,141 1,794 2,32 2,826 3,356 Other operating cash flows Intangible assets Cash flows from operating activities 1,71 1,616 3,776 4,943 6,42 Other LT assets Net purchases of fixed assets Total LT assets 1,619 2,319 2,835 3,477 4,8 Decrease/increase in investments -1, ,83-15,83-15,83 Total assets 7,636 11,637 14,823 21,189 28,65 Other investing cash flows ,815 6,867 6,242 Accounts payables 2,713 5,191 5,971 9,26 11,175 Cash flows from investing activities -1,932-1,26-8,671-8,619-9,244 ST debt ,657 2,15 2,79 Net increase in equity 594 1,68 2,533 2,523 3,616 Other CL ,12 1,458 Net increase in debt 1,448 2,932 4,654 3,843 3,26 Total CL 3,739 6,658 8,365 12,187 15,423 Dividends paid ,8-1,345 LT borrowings Other financing cash flows -1,96-3, ,121 1,625 Other LT liabilities Cash flows from financing activities ,218 7,479 7,157 Total LT liabilities Beginning cash ,792 6,597 Share capital Change in cash ,323 3,83 4,333 Reserves 3,726 4,79 6,261 8,781 12,397 Shareholders' equity 3,831 4,895 6,366 8,886 12,52 Minority interest Total liabilities & equity 7,636 11,637 14,823 21,189 28,65 Income statement (Rmb m) Key financial ratios Year ended 31 Dec 215A 216A 217E 218E 219E Year ended 31 Dec 215A 216A 217E 218E 219E Sales revenue 1,696 14,612 23,837 32,778 39,617 Profitability COGS -8,933-11,932-19,65-26,99-3,672 EBITDA margin (%) Operating expense -9,787-13,249-2,977-28,747-34,71 EBIT margin (%) EBITDA 1,168 1,695 3,384 4,676 6,316 Pre-tax profit margin (%) Depreciation & amortization NPM (%) Operating profit (EBIT) 923 1,379 2,86 4,32 5,546 Liquidity Net interest income/(expense) Current ratio (x) Other gains/(losses) Net debt-to-equity (%) Pre-tax profit 862 1,446 2,924 4,131 5,674 Quick ratio (x) Income tax Valuations Minority interest P/E Net profit 762 1,271 2,582 3,643 5,4 P/B EPS P/CF (x) EBITDA EV/EBITDA (x) DPS Turnover ratios Revenue growth (%) Receivable turnover days EBIT growth (%) Payable turnover days EPS growth (%) Returns Divident payout ratio (%) ROE (%) ROA (%)

8 Rating definitions Benchmark: Hong Kong Hang Seng Index Time horizon: 12 months Company ratings Buy Stock expected to outperform benchmark by more than 15% Accumulate Stock expected to outperform benchmark by more than 5% but not more than 15% Hold Expected stock relative performance ranges between -5% and 5% Underperform Stock expected to underperform benchmark by more than 5% Sector ratings Positive Sector expected to outperform benchmark by more than 1% Neutral Expected sector relative performance ranges between -1% and 1% Cautious Sector expected to underperform benchmark by more than 1% Analyst Certification The research analyst(s) primarily responsible for the content of this research report, in whole or in part, certifies that with respect to the company or relevant securities that the analyst(s) covered in this report: (1) all of the views expressed accurately reflect his or her personal views on the company or relevant securities mentioned herein; and (2) no part of his or her remuneration was, is, or will be, directly or indirectly, in connection with his or her specific recommendations or views expressed in this research report. 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