The Zhitong Finance App learned that Guosheng Securities released a research report stating that maintaining the “buy” rating of Shunyu Optical Technology (02382), and considering the intense competition in the industry, the estimated revenue for 2024-2025 was 355/393/42.9 billion yuan, +12%/+11%/+9% year over year; net profit to mother was 19.25/2.9 billion yuan, +33%/+16%, with a target price of HK$49.

Guosheng Securities's main views are as follows:

The company's revenue resumed year-on-year growth in the second half of 2023.

2023H2, the company's revenue increased 7.3%/21.9% yoy to 17.4 billion yuan. According to the division, revenue of optical components/optoelectronic products/optical instruments was 52 billion 11.9/300 million, respectively, accounting for 30%/68%/2%. According to the terminal product type, the revenue of mobile phone-related products/automobile-related products/XR-related products/other products was 112/28/14/1.9 billion, respectively, accounting for 65%/16%/8%/11%, respectively. The company's gross margin recorded 14.1% in the second half of the year, a slight decrease of 0.8 pct from month to month and 4.9 pct year on year. H2 recorded net profit of 660 million yuan, a year-on-year decrease of 37%. The net profit margin to mother was 3.8%, or -2.7 pct/month-on-month. The company's net profit for the whole year decreased by 54.3% year-on-year to 1.1 billion, mainly due to poor overall market demand, intense industry competition, and product downsizing, which put pressure on the ASP and gross margin of mobile phone lenses and mobile phone modules.

The profitability of mobile phone products is expected to improve.

2023H2, the company's mobile phone-related product shipments grew at a relatively good rate. Mobile phone lens shipments were 660 million, up 22%/28% year over year; mobile phone camera module shipments were 310 million, up 37%/23% year over month. However, due to pressure on ASP, mobile phone-related revenue only increased 7% year-on-year to 11.2 billion in the second half of the year. Looking ahead to 2024, the bank expects that as high-end customers pull in goods, the company's mobile phone lens shipments are expected to increase by 5% year on year, total mobile phone module shipments remain flat but the structure is expected to improve, and the gross margin of mobile phone lenses and modules is expected to increase significantly.

The automotive business is growing steadily and is highly profitable.

2023H2, the company's revenue from automotive-related products increased 18% year on year and 14% month-on-month to 2.8 billion yuan, accounting for about 16%.

1) In terms of automotive lenses, the company's automotive lens market share will still rank first in the world in 2023, further widening the gap with the second largest in the world. Vehicle lens shipments increased 5.9% year-on-year in the second half of the year to 43.73 million pieces. The bank expects automotive lens shipments to increase by about 10% in 2024, and gross margin is expected to remain above 40%.

2) In terms of in-vehicle modules, the company's 8-megapixel in-vehicle modules have received targeted projects from the world's largest automotive OEMs, further consolidating the number one global market share position for 8-megapixel automotive modules. The bank expects revenue from the automotive module business to increase by 20%-30% year-on-year in 2024.

3) In the emerging field of automotive optics, the company added 3 new lidar mass production projects in 2023, mass production of PGU modules using the digital light processing (DLP) technology route, and obtained a number of fixed-point projects for high-pixel headlight products. Among them, the core products of mega-pixel headlights have already been mass-produced.

The VR business has made new progress in customer acquisition.

The company's XR business declined in 2023. In particular, revenue in the first half of the year decreased 29% year on year to 470 million. There was an improvement in the second half of the year, and revenue fell slightly by 0.1% year on year to 1.4 billion yuan. In 2023, the company will further deepen strategic cooperation with VR customers around the world and successfully achieve mass production of key projects. In addition, the company has also become the preferred supplier of next-generation perception and interaction modules for a world-renowned VR customer.

Risk warning: the risk that the macroeconomic environment will change beyond expectations, the risk that the mobile phone market will continue to weaken, and the risk that the growth rate of the automotive and AR/VR markets will not meet expectations.