1Q25 GPM同比增长/环比增长，关注汽车业务扩张。

1Q25GPM Up Yoy/Qoq,WatchingAuto Business Ramp-up Huatai Research Annual Results Review 18 May 2025│China (Mainland) Consumer Electronics AnalystXIE ChunshengSAC No.S0570519080006SFC No. BQZ938xiechunsheng@htsc.com+(86) 21 2987 2036 In2024,LianChuangElectronicTechnology(LCE)recordedrevenueofRMB10,212mn (+3.69% yoy) and attributable netprofit (NP)of-RMB553mn(+44.29% yoy), broadly in line with the upper end of its priorprofit alertof aRMB550mnloss.For1Q25,revenuereachedRMB2,177mn(-11.71/-11.81%yoy/qoq), with attributableNPturning positive to RMB3mn,turning aroundbothyoy and qoq. Despite significant yoy revenue declines in the touch display and ICbusinesses, the company managed to maintainstrongoverall revenue in 2024thanks to robust growth in auto optics revenue (+120% yoy). The touch displaybusiness saw asset and credit impairment provisions of aroundRMB420mn, whichled to the large full-year loss. The revenue decline in 1Q25 mainly stemmed fromweak demand in touch and terminal manufacturing businesses, in our view, thoughthe auto optics segment continued to post strong revenue growth. Looking into2025, we expect the company to swing to full-year profitability on the back of rapidgrowth in auto optics demand. Our target price is RMB11.13. Maintain BUY. AnalystZHANG YuSAC No. S0570523090002SFC No. BSF274zhangyu@htsc.com+(86) 10 6321 1166 AnalystTANG ShiheSAC No. S0570524090007SFC No. BUQ838tangshihe@htsc.com+(86) 106321 1166 Key data 2024 & 1Q25: auto optics drove earnings recovery,GPM edged upIn 2024, the company’s optical lens and module business reported revenue of RMB4,156mn(+34.2%yoy),withautoopticsrevenuerisingtoRMB2.06bn(+120% yoy). Terminal manufacturing revenue edged up to RMB3.05bn (+13.16%yoy), while touch display revenue declined sharply to RMB2.56bn (-17.57% yoy).The full-year loss was mainly due to intense competition in consumer electronics(non-auto optics GPM fell 2.59pp yoy to 13.95%) and RMB420mn in asset andcredit impairment losses for the touch display business, in our view. In 1Q25,revenue declined to RMB2,177mn (-11.71% yoy), but thanks toramping uplensorders from key auto clients, the company’s GPM improved notably to 13.3%, up6.1/5.2ppyoy/qoq. 2025 outlook: smart driving/premiumproductsto unlock upsideLooking ahead to 2025, we expect downstream auto optics business to expand rapidly. Advanced smart driving features such as BYD’s“Tianshen Eye”and Geely’s“Qianli Haohan”are increasingly adopted in RMB100k-level car models, liftingper-vehicle ADAS camera installation from1–2unitspreviously to8–12units. Weestimate auto optics revenue to exceed RMB3.5bn in 2025, with segmentrevenuesharerising from 20.2% in 2024 to 31.2% in 2025. The company also plans toextend camera applications into AR/VR and humanoid robots over time. Source:Wind Earnings forecastsand valuationWe largely maintain our 2025/2026 revenue forecasts at RMB11.34/12.34bn, and introduce a 2027 revenue estimate of RMB13.34bn. Given an expected rise inoverallexpense ratio, we lower our 2025/2026 attributableNPforecastsby 18/7% toRMB200/370mn, and introduce a 2027 forecast of RMB620mn.Our SOTP-basedvaluation comprises36.5x 2025E PE for optics, above its peers’average of 25.1x onWind consensus,reflecting LCE’s technology edge in auto optics and ramp-up ofhigh-endsmart driving, with17.9x 2025E PE forterminal manufacturing and others(in line with peers’average on Wind consensus), implying an overall2025E PE of59.6x.Our target price is RMB11.13 (previous:RMB7.66, based on 26.5/15.6x2025E PE for optics/terminal application businesses, with the increase driven byrising peer valuations amid improved market liquidity). Maintain BUY. Risks: weaker demand for auto cameras; slow rebound in consumer electronics. Source:Wind, Huatai Research Source:Wind, Huatai Research Full financials Disclaimers Analyst CertificationI/We, XIE Chunsheng, ZHANG Yu, TANG Shihe, hereby certify that the views expressed in this report accurately reflect the personal views of the analyst(s) about the subject securities or issuers; and no part of the compensation of the analyst(s) was, is,or will be, directly or indirectly, related to the inclusion of specific recommendations or views in this report. General Disclaimers and DisclosuresThis research report has been prepared by Huatai Financial Holdings (Hong Kong) L imited (hereinafter referred to as“HFHL”).The information herein is strictly confidential to the recipient. This report is intended for HFHL, its clients and associatedcompanies. Any other person shall not be deemed a client of the Company merely from his or her receipt of this report. This report is based on information deemed reliable and publicly available by HFHL, but HFHL and its associated company(ies)(collectively, hereinafter“Huatai”)makes no guarantee as to the accuracy or completeness of such information. The opinions, assessments and projections contained herein only reflect the views and judgments at the issuance date. H