结果以优势击败预期

Sunny’s 1H25 result was a mixed bag, with revenue largely in line with Bloomberg consensus supported by auto and XR business (+18.2%/+21.1% YoY), while net income far beat consensus by 15%. Revenue and net profit came in at RMB19,651mn/1,646mn respectively (+4.2%/+52.6% YoY), reaching 46.5%/50% of our FY25E forecasts, with the latter ahead of FY23-24 average (41% of full year).

Key points:

1. Net profit beat: Driven by:

   • Smartphone end demand gradual recovery (esp. flagship models) and increased high-end product mix, which drove up ASP and GM.
   • Blended GM ahead of our FY25E estimate by 0.9 ppt at 19.8% (vs. 17.2%/19.3% at 1H24/2H24), the highest since 1H22, thanks to optical components (HLS+VLS) and optoelectronics (HCM+auto CCM) margin improvement on spec upgrade.
   • SG&A ratio edged down by 0.2 ppt YoY to 3.95%.
   • Lower interest expense and effective tax rate.

2. Handset related sales: Up 1.7% YoY to RMB13.2bn, thanks to spec upgrade and lesser competition, improving both ASP and GM which offset the drop in shipment volume. HLS and CCM ASP grew 20% YoY, with revenue from 6P and above HLS, hybrid HLS, periscopes, and large image size camera modules growing >9%/>100%/>20% respectively. HLS and HCM shipment reached 50%/47% of our FY25E shipment forecasts (HLS: +5% YoY/ HCM + ~8% YoY).

3. XR related revenue: Grew 21.1% YoY to ~RMB1.2bn, taking up 6.1% of total revenue, driven by explosive smart glasses market. Sunny serves >30 AI glass customers and maintains global leading market share in optical display and imaging modules. Stuck to its flattish XR revenue growth in FY25E, as VR growth to be offset by decent AI/AR growth.

4. Automotive products: Vehicle related products sales rose 18.2% YoY to RMB3,400mn, accounting for ~17.3% of total revenue, on the back of VLS shipment grew ~21.7% YoY to 64.7mn units. Sunny guided automotive revenue growth would be >20% in FY25E, driven by VLS & auto CCM shipment growth, together with ASP upside. 7M25 shipment ahead of our FY25E shipment forecast at ~76.1mn units (+22.6% YoY, ~64% of FY25E of our forecasts). VLS shipment to grow mid-teens in FY25E. Sunny’s automotive business outlook remains upbeat, driven by project wins, increasing number of cam adoption, more compact design, and pixel migration. Continued to deepen its strategic ecological cooperation with global mainstream intelligent driving platform providers.

5. CAPEX: 1H25 CAPEX mainly on HCM, automotive and infrastructure, with R&D expense arrived at ~RMB1.6bn and accounted for 8.3% of total revenue.

Research conclusion:

• Raise FY25E-27E net profit estimates by 10.9%/13.2%/21.5%, on better GM forecasts, while leaving revenue estimate largely unchanged.
• Expect a mild recovery in FY25E/26E driven by top-tier smartphone clients.
• Sunny’s leadership in HLS and HCM remains intact, and their strategy to diversify away from smartphones is well on track, with non-smartphone revenue contribution increased to >35% of total revenue in 2H24.
• Sunny is now trading at FY26E 18.3x PE (~1 s.d. below Sunny’s 10-year average), expect FY24-27E net profit CAGR would accelerate to 25.2%.
• Maintain BUY rating with new TPat HK$108.05, which translates to FY26E 25.0x target PE (implying 1.0x PEG).
• Sunny remains one of our sector top pick, continue to advise investors to accumulate on dip or ride on Sunny’s long term growth (auto+XR+ increasing AI adoption in smartphones).

Risk Factors:

• Downside risks include prolonged upstream component supply shock, further slowdown in PRC customers’ smartphone shipment, slower than expected multi-lens/HCM adoption in Android camp, non-smartphone products’ shipment/sales disappoints, pricing pressure arising from overseas players and domestic peers, and RMB depreciation.