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Sunny Optical Technology (Group) Co Ltd 02382

Morningstar Rating
HKD 39.95 +0.40 (1.01%)
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Company Report

Sunny Optical Earnings: Disappointing Results Imply Intensifying Competition; Valuation Cut by 44%

We lowered our fair value estimate for Sunny Optical to HKD 60. Its disappointing profitability in the December quarter and sluggish 2024 guidance suggest that lower-end competitors, such as AAC Technologies in lenses and Q Technology in camera modules, are catching up. This led us to assume lower structural revenue growth and gross margins for its smartphone-related products. However, we believe Sunny’s share price decline of more than 20% after its results is an overreaction because smartphone revenue is becoming less important, and our long-term view on vehicle electrification and mass adoption of extended reality headsets remains intact. Hence, we continue to view the stock as undervalued.

Price vs Fair Value

02382 is trading at a 60% discount.
Price
HKD 43.00
Fair Value
HKD 982.00
Uncertainty
Very High
1-Star Price
HKD 871.62
5-Star Price
HKD 42.60
Economic Moat
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Capital Allocation
Mjrczrlr

Bulls Say, Bears Say

Bulls

Camera performance as a key differentiation feature in smartphones drives demand for camera module components at a faster rate.

Bears

Increasing price competition in a relatively fragmented handset camera module market could put downward pressure on gross margins.

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News

Trading Information

Previous Close Price
HKD 39.55
Day Range
HKD 39.2541.15
52-Week Range
HKD 38.8599.40
Bid/Ask
HKD 39.95 / HKD 40.05
Market Cap
HKD 43.80 Bil
Volume/Avg
13.0 Mil / 8.4 Mil

Key Statistics

Price/Earnings (Normalized)
18.29
Price/Sales
1.24
Dividend Yield (Trailing)
1.25%
Dividend Yield (Forward)
0.55%
Total Yield
1.25%

Company Profile

Headquartered in Yuyao, China, Sunny Optical is China’s biggest handset camera modules maker and the world’s largest handset lens sets manufacturer. Higher-margin lens sets are used on smartphones, vehicles, and augmented/virtual reality. Sunny Optical is a key beneficiary of the secular growth of extended-reality devices and vehicle camera demand, as advanced driver-assistance systems witness rising adoption among automakers. The firm also manufactures optical instruments, such as high-end microscopes and optical measuring instruments. The company employed over 29,524 people as of December 2023.
Sector
Technology
Industry
Electronic Components
Stock Style Box
Large Core
Total Number of Employees
29,524

Competitors

Valuation

Metric
02382
02018
3008
Price/Earnings (Normalized)
18.2941.1718.54
Price/Book Value
1.771.301.96
Price/Sales
1.241.376.72
Price/Cash Flow
10.515.9414.78
Price/Earnings
02382
02018
3008

Financial Strength

Metric
02382
02018
3008
Quick Ratio
1.481.514.39
Current Ratio
1.761.964.55
Interest Coverage
4.062.1715,895.42
Quick Ratio
02382
02018
3008

Profitability

Metric
02382
02018
3008
Return on Assets (Normalized)
5.08%1.56%9.46%
Return on Equity (Normalized)
10.03%2.89%11.30%
Return on Invested Capital (Normalized)
7.84%2.46%9.28%
Return on Assets
02382
02018
3008
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