Guotai Junan released a research report stating that it first gave a "shareholding" rating to the company Kangnaite Optical (02276). It predicted that the net profit attributable to the parent company for 2024-2026 was 0.409/0.492/0.575 billion yuan, with growth rates of 25.2%/20.2%/17%. The bank said that the company has been deeply cultivating the domestic leading position in lens export for more than 20 years, and the efficient C2M mode and leading technological R&D advantages promote the optimization of business structure and profitability, and is bullish on future growth.
GTJA's main opinions include:
More than 20 years of deep cultivation has cast the leading position in lens export.
1) The company was founded in 1996 and has three major bases in Shanghai Pudong, Jiangsu Qidong and Japan Kiyosu, with a capacity utilization rate of more than 90%; 2) The equity structure is concentrated, and the founder and chairman of the board of directors, Mr. Fei Zhengxiang, holds approximately 49.87% of the shares, and the core executives have rich resumes; 3) In 2023, according to sales volume and sales, the company ranks second and fifth respectively in the global resin lens market; and is the largest exporter of resin lenses in China, with a market share of approximately 7.3%; 4) The company's products are exported to more than 80 countries and regions, with China/the Americas/Asia (excluding China)/Europe accounting for 33/23/22/17% respectively; 5) From 2019 to 2023, the company's revenue increased from 1.07 billion yuan to 1.78 billion yuan, with a CAGR of 10.7%; net profit increased from 0.112 billion yuan to 0.327 billion yuan, with a CAGR of 23.9%; gross margin increased from 33% to 37.4%, and net margin increased from 10.5% to 18.4%.
Global lens demand is growing steadily, and functional lenses and smart glasses are expected to add new demand.
1) The penetration rate of electronic products is increasing, and the increase in work pressure has led to an increase in the length of time spent using the eyes. The demand for functional and personalized lenses, such as myopia prevention/progressive lenses/anti-fatigue, is increasing, and the demand for glasses is growing steadily. 2) According to Frost & Sullivan, global lens retail sales will increase from USD 50.1 billion to USD 67.7 billion from 2023 to 2028, with a CAGR of 6.2%; among them, customized lens sales will increase from USD 2.9 billion to USD 15.5 billion, with a CAGR of 40.1%; 3) The global shipments of AR/VR glasses are growing rapidly, and it is expected that the CAGR of VR/AR device shipments from 2023 to 2027 will be 30.2% and 135.9%, respectively; optical lenses will also enjoy industry growth dividends as the "last mile" for smart glasses to land.
The three major advantages build a core barrier and lay the foundation for long-term growth.
1) The company has a rich product matrix, outstanding cost performance, and diversified channel layout. So far, it has over 7 million SKUs, which can meet the diversified needs of consumers. 2) Technological research and development strength is at the forefront of the industry: ① Numerous patents, honors, and certifications, and the core backbone has been rated as "Shanghai Craftsman"; ② The only domestic manufacturer that can produce 1.74 refractive index lenses; ③ More than 200 R&D personnel, around 4% of the R&D cost ratio are ahead of their peers; 3) The C2M mode efficiently empowers the business process, and the delivery cycle of customized orders can be as short as 72 hours, and can meet the needs of various terminal customers in a one-stop manner, and promote the continuous growth of the proportion of customized lenses. The proportion reached 20.1% in 2023, and the revenue CAGR from 2019 to 2023 was 20.3%.
Risk warning: The promotion of customized lenses and self-owned brands may not meet expectations, the development of smart glasses lens business may not meet expectations, and industry competition may intensify.