Intelligent phone camera upgrades bring about the recovery of mobile phone camera and camera module performance. The potential of the car optical field in the company is promising. Guosen Securities maintains its "Better than the market" rating.

The main points of the report are as follows:

It is expected that the net profit attributable to the mother in the first half of 2024 will increase by 140%-150% over the same period last year.

The company has released a positive profit forecast for the first half of 2024. It is expected that the net profit attributable to the mother in the first half of 2024 will be 1.048-1.092 billion yuan (YoY 140%-150%). The growth of profits is mainly due to the recovery of the intelligent phone market, the improvement of the company's product portfolio resulting in an annual increase of mobile phone lens and camera module shipments, an increase in the average selling price and gross margin improvement.

The performance of mobile phone lenses in the first half of the year was strong, and camera modules sought differentiation breakthroughs and innovations.

The company shipped 109 million mobile phone lenses in June (YoY 19.6%, MoM 5.1%); accumulated shipments from January to June reached 634 million (YoY 23.7%). The output of mobile phone camera modules in June was 41.622 million (YoY -20.2%, MoM-8.5%); accumulated shipments from January to June reached 289 million (YoY 13.5%). As the trend of the recovery of consumer electronics gradually became clear, intelligent phone brand manufacturers paid more attention to product innovation and specification upgrades，and camera upgrades still lead the differentiated competition of intelligent phones. The company closely follows customer demand and speeds up the development of new products. It customizes high-end products for multiple intelligent phone brand manufacturers, including mass production of main camera lenses with large lens face and variable aperture, and dual-group inner focus periscope camera lenses.

The development of autonomous driving technology is driving the development of vehicle-mounted business, and intelligent automobiles are expanding the scope of vehicle-mounted optics.

The company shipped 7.64 million car-mounted lenses in June (YoY 3.4%, MoM -8.4%); accumulated shipments from January to June reached 53.234 million (YoY 13.1%). With the popularity of ADAS systems and the rapid development of autonomous driving technology, the demand for sensors such as car cameras and lidars has continued to expand. Technology and specification upgrades have led the industry's rapid development. The company has successfully developed innovative products such as 17 million pixel two-in-one forward car-mounted lenses and 8 million pixel glass and plastic hybrid cabin monitoring car-mounted lenses, and has won the global large project of 8 million pixel car-mounted modules for the world's top-ranked automobile manufacturer. In addition, the company continues to explore market opportunities in areas such as lidars, head-up displays, and intelligent headlights, and is expected to become a new growth point for vehicle-mounted business.

TheVR/AR industry is developing rapidly, and the market is in a stage of diversified exploration.

The entry of new VR customers and the launch of more new products have injected new vitality into the industry. At the same time, many technology giants at home and abroad are competing to lay out the AR industry, and some terminal AR glasses products have already been launched. With the gradual improvement of AR-related technologies, application scenarios, ecological fields, and industrial chain composition, it is expected that the overall market demand for consumer-level AR products will gradually expand. The company continues to deepen its strategic cooperation with major VR customers, while continuing to strengthen its research and development capabilities in AR waveguides, optics, and optical engines to enhance its ability to manufacture large-scale products.

Risk warning: downstream demand is lower than expected; new product progress is lower than expected; market competition risk, etc.