CROSBY Research – Sunny Optical (2382 HK/BUY): HLS/HCM shipment bottom out and sequential GPM improvement in 2H23

28 Aug 2023

Sunny reported 1H23 revenue decreased by 15.9% YoY to Rmb14,279m, dragged by 1) declined HLS/HCM shipment due to weak smartphone market demand; and 2) weak VR products sales on market softness. GPM in 1H23 shrunk significantly by 5.8ppt YoY to 14.9%, due to prolonged smartphone de-spec trend and adverse scale impact caused by shipment decline. 1H23 net profit declined 67.8% YoY to Rmb437m, at the mid-end of the profit warning (65-70% YoY decrease). An unrealized FX loss of Rmb162mn was caused by the US$400mn bond, due to RMB depreciation. If we excluded this non-cash FX loss, adjusted net profit would be Rmb598m.