Sunny Optical Q3 momentum may potentially slow

Uncertainties could dampen the sunny outlook.

Despite the positive outlook provided by Sunny Optical recently, it is believed that the near-term demand uncertainties from Samsung and the production adjustment from Chinese brand names could potentially affect Sunny Optical’s sales and earnings momentum in early 3Q14.

According to a research note from Maybank Kim Eng, this comes amid the company's significant exposure to Chinese brands and very high expectation on lens contribution from Samsung.

As a result, Maybank Kim Eng suggested investors to wait for more clear signs at this moment. It noted that its forecasts, target multiple and TP of HKD10.50 are unchanged, and said that the key risks are end demand and competition.

The report noted, however, the positive outlook provided by Sunny Optical recently. Maybank Kim Eng detailed Sunny Optical's expectation to increase camera module sales by 30-35% YoY and its continued expectation regarding lens shipment to grow by more than 100% YoY in FY14F due to rising demand in China, market-share gain and more new orders kicking in for Samsung
smartphone lens.

Here's more from Maybank Kim Eng:

Downgrade to HOLD as positives priced in. Stock +45% since our BUY call in Apr-14. Forecasts and target price unchanged.

3Q momentum may slow due to China smartphone demand uncertainties and lukewarm Samsung outlook, putting its upbeat guidance at risk. Suggest wait for better entry point.

Sunny can benefit from camera migration trend but looks fairly valued after strong run-up and it’s trading at 15x FY14F PE vs historic average of only 11-12x.

Also Read

Pet economy to boom, reaching $2.7t by 2027

Delta Global partners with HK leaders on sustainable retail

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

I want to download the media kit