Sunny Optical’s handset camera module shipment jumped 113%

But will it retain its momentum?

According to Maybank, handset camera module shipment rose 113% YoY/20% MoM in December, to 10.6m units. The strong shipment was mainly attributable to the rapid growth of smartphones, confirming its view that Chinese brand customers would support camera module sales growth.

Here’s more:

Implications: Expect the handset camera module shipment to stay strong in FY13F. Total camera module shipment reached 97m units in FY12, +39% YoY and 3% above our estimates. Based on the strong shipment result in Dec and the smartphone expansion plan of the Chinese brand customers, we revise up our FY13F handset camera module shipment assumption from 124m units to 128m units (+32% YoY).

Strong revenue growth is in sight on better ASPs. Based on our assumption that 5 mega-pixels or above handset camera module sales will make up 30% of the camera module shipment (22% in 1H12) and ASPs will increase 70% YoY in 2H12F (+60% YoY in 1H12 on our estimate), we estimate that the camera module revenue will rise by 150% YoY/57% HoH to CNY1,688m in 2H12F.

Anticipating strong earnings in 2H12F. We estimate that net profit for 2H12F will increase by 53% YoY/21% HoH to CNY190m (or FY12F net profit will grow 61% YoY to CNY346m). Risks to our forecasts are: 1) lower-than-expected ASP improvement in handset camera modules; 2) lower-than-expected gross profit margins; and 3)higher-than-expected R&D and S&D costs.

Action: Maintain BUY. We raise our earnings estimate for FY13F by 3% on higher handset camera module shipment growth assumption. As a result, we lift our target price from HKD6.40 to HKD6.60, based on an unchanged 11x FY13F PER. We anticipate that the strong 2H12 result, due in mid-March, will trigger more upward earnings revisions.