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Imaging components supplier Sunny Optical reports 67pc rise in 2016 net profit

Company predicts demand for high-end smartphone cameras to remain strong

PUBLISHED : Tuesday, 14 March, 2017, 8:39pm
UPDATED : Wednesday, 15 March, 2017, 8:09am

Sunny Optical Technology (Group), a major manufacturer of smartphone camera modules and lenses, saw its shares decline on Tuesday after reporting revenue last year that missed analysts’ estimates amid a significant increase in net profit.

The Hong Kong-listed company, which is a supplier to Chinese smartphone juggernauts Huawei Technologies, Oppo and Vivo, attributed its difficulties last year to lingering weakness in the mainland economy.

“Despite all kinds of uncertainties, the group believes that in 2017 the demand for high-end cameras on smartphones will still be strong,” Sunny Optical founder and chairman Ye Liaoning said in a statement.

Sunny Optical’s share price opened at HK$58.70 (US$7.56), up from Monday’s close, but lost ground for the rest of the trading day to finish down 4 per cent to HK$55.10 on Tuesday.

The company posted a 66.8 per cent jump in net profit to 1.3 billion yuan (US$188 million), from 761.6 million yuan in 2015, driven by healthy volume growth and improved margins of its smartphone and vehicle lenses as well as handset camera modules.

Revenue grew 36.6 per cent last year to 14.6 billion yuan, compared with 10.7 billion yuan in 2015.

Sunny Optical’s net profit beat the consensus market estimate of 1.2 billion yuan from a Bloomberg poll of analysts. Its revenue, however, missed the consensus estimate of 14.8 billion yuan.

“We believe this [optical component] growth was driven by Chinese smartphone vendors, mainly Huawei, Oppo and Vivo,” Nomura research analyst Joel Ying said.

The profit growth may have also been helped by a write-down made by Sunny Optical in the second half of last year.

“Sunny wrote down 137 million yuan of accounts receivable, likely due to Leshi,” Huatai Research analyst Ken Hui said in a report on Tuesday.

The LeEco group, with businesses from smartphones and television to video streaming services and electric cars, suffered a cash crunch in the second half of last year, which prompted chief executive Jia Yueting to halt further expansion in the Asia-Pacific.

LeEco’s Shenzhen-listed arm, Leshi Internet Information & Technology, owns Hong Kong-traded smartphone supplier Coolpad Group.

Despite its hefty net profit growth, Sunny optical cut its dividend payout to 25 per cent, against 30 per cent in 2015.