Update | Sunny Optical shares hit record after forecasting strong profit growth
Sunny Optical Technology’s stock price soared to a record high on Tuesday after the lens manufacturer issued a positive profit alert, predicting an increase by more than 120 per cent in profit attributable to its owners during the first half.
Shares of Sunny Optical, which makes lenses for handsets, digital cameras, vehicle imaging systems and security surveillance systems, closed 16.9 per cent higher to a record HK$92.45 after surging by as much as 17.6 per cent.
That dragged up shares of other smartphone components makers. Acoustic parts maker AAC Technology Holdings, which also supplies to Apple, jumped 6.8 per cent to HK$115.8 on Tuesday while South Korean company listed in Hong Kong, Cowell e Holdings climbed 10.7 per cent to HK$3.41. The Hang Seng Index rose for a seventh straight day, gaining 0.2 per cent on Tuesday, or 54.36 points, to 26,524.94.
“Positive companies’ earning results are outweighing the regulatory risks in China, so Hong Kong’s market is quite strong overall,” Linus Yip chief strategist for First Shanghai Securities said.
Sunny Optical’s substantial growth in first-half profit was mainly due to a strong year-on-year increase in shipments of handset lens sets, vehicle lens sets, and handset camera modules, the company’s chairman Ye Liaoning said in a statement after the market closed on Monday.
The growth was also boosted by higher average selling prices of “better product mix” and “better gross margins” for handset lens sets and handset camera modules, Ye said.
A string of brokers have also raised their target prices for the stock. JP Morgan, which upped the target price to HK$100 from $75 and maintained the overweight rating for the stock, predicted that the company’s profit will grow 43 per cent in 2018 and non-smart phone revenue will represent 17 per cent of total revenues in the same year. Jefferies lifted its target price to HK$96 from HK$85, and maintained its “buy”rating. It raised the forecast for the company’s 2017 net profit by 11 per cent to factor in 3D sensing products with 5 per cent penetration in China smartphone brands. Macquarie said the company’s first half shipments of 81 per cent from a year earlier points to stronger handset lens shipments in the second half amid better seasonality and a stronger China smartphone market.
In 2016, Sunny Optical’s revenues rose 52 per cent year-on-year to 2.68 billion yuan (US$400 million). Profit attributable to the owners gained 67 per cent to 1.27 billion yuan. Net assets were 4.91 billion yuan, and net profit margin was 8.7 times, with a gearing ratio of 7.8 times.
The company was due to publish on August 14 its results for the six months ended 30 June 2017.
