External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

Sunny Optical Technology Group / Equity Bottom-Up

<ul><li>We are positive on post-destocking shipment recovery and industry-wise spec upgrade trend driven by recent Huawei/Apple flagship models (Mate Pro 60/ iPhone 15 Pro Max).</li><li>For Sunny, we also expect blended ASP recovery, Apple/ Huawei order wins and easing competition to drive earnings in 2H23/2024.</li><li>However, in the near term, we believe recent stock rallies have factored in these positives, and Sunny’s Sep HLS/HCM shipment growth of 17%/41% YoY was largely in-line mainly on Apple/Huawei restocking and low base vs 2022. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We are positive on post-destocking shipment recovery and industry-wise spec upgrade trend driven by recent Huawei/Apple flagship models (Mate Pro 60/ iPhone 15 Pro Max).For Sunny, we also expect blended ASP recovery, Apple/ Huawei order wins and easing competition to drive earnings in 2H23/2024.However, in the near term, we believe recent stock rallies have factored in these positives, and Sunny’s Sep HLS/HCM shipment growth of 17%/41% YoY was largely in-line mainly on Apple/Huawei restocking and low base vs 2022. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Sunny Optical (2382 HK) – Positive on Shipment Recovery and Upgrade Trend

<ul><li>While we expect HLS/HCM shipment to recover sequentially into 2H23E driven by channel restocking and major clients’ order ramp-up, we believe 2H23E margin recovery will be slower-than-expected, dragged by limited spec upgrade and slow utilization recovery.</li><li>We revised down FY23-25E EPS by 9-18% to reflect 1H23 results and more conservative margin estimates.</li><li>We maintain our positive view on automobile/XR upside, but we believe a bumpy 2H23 will remain an overhang for the stock. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

While we expect HLS/HCM shipment to recover sequentially into 2H23E driven by channel restocking and major clients’ order ramp-up, we believe 2H23E margin recovery will be slower-than-expected, dragged by limited spec upgrade and slow utilization recovery.We revised down FY23-25E EPS by 9-18% to reflect 1H23 results and more conservative margin estimates.We maintain our positive view on automobile/XR upside, but we believe a bumpy 2H23 will remain an overhang for the stock. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Sunny Optical (2382 HK) – Expect Shipment Recovery on Track in 2H23E

<ul><li>While Sunny’s 1H23 net profit decline of 68% YoY is in-line with our estimate and its profit warning (down 65-70% YoY), its 1H23 GPM of 14.9% is well below our/consensus estimate of 17.2%/17.1%, given demand weakness, lower utilization and de-spec trend.</li><li>We expect 2H23E HCM/HLS shipment will recover YoY/QoQ given restocking and low base effect in 1H22, but margin will remain under pressure given slow demand recovery and limited spec upgrade.</li><li>In the long term, we are positive on auto/LiDAR/HUD/AR/VR to drive future growth. Trading at 36.5x/23.1x FY23/24E P/E, we think the stock is fairly valued. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

While Sunny’s 1H23 net profit decline of 68% YoY is in-line with our estimate and its profit warning (down 65-70% YoY), its 1H23 GPM of 14.9% is well below our/consensus estimate of 17.2%/17.1%, given demand weakness, lower utilization and de-spec trend.We expect 2H23E HCM/HLS shipment will recover YoY/QoQ given restocking and low base effect in 1H22, but margin will remain under pressure given slow demand recovery and limited spec upgrade.In the long term, we are positive on auto/LiDAR/HUD/AR/VR to drive future growth. Trading at 36.5x/23.1x FY23/24E P/E, we think the stock is fairly valued. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Sunny Optical (2382 HK) – 1H23 First Take: In-Line with Profit Warning

<ul>
<li>Apple is widely expected to launch its long-awaited MR headset in WWDC 2023 this week.</li>
<li>We believe 2023 is set to be one of the best years in VR/AR ecosystem development as Apple’s first MR headset will set new standard for innovation.</li>
<li>We expect technology upgrade to accelerate in displays, optics/sensors and tracking/interaction for enhancing user experience. </li>
</ul>
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.


Apple is widely expected to launch its long-awaited MR headset in WWDC 2023 this week.
We believe 2023 is set to be one of the best years in VR/AR ecosystem development as Apple’s first MR headset will set new standard for innovation.
We expect technology upgrade to accelerate in displays, optics/sensors and tracking/interaction for enhancing user experience. 

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology – Apple MR: Long-awaited next “iPhone moment”

Thematic (Sector/Industry)

<ul><li>Both SMIC and Hua Hong Semi posted in-line 3Q23 results but GPM pressure continued on lower UTR and ASP.</li><li>Looking ahead, both companies expected stabilizing demand on smartphone/CE recovery, and highlighted concerns on high inventory in automotive market.</li><li>On mature nodes, both expected stable demand into 2024 but lack growth momentum, and SMIC guided 8-inch UTR to remain at 50-70% in 2024. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Both SMIC and Hua Hong Semi posted in-line 3Q23 results but GPM pressure continued on lower UTR and ASP.Looking ahead, both companies expected stabilizing demand on smartphone/CE recovery, and highlighted concerns on high inventory in automotive market.On mature nodes, both expected stable demand into 2024 but lack growth momentum, and SMIC guided 8-inch UTR to remain at 50-70% in 2024. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology – SMIC/Hua Hong Semi 3Q23: in-line revenue; ASP/GPM pressure to persist into 4Q23E

China

Zhejiang Dahua Technology Co., Ltd. researches, designs and manufactures security and surveillance equipments. It also modular-designs both hardware and software with flexibility for different configurations, various scales of applications and future expansion.

WUS Printed Circuit (Kunshan) Co., Ltd produces and sells electrical equipments and related products.  The Company's products include double-side circuit board, multi-layers circuit board, and connector for electrical equipments.

Wus Printed Circuit (Kunshan) Co,Ltd. (002463 CH)

AAC Technologies Holdings Inc designs, develops and manufactures a broad range of miniaturized components that include speakers, receivers and microphones in the acoustic segment and others such as haptics vibrators, RF and antennas, and optical lenses. AAC's products are found in mobile devices such as smartphones, tablets, wearables, ultrabooks, notebooks and electronic book-readers.

Universal Scientific Industrial (Shanghai) Company Limited develops, procures, manufactures, provides logistics and maintenance services. The Company's main product types include communications, computer and storage, consumer electronics, industrial, and other related types.

Universal Scientific Industrial (Shanghai) (601231 CH)

Universal Scientific Industrial (Shanghai)

Unigroup Guoxin Co., Ltd., formerly Tongfang Guoxin Electronics Co., Ltd., is a China-based company, principally engaged in the design and distribution of integrated circuits (ICs). The Company's IC products consist of smart card chips, special IC products and memory chips. In addition, the Company also engages in the development, manufacture and distribution of quartz crystal components. The Company distributes its products within domestic market and to overseas markets.

Shengyi Technology Co., Ltd. manufactures and markets electronic components. The Company's products include copper coated panels, printed circuit boards, and other related products.

Lingyi iTech (Guangdong) Company manufactures magnetic material components. The Company develops, produces, and distributes ferrite permanent magnet components, ferrite soft magnet components, and other magnetic material components. Lingyi iTech (Guangdong) markets its products worldwide.

Chaozhou Three-Circle Group Co. Ltd. manufactures advanced ceramics. The Company researches, develops, produces, and sells ceramic ferrules, sleeves, substrates, capacitors, and other ceramic products. Chaozhou Three-Circle Group provides its products for optic telecommunication, machinery, environmental protection, and new energy industries.

Victory Giant Technology (Huizhou) Co., Ltd. manufactures electronic products. The Company specializes in high-density PCB development, production and sales.

Shennan Circuits Co.,Ltd. manufactures printed circuit boards. The Company produces packaging base plates, substrates, electronic assemblies, system in package, and other products. Shennan Circuits markets its products across worldwide.

Samsung Electro-Mechanics Co., Ltd. manufactures a variety of electronic components used in computers, audio and video products, industrial electronics, and telecommunication equipment. The Company's products include multi-layer boards and capacitors, optical Pick Ups, deflection yokes (DY), keyboards, speakers, and light emitting diode (LED) products.

Samsung Electro Mechanics Co, Ltd. (009150 KS)

Jentech Precision Industrial Company Ltd. provides tooling, precision metal stamping, custom insert molding, injection molding, and assembly solutions for medical, consumer electronics, semiconductor, automotive, appliance, and micro electronic markets to a wide variety of industries.

YASKAWA Electric Corporation manufactures and markets servomotors, controllers, inverters, and industrial robots.  The Company's products include spindle controllers, computerized numerical control (CNC) systems, and system engineering.

Insight Enterprises, Inc. offers information technology hardware, software, and services to large enterprises, small to medium sized businesses, and public sector institutions in North America, Europe, the Middle East, Africa, and Asia-Pacific.

FPT Corp is an information and communication technology company. The Company provides services in mobile distribution, systems integration, software outsourcing and development, Internet and e-media content, and computer assembly.

Dolby Laboratories Inc. develops audio signal processing systems for the motion picture, broadcasting, and music recording industries, as well as the consumer market.

Innolux Corporation manufactures TFT-LCD, LCD models and LCD monitors. The company also provides research, development, manufacturing and retails business.

LOTES Co., Ltd specialize in design and manufacture of connectors, CPU Socket, Coolers and Antenna for Notebook Computer, Personal Computer, Mobile electronic device and Ditial Video.

Arrow Electronics, Inc. distributes electronic components and computer products to industrial and commercial customers.  The Company distributes a variety of products including computer systems, peripherals, software, and mass storage products to original equipment manufacturers and commercial customers worldwide.

AU Optronics Corp. manufactures and markets thin film transistor-liquid crystal displays (TFT-LCDs) and plasma display panels (PDPs).  The Company sells its products in Taiwan and exports worldwide.

Sunny Optical Technology Group Co., Limited designs and manufactures optical and optical related products. The Company's products include glass/plastic lenses, prisms, mobile phone camera modules, microscopes, surveying instruments, and other analytical instruments.

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Sunny Optical Technology Group (2382 HK)

Sunny Optical (2382 HK) – Positive on Shipment Recovery and Upgrade Trend

We are positive on post-destocking shipment recovery and industry-wise spec upgrade trend driven by recent Huawei/Apple flagship models (Mate Pro...

CMB International

Sunny Optical (2382 HK) – Expect Shipment Recovery on Track in 2H23E

We maintain our positive view on automobile/XR upside, but we believe a bumpy 2H23 will remain an overhang for the stock.

CMB International

Sunny Optical (2382 HK) – 1H23 First Take: In-Line with Profit Warning

In the long term, we are positive on auto/LiDAR/HUD/AR/VR to drive future growth. Trading at 36.5x/23.1x FY23/24E P/E, we think the stock is fairly...

CMB International

China Technology – Apple MR: Long-awaited next “iPhone moment”

We believe 2023 is set to be one of the best years in VR/AR ecosystem development as Apple’s first MR headset will set new standard for innovation.

CMB International

China Technology – SMIC/Hua Hong Semi 3Q23: in-line revenue; ASP/GPM pressure to persist into 4Q23E

On mature nodes, both expected stable demand into 2024 but lack growth momentum, and SMIC guided 8-inch UTR to remain at 50-70% in 2024.

CMB International

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