"Big Banks" Bank of America lowers SUNNY OPTICAL target price to 60 yuan, maintains "Neutral" rating

Bank of America Securities published a research report indicating that Sunny Optical (02382.HK) achieved a net profit of RMB 3 billion in the second half of last year, representing a 82% increase half-on-half and a 177% increase year-on-year, falling within the median range of earnings guidance and in line with expectations. Revenue increased by 20% half-on-half and 25% year-on-year to RMB 23.6 billion, also in line with expectations. The gross profit margin was 19.6%, which is 0.6 and 0.4 percentage points lower than the bank's and market expectations, respectively. Operating profit was affected by controlled expenses, reaching RMB 2 billion, in line with expectations.

Considering the performance and management outlook, Bank of America Securities slightly adjusted its earnings forecast for Sunny Optical for this year and next, lowering the target price from HKD 70 to HKD 60, based on a forecast price-to-earnings ratio of 15 times for 2026, down from the previous 18 times, to reflect market concerns about the smartphone and automotive industries, as well as Sunny's higher exposure to Android brand clients. The current price of the stock corresponds to a forecast price-to-earnings ratio of about 14 times for 2026, which is considered reasonable, maintaining a "Neutral" rating