机构：中金公司

　　评级：BUY

　　目标价：153.00港元

　　2017 results beat expectations 

　　Sunny Optical Technology announced its 2017 results: revenue was up 53% YoY to Rmb22.37bn and net profit was up 128% YoY to Rmb2.90bn or Rmb2.64/share and beating its own February 12 profit alert by 14%. Regardless of its inventory adjustment in 4Q17, Sunny delivered 116% earnings growth in 2H17, driven by 42% YoY revenue growth and 2.7ppt GPM expansion

　　Trends to watch 

　　Handset Camera module (HCM) ASP and margin continued to expand in 2H17: HCM GPM improved by +1.7ppt YoY or +0.7ppt HoH in 2H17. We expect HCM ASP to grow +32% YoY or +7% HoH in 2H17, driven by the rising ratio of dual cameras. The higher margin reflects its leadership in MOC (molding on chip), MOB (molding on board) and other new module technologies.  

　　Margin expansion in optical components driven by product mix improvement. GPM of optical components improved by +3.5ppt YoY or +0.6ppt HoH in 2H17; we think this was mainly driven by product mix improvement in handset lenses. 

　　Company will host analyst briefing on March 20; at which it will share more details with investors. We expect investors to focus on its 2018 strategy, such as 3D sensing and camera modules. 

　　Earnings forecast 

　　We maintain our 2018/19 EPS forecasts of Rmb3.32/4.89. 

　　Valuation and recommendation 

　　The stock is trading at 35.1x. We maintain our BUY rating and HK$153.00 target price.  

　　Risks 

　　Weak sales of Android phones; penetration of ADAS disappoints; 3D sensing penetration misses expectations.