机构：信达证券

　　评级：BUY

　　目标价：202.83港元

　　Sunny delivered another set of strong FY17 result, with EPS (up ~127% Yoy) came in 7% higher than Bloomberg consensus.  We attribute the beat due to better than expected GM, which was 60bps/90bps higher than both market and our consensus. Sunny’s management also guided on FY18E shipment in respective segments (HLS: 30-35% Yoy, CCM: 15-20% Yoy, vehicle lens:30-35%). Sunny’s guidance was generally in-line with our estimates, with 2M18 respective shipment accounted for 13%/15%/13% of our FY18 estimates (vs. 14%/16%/19% in 2M17).  

　　Sunny’s FY18E CAPEX would be RMB 2bn (40-45% for lens capacity expansion and automation, 35% in CCM capacity expansion, 10% allocated in vehicle lens).The total capacity would be increased by ~29%/33%/18% to 90kk/65kk/4kk pieces/mth. We view the CAPEX hike as a signal for clients’ strong product demand, hence soothing market previous worries on demand slowdown. 

　　Group GM uptrend still expected with lens’ GM; HCM GM a surprise to us, advanced features to drive segment GM    

　　Sunny’s GM grew 320 bps Yoy to 21.5%, in which HCM GM came in at 13.7% (vs. 12.1% in 1H17). We continue to see gradual GM expansion across the board, driven by better product mix (with >10MP HLS at >50% of shipment, >10MP CCM at >70% of shipment, dual cam CCM at >20% of shipment, better operating efficiency (hence yield rate)  

　　Automotive CCM verified by 1st –tier clients; Don’t miss out on another new potential growth engine as well : factory automation    

　　In addition to the rosy outlook for VLS on increasing ADAS adoption worldwide, Sunny has also shared with us that its automotive CCM has acquired certification from Tier-1 customers after making 2-3 years’ effort. We view this as another Sunny’s breakthrough in the automotive segment. Sunny will only target Tier-1 customers (e.g. Magna, Continental etc.) and will not compete with them. Meanwhile, we also identify optical instruments as another new potential growth engine in the years to come (strong demand for AOI machines due to increasing labour costs and more sophisticated products require more accuracy in identifying product defects) . 

　　Upgrade to BUY on better growth visibility; New TP HK$202.83  

　　We expect Sunny’s revenue and EPS to grow at 35.5%/38.8% CAGR in FY17-FY20E respectively, driven by i) product upgrade on high margin lens (e.g. 6P and hybrid lenses have commenced mass production, R&D on 7P lenses has also completed; ii) HCM enhanced features (e.g. dual/triple cam, large aperture, optical zoom and miniaturization etc.), iii) volume growth (increasing units/ car) and pixel upgrade cycle from vehicle lens. Though Sunny’s stock price soared >60% YTD, the counter is trading at FY19E 24.4x PE, which implies a 0.63x PEG (vs. peers at 0.8x).   

　　We adopt FY19E EPS as Sunny is diversifying away from smartphones, this alleviates our previous concerns on Sunny’s long term growth visibility. We upgrade Sunny’s rating to BUY with new TP at HK$202.83 based on 0.8x PEG , implying 31.0x FY19E PE.