Sunny Optical’s FVE Trimmed to HKD 180 With Smartphone Headwinds but Other Ventures’ Outlook Solid

We trimmed our fair value estimate for narrow-moat Sunny Optical to HKD 180 from HKD 190 as it experiences more significant headwinds from having greater exposure to the Android and Chinese market than we had expected in March. Sunny’s recent shipment data underperformed its peers that either have more exposure to the iPhone, which is currently more resilient; or to lower-end handsets. Sunny may possess greater risk in the near term as Chinese middle-class consumers’ appetite for electronic goods vanishes due to the recession concerns. Therefore, we cut our 2022 handset lens sets and handset camera modules shipment estimate for Sunny Optical on fewer cameras per phone and market share loss.