Guotai Haitong Securities has released a research report maintaining an "Overweight" rating on CONANT OPTICAL (02276). The company, a global leader in lenses, is bolstered by its extensive SKU range, outstanding cost-performance ratio, optimized product mix, and efficient C2M model, which collectively drive continuous profit enhancement and steady market share growth. Furthermore, bonded lenses are likely the optimal solution for myopia correction in smart glasses, positioning the company to further secure key clients in the global smart glasses sector and achieve higher developmental milestones. The main points from Guotai Haitong Securities are as follows.
The company issued a positive profit alert, anticipating that its net profit attributable to shareholders for 2025 will increase by no less than 30% compared to 2024. The significant profit growth in 2025 is primarily attributed to: ① increased sales of 1.74 high-index lenses and other multifunctional products; ② the ongoing amplification of economies of scale and improved levels of mechanical automation; and ③ active optimization of the financing structure, leading to higher returns on funds and lower financing costs. Based on calculations, the company is expected to achieve an annual net profit attributable to shareholders of no less than 557 million yuan for 2025, representing year-on-year growth of no less than 30%. On a semi-annual basis, net profit for the second half of 2025 is projected to be no less than 283 million yuan, with growth of no less than 29.3%.
The company has exceeded its incentive targets, and its smart glasses initiatives are accelerating. Net profit attributable to parent company shareholders grew by +30.3% in the second half of 2024 and +30.7% in the first half of 2025, with growth for the second half of 2025 expected to be no less than 29.3%, indicating stable semi-annual profit growth. According to the 2024 equity incentive plan, the target for 2025 was a net profit growth (after excluding share-based incentive expenses) of no less than 21%, which has been surpassed. Recently, the company's smart glasses business has gained momentum due to several catalysts: 1) On December 30, the 2026 national subsidy policy was announced, extending subsidies for new digital product purchases to include smart glasses and smart home devices. 2) Meta Platforms and EssilorLuxottica are in discussions to ramp up production capacity for AI glasses to over 20 million units by the end of 2026. 3) The company has become the exclusive lens supplier for Alibaba's Quark AI glasses. CONANT OPTICAL is actively expanding its XR business, accelerating its strategic deployment in the smart glasses market.
Risk warnings include potential underperformance in custom lenses and proprietary brand development, slower-than-expected progress in the smart glasses lens segment, and intensifying industry competition.
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