To The Moon

CICC has released a research report maintaining an "Outperform" rating on Q TECH (01478) with a target price of HK$14.97, which implies a P/E ratio of 16.9x and 13.0x for 2026 and 2027, respectively, representing a potential upside of 46.5% from the current share price. The company issued a positive profit alert, forecasting that its net profit attributable to owners for 2025 will increase by 400-450% year-on-year, amounting to approximately RMB 1.40-1.53 billion, significantly exceeding the bank's and market expectations. Based on the profit alert, CICC has raised its forecast for the company's 2025/2026 net profit attributable to owners by 109% and 12% to RMB 1.469 billion and RMB 952 million, respectively (with 2026 excluding gains from disposals), and introduced its 2027 estimates of RMB 27.7 billion in revenue and RMB 1.21 billion in net profit. The report stated that the company's shipment volume for non-handset products doubled year-on-year, and the bank is optimistic about the continued momentum from this growth engine. In 2025, the company's non-handset camera module (CCM) shipments reached 25.59 million units, a 111% year-on-year increase, with second-half 2025 shipments surging 163% year-on-year, which the bank attributes primarily to robust demand for handheld imaging devices, strong sales performance from a major automotive customer in the second half, and the company's expansion into other IoT areas such as AI glasses and robotics. Benefiting from economies of scale, the bank anticipates that the gross profit margin for non-handset CCMs in the second half of 2025 is expected to improve both year-on-year and sequentially. The bank believes that shipment growth and profitability improvements in emerging smart terminals will likely remain the key growth drivers for the company in 2026. Regarding handset CCMs, the company's 2025 shipment volume was 435 million units, up 3% year-on-year; although the proportion of modules with 32 megapixels and above decreased to 48% year-on-year due to an increased supply share from overseas customers, sales of high-end periscope and OIS modules saw significant year-on-year growth (according to the preview), leading the bank to expect overall ASP and gross margin for handset CCMs to remain stable or increase slightly. For fingerprint modules (FPM), the total shipment volume in 2025 was 203 million units, a 26% year-on-year increase, with ultrasonic FPM shipments reaching 41.55 million units, surging 389% year-on-year, which has effectively enhanced the product value-added for FPMs.