Monday Global Tech Biweekly 24 June 2019 Smartphone supply chain Figure 1: Sunny Optical monthly shipment (LHS) and YoY growth (RHS) 120,000 ('000 pieces) Handset lens set 90% 60,000 ('000 pieces) CCM 80% 80% 70% 100,000 50,000 70% 60% 50% 80,000 60% 40,000 40% 50% 60,000 30,000 30% 40% 20% 40,000 30% 20,000 10% 20% 0% 20,000 10,000 10% -10% - 0% - -20% Source: Company data, AMTD Research AMTD comments: On 11 Jun, Sunny Optical announced shipment data for May. Handset lens shipment were 107mn, -5.8% MoM/+38.7% YoY. CCM shipment were 39.7mn, +2.1% MoM/+16.6 YoY. The shipment data began to weaken mainly because the Huawei’s order cut impact started to show. The positive news is that, according to Investor Day on 18 Jun, management maintained the full year shipment guidance unchanged (handset lens set 25-30% growth/CCM 20-25% growth) as the company believe it can make up the shortfall caused by Huawei with its diversified client base. For CCM gross margin, management mentioned it could come under pressure in 1H19, however, it is expected to improve in the 2H19 as many optimizations to the CCM production process have been implemented. In addition, increasing orders from overseas will cushion the FX impact. The company has constantly focused and made progress on trending designs and products such as wide-angle, periscope design in CCM and high-resolution HUD in vehicle. AMTD Research AMTD Research Brian Li Michelle Li +852 3163-3384 +852 3163-3383
[email protected] [email protected] News updates 19 Jun 2019 Xiaomi to invest RMB5bn in new retail channels Xiaomi will invest an additional RMB5bn in new retail network over the next three years, Smartphone establish more stores and boost marketing, to grab more market share before Huawei turned back into the domestic market to offset its overseas decline.