Citi slashed Sunny Optical’s target price to HK$80 from HK$110, lowered net profit forecast

 

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Apple supplier Sunny Optical on Wednesday issued a profit warning, forecasting a 65% to 70% year-on-year drop in first-half net profit citing a decline in shipments of smartphone lenses and camera modules amid a weak recovery in China and uncertainty in the global economy, as well as intensified competition in the market.

Citi expected investors to react negatively to the profit warning, and management may lower its shipment guidance at the August results meeting. 

Considering the long-term weak outlook for the smartphone market, Citi lowered its forecast of the company’s net profit for 2023/24/25 by 57%/ 45%/ 34% respectively.

Citi also downgraded Sunny Optical to Neutral and slashed its target price from HK$110 to HK$80.