FAST NEWS: Sunny Optical’s Profit Tumbles on Weak Smartphone Market

The latest: Smartphone camera producer Sunny Optical Technology (Group) Co. Ltd. said on Sunday it expects to report its net profit plunged between 50% and 55% to between 2.25 billion yuan ($329 million) and 2.49 billion yuan in 2022.

Looking up: The decline was partly due to depreciation of the Chinese yuan, which led to an unrealized foreign exchange loss of about 353 million yuan on its $600 million bond issued in January 2018. The yuan’s rebound earlier this year may help to reduce or eliminate similar losses this year.

Take Note: The company saw demand fall for its smartphone cameras and increasing pressure on its prices, pressuring its margins amid broader weakness in the global smartphone market, which faced challenges from the Covid pandemic, a global chip shortage and the Russia-Ukraine conflict.

Digging Deeper: Founded in 1984, Sunny Optical is a leading global manufacturer of integrated optical products and became the first Chinese optical company to be listed in Hong Kong in 2007. It has grown steadily since then on the rapid development of the global smartphone market, and was selected as a component of the benchmark Hang Seng Index in 2017. However, its business reached a turning point in 2021 when its revenue fell by 1.3%, marking the first decline in nearly a decade, due to a drop in the volume and price of smartphone cameras and camera modules. The situation further deteriorated last year, with revenue and net profit falling 14.4% and 49.5%, respectively, in the first half of the year. Management has said it expects the company will continue to face significant operating pressure.

Market Reaction: Sunny Optical shares dropped on Monday to close down 3.1% at HK$99.20 by the midday break. They now trade at the lower end of their 52-week range.

Translation by Jony Ho

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