CICC Increases Price Target for CONANT OPTICAL (02276.HK) by 12% to $65 and Revises Earnings Projections

The analyst rating for CONANT OPTICAL was kept at "Outperform" due to several positive factors highlighted in the article. These include: 1. A positive profit alert projecting a net profit increase of no less than 30% for 2025, driven by higher sales of 1.74 index lenses and multifunctional products. 2. Continued scale effects and improved mechanical automation, which contribute to cost efficiencies. 3. An optimized financing structure that enhances capital returns and reduces financing costs. Additionally, CICC raised its earnings forecasts for 2025 and 2026 by 3% each, reflecting confidence in the company's performance. The target price was also increased by 12% to $65, based on projected price-to-earnings (PE) ratios for 2026 and 2027, indicating a favorable outlook for the stock.

The analyst rating from Citi is based on the anticipated rapid growth of AI glasses as a new edge device in the technology market. Citi forecasts that shipments of AI glasses will reach approximately 112 million units by 2030, with a compound annual growth rate (CAGR) of 105% starting from 2024. The market size for AI glasses is expected to reach USD 40 billion by 2030, with a CAGR of 112% during the same period. The report emphasizes the importance of optical components in the production of AI or AR glasses, which constitute 40-70% of the bill of materials. Consequently, Citi favors companies with significant exposure to the optical supply chain, such as Essilor Luxottica, GOERTEK, SUNNY OPTICAL, OMNIVISION, and CONANT OPTICAL, leading to a Buy rating for SUNNY OPTICAL and CONANT OPTICAL with specific target prices.