Cinda: CONANT OPTICAL (02276) introduces Goer strategic shareholder to accelerate breakthrough in smart glasses.

Cinda released a research report stating that it is expected that CONANT OPTICAL (02276) will have a net profit attributable to the parent company of 4.3/5.4/6.6 billion yuan from 2024 to 2026. On December 22, the company entered into a placement agreement with the placement agent, and has conditionally agreed to encourage the underwriter to subscribe to 533.25 million shares at a placement price of HK$15.86 per share (equivalent to 12.5% of the company's existing share capital and 11.11% after the placement). Assuming all placement shares are taken up, the total expected proceeds will be HK$846 million, with a net amount of approximately HK$828 million, to be used for the research, design, and manufacturing of lenses and visual solutions for smart glasses and XR headsets. The underwriter is a wholly-owned subsidiary of Goertek Inc., and this placement will broaden the company's shareholder base and capital base, and enhance the strategic relationship between the Group and Goertek Inc. Previously on December 12, the company announced the acquisition of the second piece of land in Thailand for 240 million Thai baht (equivalent to approximately RMB 48 million), primarily for the construction of a lens production line for XR products. On December 10, the company announced that several research and development projects with leading global technology and consumer electronics companies in the United States were progressing smoothly, and the company had received payments from signed purchase orders, including research and development expenses and trial orders. In the future design direction of XR products, different customer demands are being validated and batch production is underway. The report mentioned that the company's top customers are steadily growing, and the advantages of customizing lenses are prominent. In terms of smart glasses, the company mainly develops international top customers and focuses on promoting the fitting lens scheme overseas, as opposed to the domestic snap-on/clip-on/magnetic lens solutions. The fitting lens scheme still needs to address the disassembly demand brought about by changes in prescription numbers, with better user experience and lighter weight. In the domestic market, the company is mainly cooperating with major smartphone manufacturers and is expected to break through with top customers based on the company's over ten years of experience in custom lens production. The bank stated that CONANT's high-end products are increasing in proportion, the own brand is growing rapidly, and the production capacity in Thailand is steadily expanding. The gross profit margin for standardized lenses is over 30%, with an increase in the proportion of high refractive index products shipped. The gross profit margin for custom lenses is around 60%, and is expected to improve with the increase in custom product proportion, leading to an overall optimization of the gross profit margin. The company's lens products are exported worldwide, with nearly 70% of revenue coming from overseas. The production capacity in Thailand is steadily expanding, with a small exposure to export risks to the United States. In the domestic market, rapid breakthroughs are expected with the differentiated 1.74 product, as the bank predicts that the current channel coverage is still low, with potential for rapid expansion in the future. Regarding own brands, the bank anticipates that the company's own brand revenue will account for over 50%, with a rich product SKU, leading product technical performance, and excellent value-for-money, continuing to achieve breakthroughs in the small business market.