Huachuang Securities: Maintain a "strong buy" rating on CONANT OPTICAL (02276) with a target price of HK$63.63.

Huachuang Securities released a research report stating that CONANT OPTICAL (02276) is deeply cultivating the eyewear manufacturing industry, with both domestic and international sales advancing together. The upgrade in structure is expected to drive continuous improvement in profitability. The company has already cooperated with several leading 3C companies to deploy smart glasses, showing promising growth prospects. With the acceleration of the smart glasses industry chain development and the steady improvement in the company's product structure, the bank predicts the company's net profit attributable to the parent company in 2025-2027 to be 560 million/700 million/870 million yuan, corresponding to PEs of 41/34/27X. Referring to the valuation of comparable companies, a 2026 valuation of 40X is given, maintaining a target price of HK$63.63 and a "strong recommendation" rating. Huachuang Securities' main points are as follows: Event: On December 30, 2025, the National Development and Reform Commission and the Ministry of Finance released the 2026 national subsidy policy, for the first time including smart glasses in the subsidy scope, with a subsidy rate of 15% and a maximum subsidy of 500 yuan per item (for products priced below 6000 yuan). According to calculations, smart glasses priced over 3300 yuan can basically enjoy full national subsidies. Lower purchase threshold to accelerate market penetration Looking at the Tmall Double Eleven XR device hot list, among the top 20 best-selling products, over half are priced below 4000 yuan. Mainstream AI/AR glasses products prices generally meet the requirements for national subsidies (prices usually do not exceed 6000 yuan). The bank believes that with subsidized product price decreases, there is potential to further boost consumer demand, and remains optimistic about the increase in smart glasses penetration rate next year. CES approaching, focus on subsequent new product developments The 2026 International Consumer Electronics Show (CES) will be held in North America from January 6 to 9. According to preliminary statistics from VR Gyro, more than 50 exhibitors of AI glasses will be present at this year's CES, with domestic and foreign manufacturers collectively releasing/displaying new products and reference designs, indicating a clear acceleration in category education and mental occupation. From an industry chain perspective, with technological iterations and new product promotions, the supply side and the ecological side are expected to enter a fast development track, resonating with the national subsidies through "supply prosperity + demand stimulation." It is recommended to continue monitoring the pace of subsequent new product promotions. Positive feedback from domestic benchmark customers, optimistic about the volume increase of consumer-grade products Conant is the exclusive lens supplier for Quark AI glasses, for example, the prices of lenses with refractive indices of 1.60/1.67/1.74 are 719/899/1529 yuan higher than plain lenses. In the medium to long term, the company's XR business has a clear first-mover advantage and high technological barriers. The company is expected to strengthen its competitive advantage during the process of pushing new products in the industry chain, and remains optimistic about the company's supply chain positioning. Risk Warning: Development of smart glasses falls below expectations, slower than expected domestic channel expansion, intensification of industry competition.