Guotai Haitong: Maintains "buy" rating on CONANT OPTICAL (02276) with 30% increase in 2025 performance, continued prosperity in smart eyewear industry.

Guotai Haitong released a research report stating that it maintains a "buy" rating for CONANT OPTICAL (02276). The company is a global leader in lens manufacturing, with a wide range of SKUs, outstanding cost-effectiveness, optimized product structure, and efficient C2M model. This has driven continuous enhancement of profitability and steady increase in market share. Moreover, the company's customized lenses may be the optimal solution for myopia in smart glasses, and it is expected to further break through important customers in the domestic and international smart glasses market, with promising future developments. Guotai Haitong's main points are as follows: The company has issued a positive profit forecast, expecting that the net profit attributable to shareholders in 2025 will increase by not less than 30% compared to 2024. 1) The main reasons for the high increase in net profit in 2025 are: Increase in sales of 1.74 refractive index lenses and other multi-functional products; Continuous expansion of the company's economies of scale and improvement in mechanical automation level; Actively optimizing financing structure to increase fund yield and reduce financing costs. 2) After calculation, on an annual basis, it is expected that the net profit attributable to shareholders in 2025 will be not less than 557 million RMB with a year-on-year growth of not less than 30%; on a semi-annual basis, it is expected that the net profit attributable to shareholders in 25Q4 will not be less than 283 million RMB with a year-on-year growth of not less than 29.3%. Exceeding performance incentive targets, accelerating the layout of smart glasses The company achieved a year-on-year net profit growth of +30.3%/+30.7% in 24H2/25H1 respectively, with a growth rate of not less than 29.3% in 25H2, and steady profit growth on a quarterly basis. According to the 2024 equity incentive plan, the target for the company's net profit attributable to shareholders in 2025 (excluding stock incentive expenses) is to grow by not less than 21% year-on-year, exceeding the profit target. The company's smart glasses business has recently seen catalytic developments: 1) On December 30, the 2026 national subsidy policy for digital products expanded subsidies for smart glasses and smart home products. 2) Meta Platforms and Luxottica are discussing increasing production capacity of AI glasses to over 20 million pairs by the end of 2026. 3) The company has become the exclusive lens supplier for Alibaba's Quark AI glasses. The company is currently expanding its XR business and accelerating the layout of smart glasses. Risk warning Customized lens and own-brand promotions fall short of expectations, smart glasses lens business development falls short of expectations, intensified industry competition, etc.