EB SECURITIES: Non-mobile camera module revenue is expected to continue to grow. Maintain a "buy" rating on Q TECH (01478).

EB SECURITIES released a research report stating that the company Q TECH (01478) is expected to see a significant year-on-year increase in revenue and net profit in 2025. The structure of the mobile camera module products continues to be optimized, and there is a substantial increase in revenue from non-mobile camera module areas. Considering that the increase in storage prices may put pressure on the company's mobile camera module ASP and gross margin, and the increase in storage prices is sustainable, the net profit forecast for 2026/27 is reduced by 6%/7% to 8.79/10.91 billion yuan, with an additional net profit forecast for 2028 of 13.80 billion yuan. The bank believes that the current valuation of the company already reflects some of the negative expectations from the increase in storage prices, and given the expected significant growth in the company's non-mobile camera module areas and the significant expansion of the multi-optical track business, they maintain a "buy" rating. The main viewpoints of EB SECURITIES are as follows: Event: Q TECH announced its full-year performance as of December 31, 2025, on March 16, 2026. Comments: The company's revenue and net profit saw a significant year-on-year increase in 2025. The company achieved revenue of 20.877 billion yuan in 2025, a year-on-year increase of 29.3%, and the gross profit margin increased by 1.7 percentage points to 7.8%, benefiting from the company's continued focus on mid-to-high-end camera modules and accelerated development in non-mobile camera module businesses such as automotive and IoT. Net profit was 1.494 billion yuan, a significant increase of 435.2% year-on-year, with net profit excluding the income from the equity arrangement in Indian Qutai rising by 144.4%. The structure of the company's mobile camera module products in 2025 continued to be optimized, with a substantial increase in revenue from non-mobile camera module areas. The impact of the increase in storage prices on ASP and gross margins should be monitored. In 2025, the company's shipments of mobile camera modules increased by 3.0% year-on-year, with the periscope camera module shipments increasing by 270.1%, far exceeding the growth guidance of no less than 100%. Looking ahead to 2026, market concerns about the decline in smartphone terminal sales, the reduction in optical specifications in mid-to-low-end smartphones, or the pressure on ASP and gross margins of mobile camera modules due to the background of rising storage prices should be considered. The company's vertical integration layout of visual systems continues to deepen, and the bank believes that its profitability has some resilience during a downturn. It will focus on the pricing negotiation results of new machine projects in the second half of the year. In 2025, the company's revenue from non-mobile camera module areas was 5.055 billion yuan, a significant increase of 171.2% year-on-year, with a compound growth rate of 89.6% from 2021 to 2025. The proportion of non-mobile camera module revenue in total camera module revenue increased to 26.9%, surpassing the target of 25% or more set out in the company's first five-year plan released in 2021; shipments increased significantly by 111.0% year-on-year, with a compound growth rate of 71.3% from 2021 to 2025. The optimization of product structure led to an increase in the comprehensive ASP of camera modules to 40.8 yuan, a year-on-year increase of 19.7%. The company has a wide range of optical products in the drone and handheld imaging device market, including camera modules, visual modules, and lidar products. The bank expects that with the rapid growth of the handheld imaging device market, the company's shipments of non-mobile camera modules will continue to grow rapidly. The company's second five-year plan aims for non-mobile camera module revenue to account for more than 50% of total camera module revenue. The significant effectiveness of the company's multi-optical track business expansion is notable. In the smart glasses field, the company has established partnerships with 18 domestic and foreign manufacturers, with 2 top overseas terminals achieving small batch deliveries, and the world's smallest display light engine based on Micro-Led has also completed small batch deliveries. In the field of Siasun Robot & Automation, the company has joined forces with industry leaders such as Nanjing Xinsijie and Guava Siasun Robot & Automation to launch a dual RGB-dToF fusion perception solution, enhancing industry perception capabilities. In the field of intelligent driving, the company has established business relationships with 7 global intelligent driving Tier1 and 35 automotive brands, achieving a breakthrough in the shipments of laser radar receivers, with COB technology-based automotive camera module shipments ranking among the top in the industry. The shipments of the company's biometric module steadily increased in 2025. The shipments of biometric modules in 2025 reached 203 million units, an increase of 25.8% year-on-year, with a steady increase in market share and a further consolidation of its leading position in the industry. With the dual drivers of increased shipments and upgraded product specifications, the capacity utilization rate of biometric modules continued to improve, leading to an increase in gross margin. Profit forecast, valuation, and rating: Taking into account the impact of the increase in storage prices on the company's mobile camera module ASP and gross margin, and the sustainability of the increase in storage prices, the net profit forecast for 2026/27 is reduced by 6%/7% to 8.79/10.91 billion yuan, with an additional net profit forecast for 2028 of 13.80 billion yuan. The bank believes that the current valuation of the company already reflects some of the negative expectations from the increase in storage prices, and given the expected significant growth in the company's non-mobile camera module areas and the significant expansion of the multi-optical track business, they maintain a "buy" rating. Risk factors: The increase in storage prices leading to a decline in smartphone demand, a decrease in the specifications of camera module products, intensified competition in the camera module industry, growth below expectations in IoT and automotive camera module businesses, and the risk of changes in tariff policies.