欧菲科技(002456)

Positive growth outlook, but fairly priced

O-Film attended our DB Access China conference in Beijing. O-Film elaborateon key growth drivers in 2018, including the breakthrough in high-end dualcam projects (for Chinese OEMs), rising Apple sales (Touch panel ITO film andRX module in Face ID system) and potential 3D sensing module projects fromChinese OEMs. O-Film expects to see small volume adoption of 3D sensing in2H18, before a bigger ramp in 2019. For longer term, O-Film will focus onsmart vehicle solution (ADAS, entertainment system). Trading at 26x PER (or0.8x PEG), we think it is fairly priced, despite the decent growth. Hold.

CCM – breakthrough in high-end dual cam projects

O-Film views dual-cam as the key growth driver in CCM business, believing itwill benefit from rising dual-cam penetration in China smartphones (from sub-20% to 30%-40%) and its share gain in high-end projects. O-Film has builtmonthly capacity of 15mn for dual-cam CCM now and expects to double thisby end of 2018 (while single-cam CCM capacity could stay flat at 60-65mnunits). For high-end projects, O-Film highlights that it had grown its share inHuawei’s high-end products (P/Mate series) from almost nil in 1H17 to 10-15%in 2H17. Based on current order visibility, O-Film think it could get 30%+ or40%+ market share in new projects. Particularly, O-Film believe it will be thekey supplier for the globe’s first trio-cam project (Huawei P20 Pro, in our view).

3D sensing – iPhone’s RX module + initial adoption from Chinese OEMs

O-Film targets to get RX (receiver) module of iPhone’s Face ID system in 2H18,by leveraging its current iPhone front-cam capacity. The design and structureof RX module is familiar to that of front cam. Face ID adoption is expected tospread out from iPhone X to all new iPhones in 2H18, so Apple will need moresuppliers. O-Film expects some Chinese clients to adopt 3D sensing module onfew very high-end models, but also notes the volume will be very small, giventhe immature technologies and low production yield. O-Film believes this willbe an important long-term growth driver, and has formed an exclusivepartnership with Mantis Vision (a leading 3D sensing algorithm supplier) totarget Chinese OEMs. Other partners include Himax in WLO lens and Finisar inVCSEL.

Apple’s touch panel (TP) business – expanding from iPad to iPhone

O-Film expects Android’s TP business to stay stable, with the rising adoption ofout-cell solution to offset the continued pricing pressure. But, O-Film is positiveabout i-device’s TP business. The firm just penetrated into iPad’s TP sensor +full lamination business in May 2017, and has quickly grown market sharefrom zero to 20%-30% by the end of 2017. In 2018, O-Film expects it willcontinue to grow market share in iPad Tps, and is very likely to win iPhone TPorders as well (touch sensor + 3D touch + cover glass lamination).