No End in Sight for Sunny as It Is Stuck in the Midend While Q Tech Catches Up

Following its investor day, we maintain our expectation that Sunny will continue to face intense competition as we do not find management’s presentation on opportunities from artificial intelligence, automotive, and robotics material enough to solve its structural headwinds, and the question and answer session reinforced our existing views. For example, the lack of camera upgrades in the mass-market segment has led to its lower-end rival, Q Technology, outperforming Sunny in shipments. As a result, we maintain our fair value estimates for Sunny and Q Tech at HKD 60 and HKD 5.70, respectively, as both companies’ upbeat shipment figures may be due to replacement demand being brought forward. We prefer Q Tech over Sunny as the former trades on less demanding camera upgrade expectations.