Sunny Optical Technology: Main financial indexes in 2020
Chairman’s Statement Sunny Optical Technology
The Sunny Optical Technology is pleased to present to the shareholders the annual report for the year of 2020. In 2020, the worldwide spread of coronavirus disease 2019 (“COVID-19”), the rapid and profound development in global political landscape and the everchanging global economic environment have formed an unprecedented tremendous change in the past century, which threatened the development of many corporations.
However, the Group worked together with all of its employees to get through this difficult period and achieved excellent performance in pandemic prevention and control, resumption of work and production as well as the enhancement of operational performance, which continuously created value for shareholders.
Besides, some relevant subsidiaries of the Group actively responded to the need in pandemic prevention by working overtime during the pandemic to produce key components for anti-pandemic products, which satisfied the anti-pandemic requirement at that time and fulfilled its corporate responsibility. The Group has received wide acclaim from the society.
In 2020, due to the wide spread of the pandemic around the world, the overall global economy has declined, coupled with the sudden changes in the international situation and the Sino-U.S. trade friction, the market environment has undergone tremendous changes. In spite of challenges, the Group continued to consolidate and exploit its existing advantageous businesses.
By improving R&D capabilities, promoting automated manufacturing processes and strengthening cost control capabilities, the Group has solidified its supreme position in the industry. The Group continued to increase investment in new businesses, made every effort to develop emerging businesses and nurtured new business growth points in order to deploy a layout for sustainable development in the future.
At the same time, the Group further promoted the transformation of human resources and fostered the construction of digitalization in human resources while energizing the management cadres and human resources management group. With the implementation of a series of corporate cultural activities, the comprehension and awareness of the corporate culture by all employees have been greatly enhanced, thereby ensuring the provision of talents for the continuous and rapid development of the Company.
During the year under review, despite the unfavourable situation of the year-on-year decline in the global smartphone industry and vehicle camera industry, the Group’s major businesses achieved good results. The shipment volume of handset related businesses continued to hit new heights.
Moreover, the Group made breakthroughs in business and technology for high-end products, further increasing its global market share and market competitiveness. Despite the circumstances of decline in the global vehicle sales, the vehicle related businesses still achieved growth. The business of vehicle lens sets continued to maintain the global No.1 in market share.
The infrared related business emerged during the outbreak of the pandemic which did not only achieve impressive growth in business performance, but also make contributions to fighting the pandemic. Other businesses and emerging businesses also made breakthroughs and developments in the aspects of technological R&D, market expansion and stable delivery.
The Group believes that promoting the sustainable development of the environment is the unshirkable responsibility of an enterprise, and the sustainable development of an enterprise shall also be its long-term policy of business operation. The Group believes that the harmonious development of society requires the concerted efforts of every individual and organization.
The Group is willing to undertake the social responsibility as a corporate citizen consciously in the aspects of economic development, social security, cultural education and environmental protection, making a long-term commitment to foster the civilization progression and sustainable development of the society.
Therefore, the Group always adheres to the core value of “Create Together” in the production and operation process, striving to provide customers with higher quality products and services as well as continuing to improve the satisfaction of customers, society and shareholders and at the same time to realize the rapid development of various businesses.
While pursuing outstanding performance, the Group also realizes that sustainable development is the cornerstone for the Group to be stronger, bigger and go further in order to achieve the corporate vision of becoming a “Hundred-Year-Old Brand” in the optoelectronic industry.
The Group has always taken all factors of sustainable development into consideration in corporate strategy formulation and routine operation and management in order to strive for achieving sustainable profit growth. The Environmental, Social and Governance Report for 2020 of the Group will be published before the end of June 2021, which will be available on the website of HKEXnews of The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) (http://www.hkexnews.hk) or the website of the Group (http://www.sunnyoptical.com).
For the year ended 31 December 2020, the Group’s revenue was approximately RMB38,001.8 million, representing a slight increase of approximately 0.4% compared to that of last year.
The slight increase in revenue was mainly attributable to the fact that in 2020, the shipment volume of the Group’s three main products (namely handset lens sets, vehicle lens sets and handset camera modules) increased compared to that of 2019, and the market share increased further.
However, affected by the global pandemic, the average selling price of handset lens sets and handset camera modules decreased year-on-year due to the downgraded specification and configuration across the handset camera industry, which partially offset the revenue growth brought by the increased shipment volume. Revenue generated from the Optical Components business segment was approximately RMB9,181.1 million, representing a slight increase of approximately 4.1% compared to that of last year.
The slight increase in revenue was mainly attributable to the increase in the shipment volume of handset lens sets and vehicle lens sets, while the average selling price of handset lens sets decreased year-on-year due to the downgraded specification and configuration across the handset camera industry, which partially offset the revenue growth resulting from the increased shipment volume. Meanwhile, the infrared lens sets performed well. Revenue generated from the Optoelectronic Products business segment was approximately RMB28,494.3 million, representing a slight decrease of approximately 0.9% compared to that of last year.
The slight decrease in revenue was mainly attributable to the increase in the shipment volume of handset camera modules, while the average selling price of handset camera modules decreased year-on-year due to the downgraded specification and configuration across the handset camera industry, which offset the revenue growth resulting from the increased shipment volume.
Revenue generated from the Optical Instruments business segment was approximately RMB326.4 million, representing an increase of approximately 14.6% compared to that of last year. The increase in revenue was mainly attributable to the increased market demand for optical instruments for application in domestic industrial sector.
Gross Profit and Margin
The gross profit of the Group for the year ended 31 December 2020 was approximately RMB8,697.9 million, representing an increase of approximately 12.2% compared to that of last year. The gross profit margin was approximately 22.9% (2019: approximately 20.5%), which was approximately 2.4 percentage points higher compared to that of last year.
The increase in gross profit margin was mainly attributable to the improvement in gross profit margin of handset camera modules under Optoelectronic Products business segment which contributed approximately 75.0% of the Group’s total revenue, from 9.3% in 2019 to 12.6% in 2020.
The gross profit margins of Optical Components business segment, Optoelectronic Products business segment and Optical Instruments business segment were approximately 42.8%, 12.6% and 39.2%, respectively (2019: approximately 45.2%, 9.3% and 41.3% respectively).
Selling and Distribution Expenses
The selling and distribution expenses of the Group for the year ended 31 December 2020 increased by approximately RMB34.9 million compared to that of last year to approximately RMB313.5 million. It accounted for approximately 0.8% of the Group’s revenue during the year, compared to approximately 0.7% of last year. The increase in absolute amount was primarily attributable to the increase in the headcount and remuneration of sales staff.
The R&D expenditure of the Group for the year ended 31 December 2020 increased by approximately RMB289.8 million compared to that of last year to approximately RMB2,499.1 million. It accounted for approximately 6.6% of the Group’s revenue during the year, compared to approximately 5.9% of last year. The increase in overall R&D expenditure was attributable to the Group’s continuous investments in the upgrade of existing products and the R&D of products related to the emerging businesses.
About Sunny Optical Technology
Sunny Optical Technology (Group) Company Limited (the “Company” or “Sunny Optical”, together with its subsidiaries, the “Group”) (Stock Code: 2382.HK) is a global leading integrated optical components and products manufacturer with more than thirty years of history. The Group is principally engaged in the design, research and development (the “R&D”), manufacture and sales of optical and optical-related products.
Such products include optical components (such as glass spherical and aspherical lenses, plane products, handset lens sets, vehicle lens sets and other various lens sets) (the “Optical Components”), optoelectronic products (such as handset camera modules, three dimensional (the “3D”) optoelectronic products, security cameras and other optoelectronic modules) (the “Optoelectronic Products”) and optical instruments (such as microscopes, optical measuring instruments and intelligent equipment for testing, manufacturing and assembly) (the “Optical Instruments”).
The Group focuses on the application fields of optoelectronic-related products, such as handsets, digital cameras, vehicle imaging systems, security surveillance systems, optical measuring instruments and automated factories, which require the comprehensive application of optical, electronic, software and mechanical technologies.