報告_MS_iPhone18供應鏈_20260910

PDF 原檔：報告_MS_iPhone18供應鏈_20260910_original.pdf

原始內容

M September 10, 2026 08:01 AM GMT

Greater China Technology Hardware | Asia Pacific

iPhone 18: Real Upgrade Cycle, but Select Optical Valuations Look Stretched

We expect Luxshare, Lingyi, Crystal, and AAC to be the key beneficiaries of the new iPhone launch. We downgrade Largan to EW and Genius to UW. Both can benefit from the variable aperture lens upgrade, but enthusiasm over Co-Packaged Optics has made the stocks overvalued.

The iPhone opportunity is real for Largan and Genius…but their stocks have rallied 48% and 85%, respectively, in the past month: (The TAIEX is up 5% over this period.)

We now value Largan at NT$7,100/share - no longer attractive: Our analysis suggests that Largan's current share price already embeds more than 30% global market share in Fiber Array Units (FAU) before formal production starts in 2H27 or even 2028. Our residual income model yields a value of NT$3,000/share for the company's traditional business, while our TAM analysis derives a value of NT$4,100/ share for CPO/FAU new business, bringing the total price target to NT$7,100. However, any delay in CPO/FAU development poses significant downside risk. We therefore downgrade to EW.

We now value Genius at NT$910/share - but even on this basis, we view it as overvalued: Similarly, we believe Genius's share price is also inflated by hopes for FAU components. Using a similar approach, we conclude that aggregate value is NT $910/share (NT$600 for existing business and NT$310/share for FAU component business). We recommend taking profits.

Reiterate OW on Luxshare, Lingyi, Crystal and AAC: We believe all four companies will benefit from the new iPhone launch. Here, however, we still see upside in the stocks. We see these companies, benefiting in various ways:

• Luxshare: Key player in iPhone 18 Pro/Pro Max assembly, also benefits from variable aperture upgrade as component supplier.
• Lingyi: Higher content value form both iPhone 18 Pro/Pro Max and foldable.
• Crystal: Micro prism modules, coated filters, and cover lenses should enjoy positive ASP and volume growth.
• AAC: Vapor chamber (VC) heat dissipation upgrade for iPhone 18 Pro Max and Pro is the key catalyst.

Remain EW on Sunny Optical and GoerTek: Sunny is a key variable aperture component vendor, but it's been well on track to meet the goal of doubling revenue, implying limited upside surprise. GoerTek could face labor shortages and margin headwinds during peak season; thus, may be less likely to outperform.

Morgan Stanley Asia Limited+

Andy Meng, CFA

Equity Analyst Andy.Meng@morganstanley.com

Betty Chen

Research Associate

Betty.H.Chen@morganstanley.com

Greater China Technology Hardware

Asia Pacific

Industry View

In-Line

Exhibit 1 : Summary of changes

Share prices as at: Sep 7, 2026. Source: FactSet, Morgan Stanley Research estimates.

Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.

For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.

+= Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to FINRA restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

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+852 2239-7213

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Order of Preference

Exhibit 2: Order of Preference

Source: Company data, Morgan Stanley Research estimates. Note: Closing prices as of Sep 7, 2026.

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Executive Summary

With Largan and Genius's significant outperformance YTD, we believe the iPhone 18 launch is less likely to become a key driver of further stock price movement for them. Instead, our analysis suggests that the CPO enthusiasm could have already made these stocks overvalued. We therefore downgrade Largan from OW to EW and downgrade Genius from EW to UW.

Meanwhile, we expect Luxshare, Lingyi, Crystal, and AAC to become the key beneficiaries amid iPhone new product launches. These stocks haven't rallied materially, and we see upside potential in them.

We maintain EW ratings on Sunny and GoerTek and expect limited positive surprise from the iPhone peak season.

Exhibit 3: Downgrade Largan to EW and Genius to UW, Reiterate OW on Luxshare, Lingyi, Crystal, and AAC

Source: FactSet

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For a snapshot of each company's investment thesis, please refer to the summary table below.

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Exhibit 4: Investment Thesis

Source: Morgan Stanley Research estimates

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Implications from iPhone 18 Launch for Various Supply Chain Companies

Camera spec upgrade is a positive earnings driver, but CPO enthusiasm has made Largan and Genius overvalued

The iPhone 18 Pro and Pro Max have applied a variable aperture main camera for the first time, representing a significant hardware upgrade. The ASP of variable aperture lenses will be higher than it is for traditional lenses. Thus, a rapid shipment increase in 3Q26 could become a key re-rating catalyst - indeed, it has already prompted sharp re-rating for Largan, Genius, and Sunny.

Besides this, the launch of Apple's first foldable iPhone will also provide an incremental demand driver beyond the standard iPhone 18 lineup. According to Nikkei Asia (link), foldable smartphone orders increased from 8 million units to 10 million units this year, and if the new product performs well in 4Q2026, it could become a positive catalyst for Apple supply chain companies.

Beyond variable aperture and foldable, the further development of a new periscope lens with the key customer is likely to expand these use of periscope lenses in the future. This could also become a positive driver for optical lens companies in the supply chain.

1. Largan: iPhone opportunity is real, but recent enthusiasm over CPO made valuation too aggressive - downgrade to EW

Largan's revenue follows a well-established seasonal pattern tied to Apple's annual iPhone launch cycle. After shipments declined continuously from March 2026 through June 2026, we expect a seasonal recovery to begin in 3Q26, with sequential increases highly likely in the following months. Largan's August 2026 consolidated revenue reached NT$5.012 billion, up 3% month-over-month and its best performance in four months, and the company expects September's shipment momentum to surpass August's.

Largan is a key supplier of variable aperture lenses for the iPhone 18 Pro series, and the company could also benefit from foldable and periscope opportunities, we raise our intrinsic value estimate of the company's traditional business from NT$2,814/share to NT $3,000/share. For more details, please refer to Exhibit 18 .

Besides the Apple lens opportunity, we believe Largan's share performance is also highly correlated to CPO development. In order to assess the fundamental value from the CPO opportunity, we undertook the following analysis:

1. We forecast CPO optical engine volume to increase from 0.39mn in 2026 to 7.78mn in 2027,with a further surge to 48.6mn in 2028. Consequently, FAU (Fiber Array Units - vital optical interconnect components that align multiple optical fibers with silicon chips, making them critical for Co-Packaged Optics) volume for CPO also grows from 0.39 to 48.6 mn for the same period of time;
2. We assume ASP of US$100 in 2026-2028 (average market level);
3. We forecast Largan's FAU market share to increase from 0% in 2026 to 5% in

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2027 and 40% in 2028 (previously 20%).

1. Assuming net margins of 10% in 2027 and 30% in 2028, we forecast FAU earnings of US$4mn in 2027 and US$579 mn in 2028.

If we value the FAU business at 35x 2028e P/E (industry peers are at 40-50x P/E, and considering the first year of scalable production), it could bring incremental market cap of US$20.278bn. Discounting it back to 2026 at a 10% rate, we derive a per-share positive impact of NT$4,100.

Exhibit 5: Base Case - Potential Positive Impact from FAU New Business for Largan

Source: Morgan Stanley Research estimates.

We hold a positive view on Largan's CPO/FAU business opportunity because the company has a superior track record of high precision manufacturing relative to most industry peers in Taiwan. However, our calculation above suggests that the current share price already reflects Largan's potential to attain >30% global market share for FAU products. Meanwhile, formal production hasn't kicked off yet - it is more likely to start in the second half of 2027 or even 2028. Therefore, any delay in CPO/FAU development could result in significant share price fluctuation. Considering current risk-reward, even after raising our price target 47%, we no longer view Largan as attractive any more in view of the recent strong share price performance. We set our price target at NT$7,100, within which NT$3,000 is from its traditional business and NT$4,100 is from CPO/FAU new business.

2. Genius: Thesis is similar to Largan's - CPO opportunities also overpriced, downgrade to UW

Genius, as the second-largest optical lens vendor to Apple, is also well positioned to benefit from the camera spec upgrade highlighted in the previous section. Considering the growth opportunities discussed above, we raise our intrinsic value estimate for the

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existing business from NT$425 to NT$600. For more details, please refer to Exhibit 17 .

Similar to Largan, we believe Genius' share price performance is also highly correlated to CPO development. In order to assess the fundamental value from the CPO opportunity, we undertook the following analysis:

1. We apply the same FAU volume and ASP assumptions as we do for Largan.
2. We expect Genius to be involved in FAU components, rather than overall solutions; therefore, we assume components TAM to be 15% of the FAU TAM.
3. We forecast Genius's market share to increase from 0% in 2026 to 5% in 2027 and 30% in 2028.
4. Assuming net margins of 10% in 2027 and 25% in 2028, we forecast FAU component earnings of US$1mn in 2027 and US$54mn in 2028.

If we value the FAU component business at 25x 2028e P/E (lower multiple vs. Largan because Genius has smaller scale), it could introduce incremental market cap of US $1,322mn. Discounting it back to 2026 at a 10% discounted rate, we derive a per-share positive impact of NT$310.

Exhibit 6: Base Case - Potential Positive Impact from FAU New Business for Genius

Source: Morgan Stanley Research estimates

Similar to Largan, our residual income model derives intrinsic value of NT$600/share for the traditional business, while the TAM analysis suggests CPO/FAU-related opportunities could be valued at NT$310/share. Adding these together, we raise our price target materially to NT$910, but that still implies 14% downside from the latest closing price.

3. Sunny: Apple revenue to double in 2026, but positive is well known

We believe Sunny Optical will benefit from the new iPhone launch because:

1. The company is a key vendor of variable aperture actuators - a key spec upgrade

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with higher ASP.

1. Sunny is expanding the product mix from a single category to multiple categories, which could generate higher revenue from the key client.
2. Sunny is also gaining share in high-end lens products.

These drivers collectively underpin management's guidance of doubling Apple revenue for the full-year of 2026.

However, the fundamental performance is in line with management's guidance, so there is lack of potential positive surprise, in our view. We therefore raise our net income estimates 29.6% for 2026 and 26.5% for 2027 based on upbeat 1H26 results. Consequently, we raise our price target to HK$75 but maintain our EW rating - the strong growth from Apple has been well expected.

4. Crystal: Prisms, coated filters, and cover lenses to benefit

We expect Crystal Optech to benefit from Apple's new product launch because the company is supplying three key products in the supply chain:

1. Its micro prism modules are a key enabling component for periscope (foldedoptics) telephoto cameras in smartphones. The company's prism technology uses a folded optical path to achieve long-focal-length telephoto capability without increasing device thickness. In 1H26, the micro prism module business enjoyed significant volume growth. The iPhone 18 launch will directly extend this demand into 2H26.
2. Crystal-Optech's coated filter business - which brings micro-nano optical processing into the IRCF manufacturing process to significantly improve petal ghosting and chromatic aberration in special imaging scenarios - is another key segment that benefits from the iPhone 18 launch. Apple's high-end Pro models are the primary application for this product, so the company is highly likely to generate rapid revenue and earnings growth.
3. The iPhone 18 Pro models are expected to feature advances in 3D sensing, including a smaller Dynamic Island as some Face ID components move beneath the display, which sustains demand for these optical components. Crystal Optech is well positioned to capture the growth opportunity in iPhone's 3D sensing and cover lenses.

The company's 2Q26 results were a bit weaker than we expected because of rising costs from R&D and capacity expansion related to new products. However, we believe this investment could lead to stronger growth in 2028 and onward. As a result, we trim our earnings estimates 15.6% for 2026 and 2.9% for 2027 but raise our 2028 estimate 8.2%. Consequently, we raise our price target 7%, to Rmb32, implying 24% upside from the current level.

Luxshare: Apple opportunity underappreciated, resilient growth intact

We believe Luxshare's Apple opportunity is underappreciated - some investors worry about the supply chain relocation. However, the company is one of Apple's most deeply

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Motherboard Modules

Exhibit 7: Luxshare: One of the most deeply embedded manufacturing partners for Apple

Magnet Array

Back Plate Sub

Graphite

Visor

Graphite

Over Mold

Copper

Glue Overnold embedded manufacturing partners, covering various products and components, as illustrated in the chart below. The company has also proved its operational resilience, consistently registering positive growth in the Apple business.

USB-C Charging Cable

Inner Mold

US B-C Connector

We expect Luxshare to benefit from the latest new product launch through the following four key drivers:

1. Second largest assembler for iPhone 18 Pro/Pro Max - the most premium-heavy iPhone lineup in history. If the Pro/Pro Max models can take 70%+ of total iPhone volume, it could mark the highest high-end model contribution over the past several model cycles. A higher share from high-end models implies better revenue and margin outlook for Luxshare.
2. Capturing component opportunity in new variable aperture actuator supply. Instead of doing assembly, Lxushare is also playing the role of supplier of actuator mechanisms for the variable aperture camera system in the iPhone 18 Pro and Pro Max. This helps Luxshare gain exposure to high-end component business, which carries higher margin than assembly business.
3. Foldable iPhone (iPhone Ultra) exposure: While Luxshare is not the assembler for the foldable phone, it has actively developed foldable hinge technology, with R&D

Source: Company Data, Morgan Stanley Research

Protection Frame

Camera

Ring

Button

Carbon Fiber Product

• Hinge Part

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Fiberglass and Other Composite Back Plate

Battery Cover

Stainless Steel Battery Case

Ultra-thin VC

• Composite VC

• Stainless Steel VC|

• Aerospace-Grade Titanium VC

• 3D Dual-Heat Source VC

Metal Mid-Frame

• Titanium Allay Support Plate

• Carbon Fiber Support Plate

• focused on high-precision, long-life, large-angle hinge modules for inward-folding flexible-display devices. The company is also developing ultra-thin haptic motors tailored for foldable smartphones. When foldable shipments reach a certain scale, Luxshare is also highly likely to become the second assembler. Other
• Leading AirPods assembly share: In the AirPods assembly market, we expect Luxshare to remain the largest supplier, with GoerTek as the second player. The iPhone 18 launch is accompanied by new AirPods models, and Luxshare's dominant AirPods assembly position means that it captures the full breadth of Apple's 2H26 product cycle - not just the iPhone.

Despite a significant FX loss, Luxshare posted resilient earnings in 1H26. We nudge our EPS estimates up 0.2% each for 2026 and 2027 and 2.0% for 2028 to reflect the solid 1H26 results and positive growth outlook in the following 2-3 years. As a result, we also raise our H-share price target to HK$82/share, implying 34% upside potential.

Lingyi: Peak season to drive strong earnings improvement

Lingyi provides a broad range of components, including core precision parts, hinge precision structural components, screen support plates, flanged ultra-thin stainless steel battery case modules, etc. Following the launch of iPhone 18 Pro, Pro Max, and Apple's first-ever foldable iPhone, Lingyi is likely to benefit from higher content per unit on standard Pro models, and a step-change in content value from the foldable iPhone.

Exhibit 8: Lingyi: Higher content value from new iPhone

Source: Company Data, Morgan Stanley Research

Lingyi also has good exposure to the iPhone foldable product, with content value per foldable device expected by the company to reach US$80-90, including titanium inner hinges, hinge components, and mid-frame support structures - substantially above the content value of conventional smartphones.

Considering the positive drivers in 3Q26, we expect Lingyi to achieve significant earnings improvement on a QoQ basis, which could become a key re-rating catalyst.

We slightly adjust our net income estimates after 1H26: up 1.6% in 2026, 0.3% and 1.7% in 2027 and 2028. However, our price targets for both the H- and A-shares are unchanged because the revision is minor while our long-term RI model assumptions remain

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unchanged.

AAC: Key beneficiary of iPhone VC application

180,000k

AAC Tech is one of Apple's key component suppliers, providing a broad portfolio spanning acoustics, haptics, and thermal management. The iPhone 18 Pro/Pro Max and iPhone Ultra launch is a direct, multi-dimensional catalyst across all those business segments.

(in thds)

Within the three segments, we believe thermal management - Vapor Chamber (VC) Heat Dissipation - is the most important catalyst. AAC Technologies is a key vendor of VC heat spreaders in the iPhone 18 Pro and Pro Max. The significant expansion of the VC cooling area is driven by the iPhone 18 Pro's A20 Pro chip, which debuts on a 2nm process node with complex WMCM packaging technology to support on-device AI computation, leading to increased thermal output. Apple first introduced VC liquid cooling in the iPhone 17 Pro series, with AAC as the primary supplier for that generation as well.

This division has already demonstrated significant growth momentum heading into the iPhone 18 ramp up. In 1H26, heat dissipation revenue surged approximately 400% YoY, to RMB1.10 billion, primarily driven by the continued ramp-up in shipments of highperformance innovative vapor chambers. The company expects VC shipments to exceed 180,000k units in 2026, up from 140,000k+ units in 2025.

Exhibit 9: AAC's VC Shipment Volume from 2021-2026e

Source: Company data

Combining the strong growth momentum in thermal management, but weaker-thanexpected performance in the optics segment (all supplied to Android), we raise our earnings estimates 8.4% for 2026 and 6.0% for 2027. After 1H26 results, we believe investors are aware of the weakness in optics, while the iPhone launch could help re-rate the stock. We raise our price target to HK$50 - the stronger 19% increase reflects earnings upgrades and a higher valuation for the thermal-management business - and maintain our OW rating.

BYDE: Normal peak season, but lackluster with limited spec upgrade

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While Apple is BYDE's key customer, accounting for >50% of total revenue, it is mainly from the iPad assembly business. Therefore, this division is less likely to benefit from the iPhone 18 launch.

The company is also the second-largest iPhone metal casing vendor, supplying precision structural components including titanium and aluminium alloy chassis. While iPhone 18 launch is the direct driver for this segment, the titanium-to-aluminium downgrade has become a near-term headwind. Titanium is a higher-value, higher-margin material for BYDE while aluminium carries lower ASP and lower gross margin. This change has made BYDE less likely to benefit from the iPhone 18 launch.

Despite the lackluster outlook, we expect earnings to show sequential improvement in 3Q26, driven by the normal peak season in 3Q26, followed by stronger growth in 4Q26 as liquid cooling products for AI infrastructure also ramp up. Our earnings estimates and price target remain unchanged.

GoerTek: Margin might face pressures despite peak season

GoerTek's primary Apple exposure is in smart acoustic complete units (AirPods assembly and components) and precision components. We believe the iPhone 18 launch and peak season ramp in 3Q-4Q will drive higher shipment volumes for these products.

However, GoerTek's transfer of production to Vietnam - where it has invested approximately US$1.3 billion through multiple entities - has created a persistent labor cost headwind. In 2H25, a labor shortage caused by the rapid capacity transfer forced GoerTek to offer higher wages, triggering material gross margin pressure for the smart acoustic assembly business. Overall gross margins partially recovered to 13.8% in 1Q26 and 15.2% in 2Q26, but the underlying trend of rising wages in Vietnam remains a structural factor. As GoerTek ramps production for the iPhone 18 peak season in 3Q and 4Q, the higher labor cost base in Vietnam will continue to weigh on assembly margins.

We raise our 2026 and 2027 earnings estimates 14.9% and 10.6%, respectively, mainly reflecting the better-than-expected gross margin recovery in 1H26. However, we raise our price target only modestly: 4%. to Rmb27, as persistent labor-cost pressure in Vietnam could limit further margin expansion and reduce the earnings benefit from higher peakseason volumes.

Considering the factors discussed above, we believe GoerTek is less likely to benefit from the new iPhone product launch and peak season volume increase.

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Order of Preference, Our Estimates vs. Consensus, and Where We Could Be Wrong

After adjusting our price targets, the latest order of preference for our coverage is: Luxshare-H > Luxshare-A> Lingyi-H> Crystal > BYDE > AAC > GoerTek > Sunny > Largan> Genius > Lingyi-A.

In this report, we raise our price targets for Luxshare-H, Crystal, AAC, GoerTek, Largan, Sunny, and Genius. We keep Lingyi-A, BYDE and Lingyi's price targets unchanged. We believe these companies are key beneficiaries of the iPhone 18 launch. For details, please see Exhibit 14 .

Exhibit 10: Order of preference by upside potential to price target

Source: Thomson Reuters, Morgan Stanley Research estimates. Note: Closing prices as of Sep 7, 2026.

Earnings estimate revisions and consensus

Following 2Q26 results, we adjust our earnings forecasts accordingly. We keep BYDE unchanged. Detailed reasons can be found in Exhibit 13 .

Exhibit 11: Net profit estimate revisions (LC mn)

Source: Morgan Stanley Research (E) estimates.

Our 2026-28 earnings forecasts are generally below consensus.

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Exhibit 12: Morgan Stanley net profit estimates vs. consensus (LC mn)

Source: Refinitiv, Morgan Stanley Research (E) estimates

Where we could be wrong

While we expect iPhone 18 to be a positive catalyst in 2H26, we are watching three key variables on the potential inflection points:

1. Memory prices: These are a key variable this year. If there is a memory price correction anytime during 2026, investors are likely to expect an earlier smartphone shipment and margin recovery, which could reverse the negative sentiment.
2. LLMs: We see LLMs as a revolutionary innovation. They could introduce numerous creative features in smartphone applications and change user habits in the years to come. If the Edge AI breakthrough arrives earlier than we expect, it could accelerate the smartphone product cycle and make the recovery earlier.
3. iPhone sales performance: Better-than-expected sell-through of the iPhone 18 Pro, Pro Max and its first foldable model could drive shipment upside, higher content value and stronger capacity utilization. Conversely, weaker demand could lead to order cuts after the initial ramp up and reduce the earnings benefits from key hardware upgrades.

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Changes to Our Estimates and Valuations

Earnings estimate revisions

Our new estimates are summarized in Exhibit 13 .

Exhibit 13: Summary of changes to earnings estimates (LC mn)

Source: Morgan Stanley Research estimates

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Price target changes

We derive our price targets (also our base case values) using a residual income model the same methodology we use for our Greater China Tech coverage.

Our new price targets are derived from revised earnings estimates and unchanged cost of equity assumptions (RFR, beta, risk premium) and growth rates.

Exhibit 14: Summary of price target changes

Source: Morgan Stanley Research estimates

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Revisions to our bull and bear case scenario values

We summarize the changes to our bull and bear case scenario values in the table below.

Exhibit 15: Summary of changes to scenario value

Source: Morgan Stanley Research estimates

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RI Models

We summarize our RI models in the tables below.

Exhibit 16: Luxshare: RI model

Residual Income Valuation

Source: Morgan Stanley Research estimates

Exhibit 17: Genius: RI model

Genius (3406.TW)

Residual income model

Source: Morgan Stanley Research estimates

Exhibit 18: Largan: RI model

RI Valuation - Base case

Source: Morgan Stanley Research estimates

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Exhibit 19: Crystal: RI model

Crystal-Optech (002273.SZ)

Residual Income Valuation

Source: Morgan Stanley Research estimates

Exhibit 20: Sunny: RI model

RI Valuation - Base case

Source: Morgan Stanley Research estimates

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Exhibit 21: Lingyi: RI model

Residual Income Valuation

Source: Morgan Stanley Research estimates

Exhibit 22: GoerTek: RI model

Residual Income Valuation

Source: Morgan Stanley Research estimates

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Exhibit 23: AAC: RI model

AAC Technologies (2018.HK)

Residual Income Valuation (Rmb mn)

Source: Morgan Stanley Research estimates

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Exhibit 24: BYDE: RI model

Residual Income Valuation

BYDE (0285.HK)

Source: Morgan Stanley Research estimates

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Luxshare: Financial Summary

Exhibit 25: Luxshare: Financial Summary

Income Statement

Rmb mn

Net sales

COGS

Gross profit

Operating expenses

• Promotion

• ADM

• R&D

Operating income

Non-operating income

Interest income

Investment income

Disposal of investment

Disposal of fixed assets

Exchange gain

Other

Pre-tax income

Income tax

Net income

EPS (Rmb)

Balance Sheet

Source: Company data, Morgan Stanley Research (E) estimates

2025

332,344

-292,756

39,589

-23,958

-2,334

-10,195

-11,428

15,631

3919

-1,088

6,764

-619

-1,610

0

471

19,550

-2,950

16,600

2.29

2026E

411,810

-363,022

48,788

-29,209

-2,565

-12,635

-14,009

19,579

3566

-4,240

7,789

358

-690

0

350

23,144

-3,773

19,371

2.65

2027E

476,649

-415,095

61,554

-34,006

-3,896

-14,542

-15,568

27,548

-400

-4,000

3,200

0

0

0

400

27,148

-4,153

22,995

3.14

2028E

559,719

-481,427

78,292

-39,334

-4,575

-16,792

-17,967

38,958

-1200

-4,000

2,400

0

0

0

400

37,758

-5,243

32,515

4.44

Cash Flow Statement

Rmb mn

Cashflow from operations

Net Profits

Depreciation

Equity investment losses (income)

Other adjustments

Cashflow from investing

(Purchases) sale of FA (capex)

(Purchases) sale of L/T investment

(Purchases) sale of S/T investment

Other adjustments

Cashflow from financing

Increase in L/T debt

Increase in S/T debt

Issuance of stock

Cash dividends

Dir.& Emp. Bonus

Changes in Treasury Stocks

Other adjustments

Exchange rate adjustment

Net change in cash

Financial Ratios

Rmb mn

Margins

Gross margin

Operating margin

Pretax margin

Net margin

YoY growth

Sales

Operating profits

Pretax profits

Net profits

EPS

Net Debt/Equity (Net of mkt secs.)

Net Debt/Equity

Liabilities/Equity

Liabilities/Assets

ROAE

ROAA

AR/NR Turnover (days)

AP/NP Turnover (days)

Inventory Turnover (days)

Cash conversion cycle (days)

2025

17,325

16,600

13,730

-6,764

-6,241

-24,207

-17,904

-2,854

-8,274

4,825

19,290

18,771

0

3,656

-3,464

0

0

327

-335

12,074

2025

11.9%

4.7%

5.9%

5.0%

23.6%

30.1%

21.4%

24.2%

23.1%

15%

18%

195%

66%

17.6%

6.3%

46

93

47

0

2026E

919

19,371

14,417

-7,789

-25,080

-12,111

-12,111

0

0

0

-5,548

-3,000

0

0

-2,548

0

0

0

0

-16,740

2026E

11.8%

4.8%

5.6%

4.7%

23.9%

25.3%

18.4%

16.7%

15.6%

25%

27%

163%

62%

17.2%

6.2%

50

95

49

4

2027E

33,912

22,995

15,138

-3,200

-1,021

-10,000

-10,000

0

0

0

-6,025

-3,000

0

0

-3,025

0

0

0

0

17,886

2027E

12.9%

5.8%

5.7%

4.8%

15.7%

40.7%

17.3%

18.7%

18.7%

6%

8%

149%

60%

17.6%

6.9%

51

98

51

4

2028E

44,381

32,515

15,894

-2,400

-1,629

-10,000

-10,000

0

0

0

-7,278

-3,000

0

0

-4,278

0

0

0

0

27,104

2028E

14.0%

7.0%

6.7%

5.8%

17.4%

41.4%

39.1%

41.4%

41.4%

-13%

-11%

135%

57%

21.0%

8.7%

51

98

50

4

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Risk Reward - Luxshare Precision Industry Co., Ltd. Risk Reward - Luxshare Precision Industry Co., Ltd. (002475.SZ)

(002475.SZ) AI Infrastructure and iPhone 18 to Drive Next Growth Leg

Rmb70.27 PRICE TARGET

Base-case scenario value, derived from a residual income model. We assume a cost of equity of 11%, a medium-term growth rate of 17% and a terminal growth rate of 3%.

Rmb79.77

Source: Refinitiv, Morgan Stanley Research

BULL CASE

Rmb88.00

23x bull-case 2027e EPS

• 1) Better-than-expected iPhone 18 Pro/Pro Max and AirPods demand and profitability.
• 2) Better-than-expected foldable iPhone adoption and content value expansion.
• 3) Stronger revenue contribution from communications, automotive and data center businesses.

BASE CASE

Rmb70.27

22x base-case 2027e EPS

• 1) Consumer electronics business continues to deliver positive growth despite industry headwinds.
• 2)Luxshare maintains its position as the second-largest iPhone 18 Pro/Pro Max assembler and captures incremental component opportunities from the variableaperture camera upgrade.
• 3) Meaningful revenue contribution from new businesses, including AI infrastructure and auto components, with incremental contribution from foldable smartphones and other new growth initiatives.

OVERWEIGHT THESIS

• We believe Luxshare's Apple opportunity remains underappreciated amid supply-chain relocation concerns.
• Luxshare should benefit from the iPhone 18 cycle through Pro/Pro Max assembly, variable-aperture actuator components and foldable-related products.
• Our price target implies 22x 2027E P/E, broadly in line with its historical average, which we believe is justified by its exposure to AI infrastructure, iPhone assembly, foldables and other new growth opportunities.

Secular Growth: Technology Diffusion:

Positive Positive

BEAR CASE

Rmb42.20

16x bear-case 2027e EPS

• 1) Worse-than-expected iPhone and broader smartphone demand.
• 2) Worse-than-expected wearable device demand.
• 3) Lower gross margin owing to competition.

M

Risk Reward - Luxshare Precision Industry Co., Ltd. (002475.SZ)

KEY EARNINGS INPUTS

INVESTMENT DRIVERS

• Smartphone, Airpod, MacBook/iPad demand
• Growth of auto components business
• New order from communication and data center business

GLOBAL REVENUE EXPOSURE

Source: Morgan Stanley Research Estimate View explanation of regional hierarchies here

MS ALPHA MODELS

3 Month Horizon

Source: Refinitiv, FactSet, Morgan Stanley Research; 1 is the highest favored Quintile and 5 is the least favored Quintile

RISKS TO PT/RATING

RISKS TO UPSIDE

• Faster-than-expected AI infrastructure and data center growth.
• Greater-than-expected foldable iPhone adoption and component content gains.
• Better-than-expected growth in communications and automotive electronics businesses

RISKS TO DOWNSIDE

• Worse-than-expected smartphone and wearable device demand.
• Slower customer qualification in AI infrastructure products.
• Margin pressure from intensified competition.

OWNERSHIP POSITIONING

Inst. Owners, % Active

85.4%

Source: Refinitiv, Morgan Stanley Research

MS ESTIMATES VS. CONSENSUS

M

Risk Reward - Luxshare Precision Industry Co., Ltd. (2475.HK) Risk Reward - Luxshare Precision Industry Co., Ltd. (2475.HK)

AI Infrastructure and iPhone 18 to Drive Next Growth Leg

HK$82.00 PRICE TARGET

Base-case scenario value, derived from a residual income model. We assume a cost of equity of 11%, a medium-term growth rate of 17% and a terminal growth rate of 3%.

RISK REWARD CHART

Key:

Historical Stock Performance

• Current Stock Price

Source: Refinitiv, Morgan Stanley Research

BULL CASE

HK$100.00

23x bull-case 2027e EPS

• 1) Better-than-expected iPhone 18 Pro/Pro Max and AirPods demand and profitability.
• 2) Better-than-expected foldable iPhone adoption and content value expansion.
• 3) Stronger revenue contribution from communications, automotive and data center businesses.
• Price Target

BASE CASE

HK$82.00

22x base-case 2027e EPS

1) Consumer electronics business continues to deliver positive growth despite industry headwinds.

• 2)Luxshare maintains its position as the second-largest iPhone 18 Pro/Pro Max assembler and captures incremental component opportunities from the variableaperture camera upgrade.
• 3) Meaningful revenue contribution from new businesses, including AI infrastructure and auto components, with incremental contribution from foldable smartphones and other new growth initiatives.

OVERWEIGHT THESIS

• We believe Luxshare's Apple opportunity remains underappreciated amid supply-chain relocation concerns.
• Luxshare should benefit from the iPhone 18 cycle through Pro/Pro Max assembly, variable-aperture actuator components and foldable-related products.
• Our price target implies 22x 2027E P/E, broadly in line with its historical average, which we believe is justified by its exposure to AI infrastructure, iPhone assembly, foldables and other new growth opportunities.

Risk Reward Themes

Secular Growth: Technology Diffusion:

Positive Positive

View descriptions of Risk Rewards Themes here

BEAR CASE

HK$48.00

16x bear-case 2027e EPS

• 1) Worse-than-expected iPhone and broader smartphone demand.
• 2) Worse-than-expected wearable device demand.
• 3) Lower gross margin owing to competition.

M

Risk Reward - Luxshare Precision Industry Co., Ltd. (2475.HK)

KEY EARNINGS INPUTS

INVESTMENT DRIVERS

• Smartphone, Airpod, MacBook/iPad demand
• Growth of auto components business
• New order from communication and data center business

GLOBAL REVENUE EXPOSURE

Source: Morgan Stanley Research Estimate View explanation of regional hierarchies here

RISKS TO PT/RATING

RISKS TO UPSIDE

• Faster-than-expected AI infrastructure and data center growth.
• Greater-than-expected foldable iPhone adoption and component content gains.
• Better-than-expected growth in communications and automotive electronics businesses.

RISKS TO DOWNSIDE

• Worse-than-expected smartphone and wearable device demand.
• Slower customer qualification in AI infrastructure products.
• Margin pressure from intensified competition.

MS ESTIMATES VS. CONSENSUS

Morgan Stanley Estimates

Mean

Source: Refinitiv, Morgan Stanley Research

FY Dec 2026e

Sales /

Revenue

(Rmb, mn)

Note: There are not sufficient brokers supplying consensus data for this metric

411,809.8

EBITDA

(Rmb, mn)

Note: There are not sufficient brokers supplying consensus data for this metric

41,094

Net income

(Rmb, mn)

Note: There are not sufficient brokers supplying consensus data for this metric

19,371

EPS

(Rmb)

Note: There are not sufficient brokers supplying consensus data for this metric

2.6

M

Sunny Optical: Financial Summary

Exhibit 26: Sunny Optical: Financial Summary

Sunny Optical (2382.HK)

Financial Summary

Source: Company data, Morgan Stanley Research (E) estimates

M

Risk Reward - Sunny Optical (2382.HK) Risk Reward - Sunny Optical (2382.HK)

Smartphone industry headwinds to halt the growth momentum; EW

HK$75.00 PRICE TARGET

Base case, residual income model (RIM)-derived SOTP methodology. We use RIM valuation methodology for Greater China Hardware Tech companies in our coverage, while SOTP reflects the material differences in growth and return profile of its businesses. We apply a cost of equity of 11%, medium-term growth rates of 0%, 10% and 12%, and long-term growth rates of 3%, 5% and 5% for the handset, vehicle and AR/VR business.

HK$85.40

Source: Refinitiv, Morgan Stanley Research

BULL CASE

HK$110.00

18x 2027e bull case EPS

Faster-than-expected Apple growth and

market-share gains: We assume: 1) stronger iPhone 18 demand; 2) faster variableaperture actuator penetration; and 3) greater-than-expected share gains in highend lenses and new Apple product categories.

BASE CASE

HK$75.00

15x 2027e base case EPS

Strong Apple growth, but largely priced in:

We expect: 1) Apple revenue to double in 2026; 2) variable-aperture actuators and high-end lens share gains to drive growth; and 3) performance broadly in line with management guidance, limiting positive earnings surprise.

EQUAL-WEIGHT THESIS

• Sunny should benefit from the iPhone 18 cycle as a key variable-aperture actuator supplier, while expanding its Apple product categories and gaining share in high-end lenses.
• These drivers support management's guidance for Apple revenue to double in 2026, but the growth outlook is already well anticipated by the market.
• Our price target implies 15x 2027 P/E, which we believe appropriately reflects strong Apple growth but limited scope for positive earnings surprise.

Source: Refinitiv, Morgan Stanley Research

Risk Reward Themes

Electric Vehicles: Secular Growth:

Positive Positive

View descriptions of Risk Rewards Themes here

HK$40.00

10x 2027e bear case EPS

BEAR CASE

Weaker-than-expected smartphone demand and Apple ramp: We assume: 1) weaker iPhone 18 sell-through; 2) slower variableaperture actuator and high-end lens rampup; and 3) intensified competition in smartphone lenses and camera modules.

M

Risk Reward - Sunny Optical (2382.HK)

KEY EARNINGS INPUTS

INVESTMENT DRIVERS

• Vehicle lens growth rate
• Smartphone lens upgrade trend
• Potential breakthrough in vehicle module business

GLOBAL REVENUE EXPOSURE

Source: Morgan Stanley Research Estimate View explanation of regional hierarchies here

MS ALPHA MODELS

2/5 MOST

3 Month Horizon

Source: Refinitiv, FactSet, Morgan Stanley Research; 1 is the highest favored Quintile and 5 is the least favored Quintile

RISKS TO PT/RATING

RISKS TO UPSIDE

• Improvement in smartphone CCM and lens gross margin
• Faster-than-expected vehicle lens/module growth
• Faster-than-expected share gains in new international client
• A breakthrough in MR/Smart glasses business

RISKS TO DOWNSIDE

• Industry demand weakness, weighing on gross margin
• More intense smartphone CCM/lens competition
• Weaker-than-expected vehicle related growth

OWNERSHIP POSITIONING

Inst. Owners, % Active

50.6%

Source: Refinitiv, Morgan Stanley Research

MS ESTIMATES VS. CONSENSUS

M

AAC: Financial Summary

Exhibit 27: AAC: Financial Summary

AAC Technologies (2018.HK)

Financial Summary

Source: Company data, Morgan Stanley Research (E) estimates

M

Risk Reward - AAC Technologies Holdings (2018.HK) Risk Reward - AAC Technologies Holdings (2018.HK)

iPhone 18 Vapor-Chamber Upgrade to Drive Re-rating; OW

HK$50.00 PRICE TARGET

Base case, from residual income-derived SOTP methodology. RIM is the same methodology we use for our Greater China Tech coverage, while we apply SOTP to capture the material differences in growth profiles between its optics and other businesses. For its optics business, we apply a CoE of 11% and a terminal growth rate of 3.5%. For others (acoustics, haptics and precision), we apply a CoE of 11% and a terminal growth rate of 3%.

HK$53.51

MS PT

Mean

Consensus Price Target Distribution

Source: Refinitiv, Morgan Stanley Research

RISK REWARD CHART

Source: Refinitiv, Morgan Stanley Research

BULL CASE

HK$65.00

17x bull case 2027e EPS

Faster - than - expected growth in thermal management and precision mechanics : We

assume: 1) stronger-than-expected vaporchamber shipments; 2) faster growth in haptics and precision mechanics; and 3) better-than-expected smartphone demand.

HK$42.05

BASE CASE

HK$50.00

16x base case 2027e EPS

iPhone 18 upgrades support earnings

growth : We expect: 1) continued vaporchamber growth driven by the iPhone 18 Pro/Pro Max; 2) solid contribution from haptics and precision mechanics; and 3) weaker Android optics to partly offset growth in other businesses.

HK$63.38

Morgan Stanley Estimates

OVERWEIGHT THESIS

• AAC is a key beneficiary of the iPhone 18 Pro/Pro Max vapor-chamber upgrade, supported by higher thermal requirements from the A20 Pro chip.
• Strong thermal-management, haptics and precision-mechanics growth should offset weakness in Android optics.
• Automobile acoustics business to enjoy rapid growth thanks to the acquisition of PSS.

HK$28.00

11x bear case 2027e EPS

BEAR CASE

Slower - than - expected industry recovery : We assume: 1) weaker-than-expected iPhone and smartphone demand; 2) slower vaporchamber shipment growth; and 3) continued pricing and margin pressure in optics.

M

Risk Reward - AAC Technologies Holdings (2018.HK)

KEY EARNINGS INPUTS

INVESTMENT DRIVERS

• Auto-related opportunities
• Haptics potential upgrades
• Haptics share gains

GLOBAL REVENUE EXPOSURE

Source: Morgan Stanley Research Estimate View explanation of regional hierarchies here

MS ALPHA MODELS

3 Month Horizon

Source: Refinitiv, FactSet, Morgan Stanley Research; 1 is the highest favored Quintile and 5 is the least favored Quintile

RISKS TO PT/RATING

RISKS TO UPSIDE

• Success in new speaker modules and haptics for Android clients
• New clients and products for precision mechanics
• Better-than-expected yield improvement for plastic lenses/CCMs
• Large breakthrough in auto-related business

RISKS TO DOWNSIDE

• Pricing and margin pressure from competition in lens/CCMs
• Inability to find new clients/drivers for precision mechanics
• Fails to benefit from the auto related opportunity

OWNERSHIP POSITIONING

Inst. Owners, % Active

53.3%

Source: Refinitiv, Morgan Stanley Research

MS ESTIMATES VS. CONSENSUS

M

Genius: Financial Summary

Exhibit 28: Genius: Financial Summary

Genius (3406.TW)

Financial Summary

Source: Company data, Morgan Stanley Research (E) estimates

M

Risk Reward - Genius Electronic Optical Co. Ltd. (3406.TW) Risk Reward - Genius Electronic Optical Co. Ltd. (3406.TW)

iPhone Opportunity Is Real, but FAU Expectations Are Overpriced; UW

NT$910.00 PRICE TARGET

Base case: Our price target is based on an SOTP valuation, comprising the traditional business and potential FAU opportunity. We value the traditional business using a residual income model, consistent with our Greater China Tech coverage, assuming an 8.5% cost of equity, a medium-term net profit CAGR of 5% and a 3% terminal growth rate. We separately value the FAU component opportunity based on our TAM and market-share assumptions.

NT$597.25

BASE CASE

NT$910.00

18x 2027E base case EPS

iPhone camera upgrades support the traditional business, with incremental FAU contribution: We assume: 1) benefits from variable-aperture, foldable and periscope upgrades; 2) Genius's FAU component market share reaches 5% in 2027 and 30% in 2028; and 3) FAU components represent 15% of the overall FAU TAM.

Source: Refinitiv, Morgan Stanley Research

BULL CASE

NT$1,705.20

28x 2027E bull case EPS

Stronger iPhone demand and faster FAU

development: We assume: 1) stronger-thanexpected iPhone orders; 2) faster penetration of variable-aperture, foldable and periscope lenses; and 3) faster FAU component adoption and greater marketshare gains.

UNDERWEIGHT THESIS

• Genius should benefit from iPhone 18 variable-aperture, foldable and periscope camera upgrades as the second-largest Apple optical-lens supplier.
• However, FAU components represent only around 15% of the overall FAU TAM, while the recent share-price rally already reflects aggressive expectations.
• Our NT$910 price target comprises NT$600 for the traditional business and NT$310 for the FAU component opportunity, but still implies downside from the current share price.

BEAR CASE

NT$592.40

15x 2027E bear case EPS

Weaker iPhone demand and slower FAU

development: We assume: 1) weaker-thanexpected iPhone demand; 2) slower cameraupgrade penetration and greater pricing pressure; and 3) delays in FAU component commercialization and market-share gains.

M

Risk Reward - Genius Electronic Optical Co. Ltd. (3406.TW)

KEY EARNINGS INPUTS

INVESTMENT DRIVERS

• VR shipments
• iPhone shipments

GLOBAL REVENUE EXPOSURE

Source: Morgan Stanley Research Estimate View explanation of regional hierarchies here

RISKS TO PT/RATING

RISKS TO UPSIDE

• More share gains in iPhones
• Better-than-expected mixed reality demand from Apple
• Better-than-expected VR/MR shipments
• Faster-than-expected business development in CPO/NPO

RISKS TO DOWNSIDE

• Delays in Apple's mixed reality shipments
• Share loss in iPhones
• Execution/yield
• Slower VR/MR shipments

OWNERSHIP POSITIONING

Inst. Owners, % Active

60.9%

Source: Refinitiv, Morgan Stanley Research

MS ESTIMATES VS. CONSENSUS

M

BYDE: Financial Summary

Exhibit 29: BYDE: Financial Summary

BYDE (0285.HK)

Financial Summary (Rmb mn)

Source: Company data, Morgan Stanley Research (E) estimates

M

Risk Reward - BYD Electronics (0285.HK) Risk Reward - BYD Electronics (0285.HK)

Sequential Improvement Highly Likely in 2H26

HK$33.00 PRICE TARGET

Base case, from a residual income model-derived sum-of-the-parts methodology. RIM is the same valuation methodology we use for our Greater China Tech Hardware coverage, while SOTP reflects the material differences in the businesses. We apply a cost of equity of 10.2% and 11% for Apple and Android, 12.6% for EV and AI computing infra. For terminal growth rates, we use 3% for Apple and Android businesses, 3.5% for EV and AI computing infra.

Consensus Price Target Distribution

Source: Refinitiv, Morgan Stanley Research

RISK REWARD CHART AND OPTIONS IMPLIED PROBABILITIES (12M)

Source: Refinitiv, Morgan Stanley Research, Morgan Stanley Institutional Equities Division. The probabilities of our Bull, Base, and Bear case scenarios playing out were estimated with implied volatility data from the options market as of 8 Sep 2026. All figures are approximate risk-neutral probabilities of the stock reaching beyond the scenario price in either three-months' or one-years' time. View explanation of Options Probabilities methodology here

BULL CASE

HK$45.00

24x base case 2027e EPS

Faster - than - expected ramp - up in AI infrastructure and NEV business : We

assume: 1) liquid cooling products for major overseas clients ramp up faster than expected, boosting AI infrastructure revenue and margins; 2) stronger demand from key overseas clients drives smart terminal recovery; and 3) faster adoption of intelligent suspension and thermal management products accelerates NEV growth.

BASE CASE

HK$33.00

18x base case 2027e EPS

BYDE to achieve steady growth in NEV and AI infrastructure in 2026: We assume: 1)

liquid cooling products enter mass production from Sep and gradually contribute to growth; 2) continued penetration of intelligent suspension and thermal management products supports NEV growth; and 3) key client product launches drive sequential earnings improvement in 3Q26 and stronger growth in 4Q26.

OVERWEIGHT THESIS

• We expect sequential earnings improvement in 2H26, supported by the peak season and key-client product launches.
• New EV products and AI infrastructure, including liquid-cooling products, remain the key medium-term growth drivers.
• We expect earnings to see sequential improvement in 3Q26 followed with stronger growth in 4Q26.

Risk Reward Themes

Electric Vehicles:

Positive Positive

Secular Growth:

View descriptions of Risk Rewards Themes here

BEAR CASE

HK$17.00