Sunny Optical Technology's listed subsidiary's dividend exceeds 2.4 billion: gross profit margin under pressure, the parent company is the largest supplier

Port Business Observer Xu Huijing

Whether it’s the surround view camera during reversing or lane-keeping assist on the highway, these intelligent driving features all rely on onboard cameras.

On January 26, 2026, Ningbo Sunny Optical Technology Co., Ltd. (hereinafter referred to as Sunny Intelligent) officially submitted its prospectus to the Hong Kong Stock Exchange, planning to list on the Main Board in Hong Kong. The joint sponsors are China International Capital Corporation and CITIC Securities.

Sunny Intelligent spun off from Sunny Optical Technology (02382.HK) in November 2025, with over 95% of its revenue contributed by onboard camera solutions. However, during the reporting periods from 2023 to September 2025, its gross profit margin has been under pressure, declining from 35.7% to 34.1%. The top five customers account for nearly 40% of revenue, and overseas revenue share dropped from 55.1% to 43.6%, adding uncertainty to its IPO prospects.

1

Steady performance growth with fluctuating gross profit margins

According to the prospectus and Tianyancha, Sunny Intelligent is a leading global onboard optical technology company committed to becoming a key enabler of future smart mobility. The company focuses on providing onboard camera solutions including intelligent perception and smart cockpit solutions, while continuously expanding its product matrix to include lidar, in-cabin projection systems, smart lighting solutions, and other onboard optical solutions.

Financial data shows that in 2023, 2024, and January-September 2025 (hereinafter referred to as the reporting periods), the company’s revenue was 5.262 billion yuan, 5.989 billion yuan, and 5.146 billion yuan, respectively, with profits of 1.14 billion yuan, 1.272 billion yuan, and 972 million yuan, respectively. Overall, the company demonstrates steady growth.

From the revenue structure, onboard camera solutions are the core business. During the reporting periods, this segment generated revenues of 4.984 billion yuan, 5.679 billion yuan, and 4.925 billion yuan, accounting for 94.7%, 94.8%, and 95.7% of total revenue, respectively.

Specifically, revenue from intelligent perception solutions was 3.460 billion yuan, 3.878 billion yuan, and 3.297 billion yuan; from smart cockpit solutions, 1.524 billion yuan, 1.801 billion yuan, and 1.628 billion yuan. Other onboard optical solutions (mainly lidar, in-cabin projection displays, and smart lighting) contributed 278 million yuan, 310 million yuan, and 221 million yuan.

Contrasting with revenue growth, gross profit margins have fluctuated. During the periods, the company’s overall gross profit margins were 35.7%, 35.5%, and 34.1%. The gross margins for intelligent perception solutions were 37.7%, 36.4%, and 35.1%; for smart cockpit solutions, 31.1%, 33.5%, and 33.5%.

Regarding margin fluctuations, financial analyst Qu Fang commented: “Compared horizontally, Sunny Intelligent’s gross margin, though trending downward, has declined less than the industry average, effectively curbing the downward trend. Behind this performance, it reflects the pressure from automakers over the past two years to upstream suppliers—using annual bargaining mechanisms to continuously cut component procurement costs, which systematically compresses profit margins across the automotive electronics supply chain. Sunny Intelligent has not been immune. Notably, the company is actively cultivating a second growth curve centered on lidar and smart lighting, aiming to offset the price pressure on traditional onboard cameras through higher-margin products, but these account for a relatively low proportion of revenue and are subject to significant fluctuations, requiring ongoing observation.”

The prospectus discloses that the company faces ongoing pricing pressure from customers. During the historical periods, it experienced pressure to lower product prices to maintain market share. Many existing and target customers have strong bargaining power, as they are large enterprises with strict standards and negotiation capabilities, or face intense market competition that forces cost reductions onto suppliers.

Additionally, the overall price decline in the new energy vehicle market, coupled with the gradual removal of government subsidies for end consumers, could significantly negatively impact the company’s average selling prices and gross margins in the future. The prospectus admits that if the company cannot achieve sufficient cost reductions to offset price declines or fails to develop new higher-margin products, its gross margin and profitability could be adversely affected.

2

Customer concentration nearly 40%, parent company is the largest supplier

During the reporting periods, sales to the largest customer accounted for 14.7%, 13.5%, and 9.1% of revenue, respectively, while the top five customers represented 56.5%, 47.7%, and 38.0%. Although decreasing year by year, customer concentration remains relatively high.

The prospectus notes that the company cannot guarantee that existing customers will continue to purchase its solutions for new models, nor that they will maintain cooperation in ongoing or future projects. Although framework purchase agreements are in place, these typically do not require customers to buy specific quantities of solutions. Loss of sales from existing customers could negatively impact revenue.

Regionally, the company’s revenue mainly comes from Mainland China and Europe. During the periods, revenue from Mainland China was 2.36 billion yuan, 3.103 billion yuan, and 2.903 billion yuan, representing 44.9%, 51.8%, and 56.4% of total revenue. European revenue was 1.448 billion yuan, 1.328 billion yuan, and 957 million yuan, accounting for 27.5%, 22.2%, and 18.6%. North American revenue was 733 million yuan, 720 million yuan, and 547 million yuan, representing 13.9%, 12.0%, and 10.6%.

Notably, overseas revenue share shows a declining trend. During the periods, total overseas revenue was 2.902 billion yuan, 2.887 billion yuan, and 2.244 billion yuan, respectively, accounting for 55.1%, 48.2%, and 43.6% of total revenue. The prospectus states that economic challenges and political/regulatory uncertainties in these markets could severely hinder sales.

Qu Fang commented: “The decline in overseas revenue share is mainly due to geopolitical tensions and increased trade barriers, which in the short term weigh on overall performance. In response, Sunny Intelligent is shifting its focus to the domestic market, deepening its presence in the local automotive supply chain to solidify its base. In the medium to long term, the company may adopt a ‘follow car exports’ strategy—leveraging domestic automakers’ overseas expansion to indirectly export products, and re-engaging in direct overseas deployment once the international trade environment improves.”

Furthermore, the company faces risks related to international trade policies and protectionism. Recent years have seen increased complexity in international relations, with countries announcing or implementing new or revised tariffs. The prospectus admits that if tariffs or trade restrictions negatively impact the company, suppliers, or partners, its business, financial condition, and operating results could deteriorate.

On the procurement side, supplier concentration is also noteworthy. During the periods, purchases from the top five suppliers accounted for 56.4%, 49.0%, and 49.2% of total procurement. The largest supplier accounted for 17.3%, 14.2%, and 12.6% of total procurement costs.

Importantly, Sunny Intelligent’s parent company, Sunny Optical Technology Group, has been one of its top five suppliers and became the largest supplier in 2024 and the first three quarters of 2025. During the periods, procurement from the parent company was about 460 million yuan, 473 million yuan, and 384 million yuan, representing 16.9%, 14.2%, and 12.6% of total procurement costs. The main purchases are optical lenses and other core components. Given Sunny Optical’s dominant position in the global onboard lens market (ranking first worldwide for 13 consecutive years), it is unlikely that Sunny Intelligent will find alternative suppliers of similar scale and quality in the short term.

Beyond procurement, Sunny Intelligent also sells products to Sunny Optical Technology and its subsidiary, Sunny Precision Mould, for automotive molds. In 2023 and 2024, sales totaled 94.66 million yuan and 154 million yuan, nearly 250 million yuan over two years. The prospectus states that related-party transactions help the company respond quickly to customer needs and expand overseas markets by leveraging Sunny Optical’s global footprint, but its independent operational capacity as a listed entity will attract market attention.

In terms of ownership structure, as of the last practicable date, the controlling shareholders (including Sunny Optical Technology, Sunny Zhejiang Optical, Sunny Overseas, Shunxiang Optical, Sunny Optical, Summit Technology (HK), and Summit Technology (BVI)) held approximately 96.5% of shares. After listing (assuming the over-allotment option is not exercised), the controlling shareholders will continue to hold a significant proportion of shares. The prospectus notes that they will be able to exert significant influence over company affairs and impact shareholder resolutions, regardless of other shareholders’ votes. Their interests may not align with those of independent shareholders.

3

R&D investment slightly fluctuates; subsidiaries paid dividends exceeding 2.4 billion before listing

Regarding R&D, during the periods, expenditure was 485 million yuan, 546 million yuan, and 438 million yuan, roughly 9.2%, 9.1%, and 8.5% of revenue, respectively. The company believes that technological R&D is the core driver of sustained growth, and R&D strength is vital for developing new products. Continuous investment enables rapid response to evolving automotive industry demands and maintains competitive advantage.

As of the last practicable date, the company holds a broad portfolio of global leading patents, totaling 823 patents, including 543 invention patents. It has established three major technology platforms: optical core technology, opto-mechatronic integration application platform, and digital manufacturing technology platform, forming a comprehensive full-process integrated technology system.

During the same period, the company operates two manufacturing bases in Yuyao, Zhejiang Province, mainly producing onboard camera solutions and other onboard optical products. Additionally, it has strategically set up two manufacturing bases in Fuchu Province and Quang Ninh Province, Vietnam, focusing on producing onboard camera products for overseas clients.

During the periods, annual capacity for intelligent perception solutions was 72.5 million, 78.2 million, and 67.7 million units; for smart cockpit solutions, 58.9 million, 69.1 million, and 66.2 million units. Given the expected rapid growth of the business, the company plans to further expand capacity, including enlarging its Vietnam manufacturing facilities.

The prospectus states that capacity expansion will require significant capital and human resources, which may exceed initial estimates. The company cannot guarantee that the expansion will proceed smoothly and on schedule, nor that it will be commercially successful. If expansion leads to excess capacity or cannot meet market demand for certain products, the company may face low utilization, overproduction, increased fixed costs, and reduced profit margins.

A key concern is the large dividends paid out before listing. In the three months prior to the listing (October-December 2025), several subsidiaries of Sunny Intelligent made large dividend payments: 337 million yuan in October, 2 billion yuan in November, and 107 million yuan in December, totaling 2.444 billion yuan—more than 2.5 times the net profit for the first nine months of 2025. During the period, total dividends from subsidiaries reached 3.285 billion yuan, accounting for 97.06% of the consolidated net profit, nearly 100%.

This large dividend payout significantly tightened the company’s cash flow. By the end of September 2025, cash and cash equivalents were 2.995 billion yuan; by the end of November, they sharply dropped to 669 million yuan, a decrease of 77.66% in two months. Working capital fell from 3.533 billion yuan to 1.838 billion yuan, a reduction of 47.96%.

According to Frost & Sullivan data, based on 2024 shipment volumes, Sunny Intelligent ranks first globally in onboard camera solutions, with market share exceeding the combined share of its three closest competitors; in smart perception and smart cockpit solutions, it is the largest provider worldwide based on 2024 shipment data; its onboard lenses have held the global market share number one for 13 consecutive years.

However, the company faces increasingly fierce market competition. The prospectus states that its main competition is in China’s onboard optical solutions market, characterized by intense and constantly changing competition, including rapid technological evolution, frequent new solution launches, shifting customer demands, and the periodic emergence of new industry standards and practices. The company has also expanded into Europe, other parts of Asia, and North America.

Sunny Intelligent admits that it cannot guarantee maintaining a leading position in onboard optical technology. Factors influencing competition include technological innovation, product quality and safety, pricing, sales efficiency, manufacturing efficiency, service quality, and branding. Some competitors may have more advanced technology, better financial resources, or offer products at lower prices or more favorable payment terms. (Produced by Harbor Finance)