Broker: CGS International Securities
Date of Report: August 29, 2025

Lens Technology: Riding the Apple Upgrade Wave, Dominating Premium Components, and Diversifying for Explosive Growth

Executive Summary: Lens Technology Poised for Explosive Growth Across Premium Electronics and Smart Mobility

Lens Technology (6613 HK) is emerging as a powerhouse in the global high-precision electronic components market, capitalizing on Apple’s ambitious product upgrade cycles, the electrification of intelligent vehicle cockpits, and the rapid expansion of emerging smart devices. With a 35% net profit CAGR forecasted for FY24-27F and robust market share gains in both consumer electronics and smart vehicles, Lens Technology is set for a rerating, supported by strong financials, strategic expansion, and a well-diversified client base.
CGS International Securities initiates coverage with an Add rating and a target price of HK$32.00, representing an 18% upside from current levels, and sees multiple catalysts ahead.

Investment Highlights: Three Pillars of Growth Drive Profitable Expansion

• Apple Integration: Lens Tech is deeply entrenched in Apple’s supply chain, set to capture over 60% share of iPhone 17’s upgraded cover glass, expand its midframe supply from one to three models, and become a leading supplier of ultra-thin glass (UTG) for Apple’s first foldable model anticipated in 2026.
• Smart Vehicles: Strategic partnerships with Tesla, Xiaomi Auto, and 30+ global automakers fuel a 29% revenue CAGR in smart vehicle segments, underpinned by next-generation cockpit components and multi-functional automotive glass.
• Emerging Devices: Early-mover advantages in humanoid robotics (Tesla, AgiBot), AR/XR hardware (Apple Vision Pro 2, Meta), and smart retail devices (Alipay “Tap to Pay”) deliver a projected 39% CAGR through FY27.

Lens Technology: Financial Performance and Segment Breakdown

Robust Valuation and Attractive Upside

• Current price: HK\$27.10; Target price: HK\$32.00 (18.1% upside)
• FY26F P/E: 18.02x; Targeted at 24x to reflect premium market position and growth
• H shares trade at a 20-30% discount to A shares, with no expectation of a premium due to liquidity differences
• Lens Tech’s valuation is currently in line with its 3-year average, but well below the 26x peak in February 2025

Strategic Growth Drivers Across Key Segments

Consumer Electronics: Leveraging Apple’s Material Innovation and Xiaomi’s Scale

• Apple: Lens Tech’s integration into Apple’s supply chain is deepening, with premium components—cover glass, back covers, metal midframes, and UTG for foldables—positioning the company for robust recurring revenues and ASP growth.
• Xiaomi: Rapid expansion in smartphone assembly for Xiaomi delivered 81% YoY revenue growth in FY24, creating synergy for high-margin components and reducing Apple revenue dependency from 71% (FY22) to 50% (FY24).
• Business Mix: Consumer electronics accounted for 83% of FY24 revenue and is expected to remain above 70% through FY27, with segment revenue forecast to grow 25%/18%/15% in FY25/26/27F, respectively.
• Foldable Phones: The only global player with mass production of 0.1mm UTG, Lens Tech is set to benefit from an expected 24% CAGR in global foldable smartphone shipments (2024-2029), driving both volume and ASP for premium glass covers.

Smart Vehicles: Capturing the Intelligent Cockpit Revolution

• Lens Tech is a top supplier of intelligent cockpits, B/C-pillars, and multi-functional automotive glass, partnering with Tesla, Xiaomi Auto, and over 30 automakers.
• Smart vehicle revenue rose 19% YoY in FY24 and is forecast for 25%/29% growth in FY25/26, with GPM improving as Vietnam and Thailand plants ramp up.
• The company leads in glass technology, offering multi-functional glass (self-dimming, projection-capable, UV-resistant), supporting innovations such as AR HUDs and intelligent windows.
• Smart vehicle segment contributed 9% to FY25F revenue, up from 8% in 2024, with GPM rising from 10.2% (FY24) to 12% (FY25F).

Emerging Devices: Robotics, AR/XR, and Smart Retail as High-Growth Adjuncts

• Supplying Tesla’s Optimus humanoid robot and AgiBot, Lens Tech leverages its precision manufacturing for robotics components (head modules, joints, dexterous hands).
• Strong technological advances in AR/XR—supplying glass panels for Apple Vision Pro 2 and Meta’s smart glasses—and robust demand from Alipay’s “Tap to Pay” expansion underpin a 39% CAGR for this segment through FY27.
• Emerging device revenue, which includes robotics and smart retail, is forecast to represent an increasingly diversified growth pillar.

Competitive Positioning: Peer Comparison Table

SWOT Analysis: Strengths, Opportunities, Risks and Threats

• Strengths:
  • World-class expertise in advanced glass tech (UTG, nano-ceramic), vertical integration, and early-mover advantage in emerging sectors.
  • Market leader with 13% global share in consumer electronics precision parts and 20.9% in smart vehicle interaction systems.
• Opportunities:
  • Surging foldable phone and AR/XR device demand, rapid growth in humanoid robotics and smart retail devices, and global expansion of Alipay’s “Tap to Pay.”
• Weaknesses:
  • Low gross margin (approx. 1.6%) in assembly business weighing on short-term profitability, and heavy reliance on Apple (50% of FY24 revenue).
• Threats:
  • Volatility in consumer electronics demand, rapid iteration in foldables/XR tech requiring high R&D spend, and exposure to geopolitical/trade policy risks.

Risks and Potential Headwinds

• Customer Concentration: Apple remains the largest client, with any reduction in orders or delays (e.g., in foldable iPhone) posing significant risk.
• Profitability Pressure: Scaling low-margin assembly could drag group margins despite strategic value.
• Competitive Pressures: Aggressive pricing and rapid tech advances from competitors could erode margin gains in both consumer electronics and automotive segments.
• Geopolitical and Trade Risks: US-China trade tensions may disrupt cost structures, though Lens Tech’s overseas capacity in Vietnam, Thailand, and Mexico provides some mitigation.

Balance Sheet, Cash Flow, and Capex Outlook

• Healthy cash position: Net debt reduced from Rmb3.4bn (FY24) to a forecast net cash position of Rmb1.9bn by FY26F, driven by improving free cash flow.
• Capex: Over Rmb18bn invested in FY22-24 for global expansion and new device production. Capex expected to stabilize at Rmb5bn per year in FY25F/26F.
• Dividend Policy: Net dividend payout ratio at 41.3% through FY27F.

ESG Commitment and Corporate Governance

• Lens Tech implements a three-layered governance structure for ESG strategy and monitoring.
• Environmental initiatives cut carbon emissions by 27,553 tonnes in 2024 through energy-saving reforms and green manufacturing investments.
• Social responsibility includes charitable donations (Rmb7.75m in 2024), support for disaster relief, education, and direct assistance to disadvantaged families and employees.

Conclusion: Lens Technology Positioned for Sustained Outperformance

Lens Technology stands at the forefront of premium electronics and intelligent mobility markets. With deep integration into Apple’s supply chain, rapid diversification into automotive and emerging devices, and robust financials, the company is primed for significant upside. Key catalysts include further Apple market share gains, successful execution in automotive and new device segments, and mitigation of geopolitical risks through global production.
Investors seeking exposure to high-growth technology hardware, with strong defensive moats and multi-year tailwinds, should consider Lens Tech as a top pick for the next phase of global tech innovation.

Appendix: Detailed Financials

Peer Group and Outlook

Recommendation

Add (Target Price: HK\$32.00). Lens Technology offers a compelling opportunity for investors seeking growth in premium technology hardware, with multiple near-term and medium-term catalysts across the consumer electronics, automotive, and emerging device landscapes.