By Jacky Wong
The Hong Kong-listed Chinese manufacturer of lenses and camera modules for smartphones shipped about twice as many camera-lens components last month than a year earlier, according to its recent results. Its stock gained 6% Monday, a blip compared with its recent history. The stock is up 20 times in five years. Apple /zigman2/quotes/202934861/composite AAPL -0.69% and Samsung Electronics SSNHZ 0.00% are each up roughly less than one time. Sometimes it is better to own the supplier than the brand.
The performance of Sunny, which supplies to Samsung and China’s Huawei, reflects the continuing smartphone design trend of adding two lenses on the same side of the camera. The additional lens allows for greater depth of field. Apple introduced dual lenses for the top-end version of its iPhone last year. Huawei also included an extra lens for its flagship phablet P9 . While only the priciest models sport them now, it seems likely to become a standard feature on most phones.
Sunny’s shares trade at 34 times forward earnings, which might be pricing in much of the bright days ahead. There are more affordable ways in. Apple supplier Largan Precision /zigman2/quotes/210444196/delayed TW:3008 -0.33% trades at 19 times forward earnings. The Taiwan company had a slow 2016 but sales have picked up. And Largan settled a longstanding legal dispute with Samsung in December, opening an opportunity to get orders from the South Korean company.
Sony, which supplies image sensors to smartphones, could also benefit. Sales of the Japanese electronics giant’s image sensors rose 41% the most recent quarter, compared with a year earlier, even before the yen tumbled, which should give sales a boost.
The sun should continue to shine for lens makers.
Write to Jacky Wong at JACKY.WONG@wsj.com