25 Aug 2026 CMB International Global Markets | Equity Research | Company Update

OmniVision (603501 CH)

Early signs of inflection at a cyclical trough

OmniVision reported 1H26 revenue of RMB14.0bn, flat YoY, while net profit fell 39.9% YoY and GPM declined 1.7ppt YoY to 28.8%, as lower-margin distribution revenue rose 41% YoY to 23% of total sales. 2Q26 revenue rose 18.7% QoQ to RMB7.61bn, exceeding guidance of RMB7.15-7.54bn and Bloomberg consensus of RMB7.4bn, although GPM remained soft at 28.3%. The 3Q26 guidance of RMB7.58-8.13bn revenue and 29.4-30.7% GPM points to modest sequential growth but a clearer margin recovery. We cut 2026E/27E revenue by 12%/12% and GPM by 2.1ppt/2.9ppt factoring in the results. Nevertheless, we maintain BUY as earnings approach a cyclical trough and the mix shifts toward higher-value applications. We lower our TP to RMB125, based on 33x 2027E P/E (previously 33x 2026E), below its two-year historical forward avg. P/E of 36.7x to reflect cyclical weakness.

 Mixed segment performance, but higher-value applications remained resilient. Consumer-electronics CIS revenue fell 31% YoY and accounted for 31% of CIS sales, reflecting weak smartphone demand and product transitions. Auto CIS declined 16% YoY and represented 34% of CIS sales, as inventory adjustments weighed mainly on 1Q26; however, demand recovered visibly in 2Q26 and should benefit from rising camera content and higher-resolution ADAS adoption. In contrast, professional-imaging CIS grew 53% YoY to 14% of CIS sales, machine-vision and robotics CIS increased over 70% YoY, medical CIS rose 15% YoY, auto analog expanded 67% YoY, and display solutions grew ~13% YoY. This divergence suggests a structural product-mix transition rather than a broad-based deterioration in competitiveness, in our view.

 Robotics, auto analog and optical connectivity are emerging as new growth engines. Higher-end robotic data-collection systems can carry over US$100 of image-sensor content, offering meaningful upside despite the business’s small current base. In auto analog, OmniVision is expanding across MCU, PMIC and SBC products, leveraging its established customer base to evolve from a sensor vendor into a platform supplier. Optical connectivity could offer an even larger opportunity, with mgmt. estimating that its product portfolio could provide US$10 or more of semiconductor content per optical module, depending on product adoption. We therefore view optical connectivity as meaningful long-term earnings optionality rather than a material near-term contributor.

 OmniVision is entering a gradual recovery. Volume stabilization became visible in 2Q26, while margin normalization should begin in 3Q26. Structural earnings expansion is more likely in 2027, when higher-value businesses should contribute for a full year. Maintain BUY with TP of RMB125.

 Key risks: Slower-than-expected product R&D, weak demand recovery, etc.

Earnings Summary

(YE 31 Dec) FY24A FY25A FY26E FY27E FY28E Revenue (RMB mn) 25,731 28,855 29,996 35,294 39,554

YoY growth (%) 22.4 12.1 4.0 17.7 12.1 Gross margin (%) 29.4 30.6 29.6 30.4 31.1 Net profit (RMB mn) 3,323.2 4,045.4 3,396.3 4,583.5 5,482.1

YoY growth (%) 498.1 21.7 (16.0) 35.0 19.6 EPS (Reported) (RMB) 2.77 3.37 2.81 3.79 4.53 P/E (x) 29.8 24.5 29.4 21.8 18.2 Source: Company data, Bloomberg, CMBIGM estimates

OmniVision (603501 CH) - Early signs of inflection at a cyclical trough

Target Price RMB125.00

(Previous TP RMB136.00)

Up/Downside 51.5% Current Price RMB82.50

China Semiconductors Kevin ZHANG

(852) 3761 8727 kevinzhang@cmbi.com.hk

Aaron GUO

(852) 3916 3715 aaronguo@cmbi.com.hk

Stock Data

Mkt Cap (RMB mn) 99,577.5 Avg 3 mths t/o (RMB mn) 2,878.7 52w High/Low (RMB) 151.17/82.50 Total Issued Shares (mn) 1207.0

Source: FactSet

Shareholding Structure

Yu Renrong 25.1% SX WEIHAO EQU INVEST FUND

6.1%

Source: HKEx

Share Performance

Absolute Relative 1-mth -14.9% -16.3% 3-mth -20.9% -16.2% 6-mth -29.7% -25.4%

Source: FactSet

12-mth Price Performance

Source: FactSet

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Figure 1: Earnings revision New Old Diff (%)

RMBmn FY26E FY27E FY28E FY26E FY27E FY28E FY26E FY27E FY28E Revenue 29,996 35,294 39,554 34,051 40,080 47,141 -11.9% -11.9% -16.1% Gross profit 8,886 10,713 12,310 10,794 13,347 16,311 -17.7% -19.7% -24.5% Net profit 3,396 4,584 5,482 4,978 6,749 8,861 -31.8% -32.1% -38.1% EPS (RMB) 2.81 3.79 4.53 4.15 5.62 7.38 -32.4% -32.6% -38.6% Gross margin 29.6% 30.4% 31.1% 31.7% 33.3% 34.6% -2.1 ppt -2.9 ppt -3.5 ppt Net margin 11.3% 13.0% 13.9% 14.6% 16.8% 18.8% -3.3 ppt -3.9 ppt -4.9 ppt

Source: Company data, CMBIGM estimates

Figure 2: CMBIGM estimates vs. BBG consensus CMBI estimates Consensus Diff (%)

RMBmn FY26E FY27E FY28E FY26E FY27E FY28E FY26E FY27E FY28E Revenue 29,996 35,294 39,554 30,695 35,953 41,264 -2.3% -1.8% -4.1% Gross profit 8,886 10,713 12,310 9,163 11,098 13,110 -3.0% -3.5% -6.1% Net profit 3,396 4,584 5,482 4,109 5,521 6,595 -17.3% -17.0% -16.9% EPS (RMB) 2.81 3.79 4.53 3.25 4.31 5.07 -13.5% -12.1% -10.6% Gross margin 29.6% 30.4% 31.1% 29.9% 30.9% 31.8% -0.2 ppt -0.5 ppt -0.6 ppt Net margin 11.3% 13.0% 13.9% 13.4% 15.4% 16.0% -2.1 ppt -2.4 ppt -2.1 ppt

Source: Bloomberg consensus, CMBIGM estimates

Figure 3: P/E chart

55

50

45

40

35

30

25

20

15

1-yr Forward P/E Mean

Mean+1SD Mean-1SD

Source: Company data, CMBIGM estimates

Figure 4: P/E band

(RMB)

190

170

150

130

110

90

70

50

04/25

02/26

08/24

10/24

12/24

02/25

06/25

08/25

10/25

12/25

04/26

06/26

08/26

Closing Px 23.9x 30.3x 36.7x 43.1x 49.5x

Source: Company data, CMBIGM estimates

Financial Summary

INCOME STATEMENT 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Revenue 21,021 25,731 28,855 29,996 35,294 39,554 Cost of goods sold (16,446) (18,154) (20,015) (21,110) (24,581) (27,244) Gross profit 4,574 7,576 8,840 8,886 10,713 12,310 Operating expenses (3,297) (3,908) (4,076) (4,265) (5,001) (5,585) Selling expense (467) (557) (564) (600) (706) (791) Admin expense (33) (40) (46) (48) (56) (63) SG&A expense (623) (748) (696) (694) (799) (876) R&D expense (2,234) (2,622) (2,843) (3,000) (3,529) (3,955) Others 60 59 73 76 90 100 Operating profit 1,277 3,668 4,763 4,621 5,712 6,726 Other income 26 13 2 2 2 2 Other expense (2) (5) (7) (7) (9) (10) Gain/loss on financial assets at FVTPL (367) (639) (287) (446) (423) (435) Investment gain/loss 73 182 12 12 12 12 Other gains/(losses) 140 47 45 (204) (148) (166) EBIT 1,148 3,266 4,527 3,977 5,146 6,129 Interest income 96 330 394 487 544 569 Interest expense (534) (327) (302) (331) (293) (245) Net Interest income/(expense) (438) 4 92 156 250 324 Other income/expense (19) 9 (18) (151) (22) (25) Pre-tax profit 691 3,278 4,601 3,982 5,374 6,428 Income tax (148) 6 (569) (597) (806) (964) After tax profit 544 3,284 4,032 3,385 4,568 5,463 Minority interest (12) (39) (14) (12) (16) (19) Net profit 556 3,323 4,045 3,396 4,584 5,482

BALANCE SHEET 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Current assets 20,264 21,804 26,467 30,550 30,263 33,874 Cash & equivalents 9,086 10,185 12,821 15,588 16,088 17,070 Account receivables 4,031 3,964 3,944 4,776 5,354 5,816 Inventories 6,322 6,956 8,598 9,139 7,676 9,790 Prepayment 221 251 298 261 307 344 Financial assets at FVTPL 133 0 126 126 126 126 Other current assets 472 448 679 661 713 727 Non-current assets 17,479 17,160 17,134 20,924 22,380 23,947 PP&E 2,586 3,126 3,442 4,061 4,784 5,568 Right-of-use assets 176 154 139 141 144 144 Intangibles 2,305 2,216 1,996 1,814 1,661 1,513 Goodwill 3,861 3,632 3,619 3,970 4,322 4,674 Other non-current assets 8,551 8,032 7,938 10,938 11,470 12,049 Total assets 37,743 38,965 43,601 51,474 52,644 57,821

Current liabilities 9,069 7,595 12,586 12,976 11,416 11,696 Short-term borrowings 2,671 1,086 2,079 3,283 43 1,014 Account payables 1,663 1,935 2,235 1,930 2,919 2,455 Tax payable 229 229 343 302 308 339 Other current liabilities 4,055 3,787 7,340 6,872 7,505 7,179 Contract liabilities 187 226 240 242 285 319 Accrued expenses 264 332 349 347 355 390 Non-current liabilities 7,180 7,167 2,861 4,126 3,079 3,481 Long-term borrowings 2,977 3,472 1,618 2,536 1,452 1,695 Bond payables 2,444 2,524 0 0 0 0 Obligations under finance leases 122 97 95 123 126 138 Deferred income 25 22 46 50 51 56 Other non-current liabilities 1,611 1,052 1,102 1,417 1,450 1,592 Total liabilities 16,248 14,762 15,447 17,102 14,494 15,178

Share capital 1,216 1,216 1,210 1,261 1,261 1,261 Retained earnings 9,008 11,868 15,164 17,743 21,534 25,990 Other reserves 11,227 11,117 11,798 15,397 15,399 15,456 Total shareholders equity 21,451 24,201 28,172 34,402 38,194 42,707 Minority interest 44 1 (18) (30) (45) (64) Total equity and liabilities 37,743 38,965 43,601 51,474 52,644 57,821

CASH FLOW 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Operating Profit before taxation 544 3,284 4,601 3,385 4,568 5,463 Depreciation & amortization 1,166 1,295 1,293 1,331 1,550 1,750 Change in working capital 5,175 (699) (1,776) (4,279) (4,279) (2,059) Others 651 892 (2,628) 1,069 1,147 577 Net cash from operations 7,537 4,772 1,490 1,506 2,986 5,731

Investing Capital expenditure (1,048) (1,249) (2,336) (2,720) (2,825) (3,025) Net proceeds from disposal of short-term investments

7 28 12 5 6 7

Others (1,422) 410 1,505 (2,099) (269) (292) Net cash from investing (2,464) (811) (820) (4,814) (3,089) (3,309)

Financing Dividend paid (574) (664) (982) (939) (804) (934) Net borrowings (2,009) (1,297) 205 1,884 (4,323) 1,213 Proceeds from share issues 3,394 218 462 4,204 0 0 Others (875) (1,264) (121) (161) (161) (161) Net cash from financing (64) (3,007) (437) 4,988 (5,287) 119

Net change in cash Cash at the beginning of the year 3,995 9,055 10,153 12,800 15,567 16,067 Exchange difference 51 143 (215) (481) 0 0 Others 5,009 955 2,862 3,249 500 983 Cash at the end of the year 9,055 10,153 12,800 15,567 16,067 17,049

GROWTH 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Revenue 4.7% 22.4% 12.1% 4.0% 17.7% 12.1% Gross profit (25.9%) 65.6% 16.7% 0.5% 20.6% 14.9% Operating profit (48.0%) 187.2% 29.9% (3.0%) 23.6% 17.7% EBIT (39.4%) 184.4% 38.6% (12.2%) 29.4% 19.1% Net profit (43.9%) 498.1% 21.7% (16.0%) 35.0% 19.6%

PROFITABILITY 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Gross profit margin 21.8% 29.4% 30.6% 29.6% 30.4% 31.1% Operating margin 6.1% 14.3% 16.5% 15.4% 16.2% 17.0% Return on equity (ROE) 2.8% 14.6% 15.4% 10.9% 12.6% 13.6%

GEARING/LIQUIDITY/ACTIVITIES 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec Current ratio (x) 2.2 2.9 2.1 2.4 2.7 2.9

VALUATION 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

P/E 175.5 29.8 24.5 29.4 21.8 18.2 P/E (diluted) 175.5 29.8 24.5 29.4 21.8 18.2

Source: Company data, CMBIGM estimates. Note: The calculation of net cash includes financial assets.

Disclosures & Disclaimers

Analyst Certification

The research analyst who is primary responsible for the content of this research report, in whole or in part, certifies that with respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report. Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to the date of issue of this report; (2) will deal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3) serve as an officer of any of the Hong Kong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies covered in this report.

CMBIGM Ratings

BUY : Stock with potential return of over 15% over next 12 months HOLD : Stock with potential return of +15% to -10% over next 12 months SELL : Stock with potential loss of over 10% over next 12 months NOT RATED : Stock is not rated by CMBIGM

OUTPERFORM : Industry expected to outperform the relevant broad market benchmark over next 12 months MARKET-PERFORM : Industry expected to perform in-line with the relevant broad market benchmark over next 12 months UNDERPERFORM : Industry expected to underperform the relevant broad market benchmark over next 12 months

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