29 Oct 2026 CMB International Global Markets | Equity Research | Company Update

OmniVision (603501 CH)

3Q26 earnings: Margin inflection takes shape

OmniVision reported revenue of RMB8.12bn in 3Q26, up 3.8% YoY and 6.7% QoQ, near the upper end of company guidance. Net profit declined 8.7% YoY but increased 50.5% QoQ to RMB1.08bn, as GPM recovered 1.7ppts QoQ to 30.0% despite a further increase in lower-margin distribution sales. Although demand recovery in smartphone/auto CIS remains subdued, the margin improvement suggests that earnings have begun to emerge from cyclical trough. The company’s 4Q26 revenue guidance of RMB7.76-8.32bn implies -4.5% to +2.5% QoQ growth, while guided GPM of 29.4-30.7% points to broadly stable profitability. Maintain BUY with TP unchanged at RMB125 (33x 2027E P/E).

 Mix improvement is beginning to outweigh distribution dilution. 9M26 semi design revenue declined 9.4% YoY to RMB16.35bn, while distribution revenue rose 55.7% to RMB5.69bn and reached 25.7% of sales. Based on our calculation, distribution accounted for ~30% of 3Q26 revenue. The recovery in consolidated GPM to 30% despite this unfavorable mix indicates a more substantial margin improvement within the design business, supported by higher-end CIS and value-added analog products. We see this as an encouraging sign as earnings recovery is increasingly driven by product upgrading rather than low-margin volume expansion.

 Optical connectivity, edge AI and auto are emerging growth drivers. OmniVision is extending its analog expertise into TIA, laser drivers and silicon-based optical-interconnect devices. Certain high-speed opticalcommunication chips have entered production introduction, while broader scale-up is targeted for late-2027, per mgmt.. Machine vision, robotics and professional imaging should remain strong, while higher-end auto CIS & analog and flagship smartphone products support further mix improvement, in our view.

 We view margin inflection as credible but likely gradual. Mgmt.’s 4Q26 guidance points to broadly stable revenue and margins QoQ, suggesting near-term earnings improvement will rely more on product-mix enhancement and cost discipline than a broad demand rebound. Maintain BUY with an unchanged TP of RMB125 as improving margins in higherend CIS and analog products are increasingly offsetting the dilution from the growing distribution business. Key risks include weaker-than-expected smartphone and auto shipments, slower new-product qualification, delays in emerging businesses, 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) 30.8 25.3 30.3 22.5 18.8 Source: Company data, Bloomberg, CMBIGM estimates

OmniVision (603501 CH) - 3Q26 earnings: Margin inflection takes shape

Target Price RMB125.00 Up/Downside 46.7% Current Price RMB85.20

China Semiconductors Zhimin ZHOU

(852) 3850 5268 zhouzhimin@cmbi.com.hk

Kevin ZHANG

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

Aaron GUO

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

Stock Data

Mkt Cap (RMB mn) 102,836.4 Avg 3 mths t/o (RMB mn) 1,299.7 52w High/Low (RMB) 135.27/71.53 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 5.5% 9.6% 3-mth -7.2% -3.9% 6-mth -18.0% -9.1%

Source: FactSet

12-mth Price Performance

Source: FactSet

PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR OR http://www.cmbi.com.hk

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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 181.3 30.8 25.3 30.3 22.5 18.8 P/E (diluted) 181.3 30.8 25.3 30.3 22.5 18.8

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

Disclosures & Disclaimers

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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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