Everbright Securities has released a research report expressing optimism about COWELL (01415)'s continued growth trajectory amid the ongoing smartphone optics upgrade cycle, as well as its significant expansion potential into emerging markets such as AI glasses and robotics. Given that the company's net profit margin for 26H1 slightly exceeded expectations, the firm has raised its 2026 net profit forecast by 4.2% to $241 million, while maintaining its 2027 and 2028 net profit projections at $285 million and $355 million respectively, along with a reiterated "Buy" rating.

The company released its 2026H1 results. Revenue for 26H1 reached $1.605 billion, representing an 18.0% year-on-year increase, primarily driven by heightened customer demand and an improved product mix resulting from higher shipments of premium products. Gross profit for 26H1 stood at approximately $180 million, up 15.7% year-on-year, corresponding to a gross margin of 11.2%, a slight decline of 0.2 percentage points year-on-year. Net profit attributable to shareholders for 26H1 was $89.87 million, surging 33.3% year-on-year, with a corresponding net margin of 5.6%, up 0.6 percentage points year-on-year, underpinned by improved operational efficiency which drove down selling and administrative expense ratios, thereby continuously enhancing profitability.

Core customer shipments demonstrate strong resilience, with storage price pressures yet to transmit to the camera module segment: During 26H1, sales to the company's largest customer reached approximately $1.593 billion, accounting for around 99.3% of total revenue, fully reflecting the deeply entrenched relationship with its core client. According to IDC data, Apple's iPhone shipments in 26Q1 and 26Q2 grew by 3.3% and 15.3% year-on-year, respectively. The combination of resilient core customer shipment growth and market share gains has collectively driven COWELL's robust revenue performance in 26H1. Despite facing upward pressure from storage costs, the company's strong pricing power, supply chain management capabilities, and product mix optimization are expected to sustain robust shipment momentum for Apple's new iPhone releases in the second half of the year, potentially driving sequential revenue improvements. In terms of profitability, margins in the camera module segment are relatively thin, and given that optical imaging upgrades serve as a key differentiator for contemporary smartphones, supply chain security remains paramount—storage price pressures have yet to be transmitted to the camera module segment. Due to new product ramp-ups, gross margins in the second half may experience a slight sequential decline, though steady-state profitability levels are expected to be maintained.

Comprehensive AI integration drives sustained improvements in operational efficiency and profitability: In 2026H1, the company's net profit growth rate (33.3% YoY) significantly outpaced its revenue growth rate (18.0% YoY), indicating continuously strengthening profitability. Through the deep integration of "data-driven decision-making, AI collaboration, and manufacturing execution," the company is progressively building technological competitive moats, transitioning from traditional scale expansion to a high-quality, high-operating-leverage growth model. Employee headcount increased from 6,854 at the end of 2025 to 7,274 by the end of June 2026—an addition of only approximately 420 staff—yet the company generated over $1.6 billion in revenue during 26H1, with per-capita efficiency improving year-on-year. With AI driving an optical innovation cycle, the company's medium-to-long-term growth trajectory remains clearly defined. As AI accelerates its penetration from cloud to edge devices, smartphones, PCs, and other terminal devices are placing higher demands on imaging and sensing capabilities, and the company, as a core optical component supplier, stands to benefit significantly. The firm's assessment suggests: 1) Leveraging its industry-leading yield rates and automation capabilities, the company is well-positioned to capture additional share in the rear camera module segment it has already entered; 2) The company is expected to enter the foldable iPhone camera module supply chain in 2026 and penetrate the rear main camera segment through regular iPhone models by 2028; 3) The company is poised to become a core camera module supplier for Apple's diverse wearable devices (such as TWS earbuds with integrated cameras, smart glasses, AR/VR headsets, and desktop robots), with some products potentially commencing mass production and launch between 2026 and 2027.

Risk warnings include customer concentration, weaker-than-expected global smartphone shipments, and delays in technological upgrades.