Interest in Apple’s potential foldable phone has sparked significant attention for its key supplier, Chinese glass manufacturer Lens Technology. Analysts from Citi indicated that the company stands to greatly benefit from the anticipated device, despite its release possibly being months or years away. In a report dated July 14, 2023, Citi analysts, led by Kyna Wong, estimated that this device could contribute approximately 5% of Lens Technology’s revenue in the next year, rising to 12% by 2027.
Notably, respected Apple analyst Ming-Chi Kuo has maintained optimism regarding Apple’s plans to launch a foldable iPhone next year. While Apple has not confirmed any details, the company has yet to respond to inquiries about whether Lens Technology will supply the “ultra-thin glass” for the phone’s display panel.
Lens Technology’s Public Offering and Market Position
Citi’s report initiated coverage of Lens Technology following its notable public offering in Hong Kong on July 9, which raised 4.77 billion HKD (approximately $610 million). This event marked the busiest day for listings on the Hong Kong exchange, with five IPOs occurring simultaneously, underwritten by Bank of America Securities. The analysts have rated Lens Technology as a buy, setting a price target of 26 HKD (around $3.13), suggesting nearly 25% upside from the closing price on the previous Friday. According to the report, the H-share listing is expected to enhance the company’s cash flow, enabling further research and development initiatives and potential overseas capacity expansion.
Investor interest has surged, with prominent U.S. hedge fund manager Steve Cohen increasing his stake in Lens Technology to 8.41% of issued voting shares after multiple purchases over three days, as disclosed in filings with the Hong Kong stock exchange. The company’s prospectus states that approximately 30% of the funds raised from the Hong Kong offering will be allocated toward developing foldable screens.
Future Prospects and Market Expansion
Lens Technology aims to bolster its production capacity in China to support the mass production of high-end foldable smartphones, thereby enhancing its market share in this emerging sector. While the company did not specifically name Apple as a client, it did indicate that its largest customer is a Nasdaq-listed U.S. multinational established in 1976, with whom it has had a business relationship for nearly two decades.
This latest listing reflects a broader trend of mainland Chinese companies pursuing public offerings in Hong Kong, a market that provides easier access for international investors. Lens Technology also trades on the Shenzhen Exchange.
Analysts from UBS echoed similar sentiments, predicting that Lens Technology will benefit from the potential launch of the foldable iPhone, as well as developments in artificial intelligence and robotics. They forecast earnings growth of at least 20% per year in 2026 and 2027, maintaining a buy rating with a new price target of 26.20 yuan, an increase from 16 yuan previously.
In light of ongoing economic fluctuations, the Citi analysts have raised their price target for Lens Technology’s shares traded in mainland China to 32 yuan (about $4.45), up from 25 yuan. Despite a 30% decline in share value following U.S. tariffs enacted in early April, they remain optimistic about the company’s ability to cater to growing demand from Chinese startups in the smart glasses and robotics sectors.
Even without the anticipated foldable iPhone, Lens Technology is expected to benefit from supplying cover glass for the upcoming iPhone 17, which is rumored to feature a slimmer design. The company has indicated that its direct exports to the U.S. are limited and plans to utilize proceeds from its Hong Kong listing to expand production in countries such as Vietnam and Thailand, alongside its existing operations in China and Mexico.
As the market watches closely for Apple’s next move, Lens Technology’s strategic positioning and diversification efforts could pave the way for substantial growth in the coming years.
