CCB International has revised its outlook for Q Technology (Group) Company Limited (01478.HK), increasing the target price by 27% from HK$8.5 to HK$10.8 while retaining a Neutral rating. This adjustment follows the company's profit alert signaling robust growth, despite expectations of subdued camera module (CCM) sales performance.

The upgrade reflects Q Tech's enhanced financial resilience, driven by conservative CCM revenue guidance offset by improved product mix lifting gross margins and increased profit contributions from associates. Consequently, CCB raised its 2025 earnings forecast for the group by 27%.

While acknowledging continuous product portfolio enhancements, the report highlighted persistent industry pricing pressures. CCB projects that 32-megapixel and higher-resolution CCMs will constitute 55% of total CCM shipments in H1 2025. Though overall CCM shipments are expected to dip 3% this year before rebounding with 7% growth in 2026, non-smartphone CCM products are forecast to surge 45% in 2025 and 22% in 2026. Market share gains in mid-to-high-end smartphone CCMs and expansion in non-smartphone segments underpin this outlook.

Product diversification toward premium offerings—including optical image stabilization (OIS) and periscope modules—may mitigate price erosion impacting conventional products. However, intense industry competition continues exerting pricing pressure, a headwind CCB anticipates persisting throughout the year.

For fingerprint recognition modules (FPM), the brokerage forecasts shipment growth of 31% in 2025 and 13% in 2026, with ultrasonic FPM's share rising to 13% and 18% respectively, attributed to market share expansion.