GTHT Securities has released a research report initiating coverage on GPIXEL (ASX: 03277) with an 'Add' rating. The company is a high-end CIS design firm focused on industrial imaging, scientific imaging, professional imaging, and medical imaging. In 2024, its revenue ranked third globally in both the industrial and scientific imaging segments, highlighting its unique technological and client barriers. The report projects the company's operating revenue for 2026-2028 to be 1.196 billion, 1.571 billion, and 1.916 billion yuan, respectively. Net profit attributable to shareholders is forecasted at 482 million, 693 million, and 906 million yuan for the same period, with corresponding EPS of 1.08, 1.56, and 2.04 yuan.

Using a PE valuation method and selecting OmniVision, SmartSens, Focuslight, and Molight as comparable companies—the first two in consumer/automotive CIS chips and the latter two in semiconductor components—the average 2027 PE for peers is 75x. Considering GPIXEL's semiconductor business is just beginning to scale, a discount is applied, resulting in a 63x PE valuation. This yields a reasonable valuation of 43.659 billion yuan, translating to a target price of HK$112.86 per share. Key insights from GTHT Securities are outlined below.

Industrial Imaging as Growth Driver, Scientific Imaging Deepens Technology, Product Mix Optimizes

In 2025, the company achieved operating revenue of 857 million yuan, a year-on-year increase of 27.30%. By business segment, industrial imaging revenue was 639 million yuan, up 43.06% and serving as the primary growth driver. Scientific imaging revenue reached 204 million yuan, growing 6.18%. Professional imaging revenue was 10 million yuan, down 2.95%. Medical imaging revenue was 4.7 million yuan, a significant decrease from 20 million yuan in 2024, slowing the overall diversification pace. The 2025 growth was primarily driven by robust demand in industrial imaging and the delivery of high-end line-scan products, which boosted both sales volume and average selling prices.

Industrial Automation, Domestic Substitution, and Medical Expansion Drive Medium- to Long-Term Growth

According to Frost & Sullivan data cited in the prospectus, the global industrial imaging CIS market is projected to grow from 2.9 billion yuan in 2024 to 7.8 billion yuan in 2029, representing a CAGR of 21.88%. The company ranks third among global industrial imaging CIS firms. The scientific imaging market is expected to expand from 1.2 billion yuan to 2.2 billion yuan, with a CAGR of 12.89%, where the company also holds the third position globally. The medical imaging market is forecast to grow from 3.0 billion yuan to 8.8 billion yuan, at a CAGR of 24.41%. The particularly strong growth rates in the industrial and medical segments provide direct support for the company's future expansion potential.

Clear Positioning as a Local High-End CIS Supplier, Benefiting from Semiconductor Equipment Growth Trend

The company's industrial CIS products are applicable in equipment such as semiconductor metrology and inspection, giving it a clear positioning advantage. The company also plans to allocate 55.00% of the net IPO proceeds to R&D investment, 21.00% to building an advanced CMOS image sensor R&D center, and 4.00% to expanding packaging and testing production lines.

Risk Factors to Consider

Potential risks include industrial imaging demand falling short of expectations, volatility in scientific imaging client demand, and broader macroeconomic environmental risks.