On April 26, O-Film Tech unveiled its financial results for the first quarter, showcasing revenue of RMB 3.729 billion, which marked a 23.60% decrease year-on-year. The net profit attributable to shareholders stood at -RMB 247 million, experiencing a 319.75% year-on-year decline. After deducting non-recurring items, the net profit attributable to shareholders was -RMB 253 million, representing a 194.44% year-on-year decrease. Nevertheless, the net cash flow from operating activities surged to RMB 468 million, reflecting a significant 1147.31% increase compared to the same period last year.

Given the cyclical adjustments within the consumer electronics sector, these results are somewhat expected. However, when we turn our attention to the Chinese smartphone market during the same timeframe, we notice structural shifts within the industry, with O-Film Tech positioned at the vanguard of optical technology in this transformation.

Counterpoint Research's latest report reveals that Chinese smartphone shipments in the first quarter of this year contracted by 4% year-on-year, indicating a period of mild market adjustment. Nevertheless, Huawei made a remarkable resurgence, capturing the top spot with a 20% market share, its highest quarterly share since the fourth quarter of 2020. This impressive 20% share is largely attributable to its dominance in the ultra-premium price segment, priced above RMB 6,000.

This development signals that domestic smartphone manufacturers and their supply chains have developed the systemic capabilities necessary to support the mass production of ultra-premium, high-margin flagship devices. As price wars make way for value competition, optical perception has emerged as the focal point for flagship smartphone competition, presenting structural opportunities for optical manufacturers involved.

O-Film Tech stands as a pivotal supplier in this evolving landscape. According to industry insiders, the company currently supplies flagship primary and telephoto modules for Huawei's Pura90 series. Within the constrained space of flagship smartphones, the design complexity of optical modules has escalated exponentially.

To overcome this challenge, O-Film Tech implemented the industry's pioneering Triplet Power Prism three-in-one ultra-condensing prism solution for the Pura90 modules. This innovation reduced module length by 20% compared to traditional industry architectures and achieved the industry's highest CIPA7.0 level of image stabilization. Furthermore, O-Film Tech's proprietary MGL multi-group AA equipment, featuring a 24-axis 0.2-micron high-precision platform and multi-parameter synchronous coupling algorithms, played a pivotal role in ensuring consistent product image quality.

However, the immediate financial benefits of these technological advancements have yet to materialize in revenue growth. The revenue decline reported in the first quarter reflects the company's ongoing business restructuring.

On one hand, the first quarter traditionally represents a slow season for consumer electronics. This, compounded by cost pressures stemming from rising upstream memory chip prices, has prompted some brand clients to dynamically adjust their product production and shipment plans, thereby slowing overall demand in the supply chain.

On the other hand, O-Film Tech is actively optimizing its business structure by gradually phasing out low-value-added, long-payment-cycle businesses and focusing on high-tech-barrier, high-value optical modules that are still in the ramp-up phase. This strategic pivot has led to short-term revenue pressures, exacerbated by accounts receivable collection challenges, increased financial expenses, and ongoing upfront R&D investments, collectively amplifying profit losses.

Additionally, the company reported RMB 22.8262 million in inventory write-downs in the first quarter, reflecting, to some extent, the adjustment pressures on inventory structure amidst slowing market demand and product iterations.

Meanwhile, the financial report also conveyed positive signals. The company's net cash flow of RMB 468 million represented a significant 1147.31% year-on-year increase, compared to just approximately RMB 37.5494 million in the same period last year. Accounts receivable decreased by 32.14% from the end of the previous year, indicating improved collection efficiency and an optimized asset structure. The improved cash flow underscores that the company's business portfolio is shifting towards higher-quality and healthier client structures, reflecting enhanced operational resilience and risk resistance during periods of industry volatility.

Notably, the Huawei Pura90 series was launched on April 20, 2026, with the first batch of products officially hitting the market on April 29. The mass production and revenue recognition of the optical modules were concentrated towards the end of the quarter. Therefore, O-Film Tech's primary performance contributions from the Pura90 modules are anticipated to gradually materialize from the second quarter of 2026 onwards, in tandem with the product's full lifecycle shipments.

Currently, the consumer electronics sector remains in a phase of cyclical adjustment and deep differentiation, with fluctuations in end-user demand leading to common shipment rhythm changes across the supply chain. Such adjustment periods often give rise to technological demarcations. As competition in the smartphone market shifts from pure shipment growth to high-end value capture, optical manufacturers' competition is also transitioning from production capacity scale to engineering capabilities in addressing miniaturization, high precision, and complex optical systems.

O-Film Tech's first-quarter performance, characterized by revenue decline, high-end mass production, and improved cash flow, indicates that the optical leader has not fallen behind but has quietly secured a critical technological position in the deep waters of ultra-premium optics.

Of course, a single quarter's figures cannot fully validate a company's long-term value. Subsequently, as new businesses continue to ramp up and Huawei's Pura90 series achieves full-lifecycle shipment growth, O-Film Tech's primary performance contributions are expected to gradually emerge from the second quarter onwards. Coupled with the gradual stabilization of the industry cycle, O-Film Tech's performance flexibility remains to be fully unlocked.

However, at the start of 2026, armed with innovations like the Triplet Power Prism three-in-one ultra-condensing prism, O-Film Tech has already secured its ticket to the next round of optical competition. The future holds immense promise.