On December 17, 2023, the Hong Kong-listed company, Kangnate Optical (02276.HK), reached an unprecedented peak in its stock priceThe shares soared to an impressive HKD 15.98 during trading hours, marking the highest level since its market debutBy the end of the trading day, the stock settled at HKD 15.62 per share, reflecting a substantial increase of 10.78%, thereby elevating the market capitalization to HKD 66.63 billionSince the beginning of the year, the stock has experienced a staggering cumulative growth rate of 132.86%, signaling a robust resurgence within the tech and optical sectors.

The remarkable surge in Kangnate’s stock price can be attributed to a multitude of favorable factors converging within the industry landscapeThe company specializes in the production and sale of both standardized and customized resin eyeglass lenses, with a significant portion of its revenue—approximately 70%—derived from international markets, underscoring its vast outreach and global competitiveness.

Industry analysts have projected that as both domestic and international tech giants continue to evolve their artificial intelligence ecosystems, the year 2025 is poised to herald a significant explosion in AI applications

The capital markets are increasingly opening up to the potential applications of AI in tangible products, particularly in the hardware sector.

Among the various innovative developments, AI eyeglasses have taken center stageThese intelligent eyeglasses are designed for extended use, offering comfort and proximity to user interaction, distinguishing them from other smart devicesThe functionality of these devices—enabling users to “see what others see” and “hear what others hear”—presents a unique advantage in the immediacy of information input and outputWhen coupled with relevant AI models, their interactivity far surpasses other smart technologies on the market.

Currently, several companies, including Meta, Google, and XREAL, have introduced smart glasses, igniting consumer interestNotably, Meta’s Ray-Ban smart glasses surpassed a million units sold this year, signaling an overwhelming demand that exceeded market expectations.

In light of Meta’s success, numerous tech behemoths have also begun to navigate this budding market

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In November, Baidu unveiled its “Xiao Du AI Glasses,” powered by a Chinese AI model, while Samsung Electronics confirmed its AI smart glasses project at the beginning of the monthAdditionally, Zhipu has announced partnerships with eyeglass manufacturers to explore synergies in augmented reality and AI techNoted entrepreneur Zhou Hongyi, founder of 360, anticipates that virtually every internet company will eventually delve into the eyeglasses market, hinting at an imminent “battle for the best glasses.”

Market research conducted by WellsennXR indicates that global eyeglass sales reached approximately 1.56 billion units in 2023, with projections suggesting an increase to around 2 billion units over the next decadeStarting in 2025, AI smart glasses are expected to penetrate traditional eyeglass sales, which are anticipated to grow steadilyBy 2029, annual sales of AI smart glasses could reach up to 55 million units, with prospects of hitting 1.4 billion by 2035, indicating a vibrant future for this segment of the optical market.

CITIC Securities has highlighted the immense potential of AI smart glasses as wearable devices that marry affordability with high-efficiency benefits for consumers

This combination positions them well within a rapidly expanding market space.

Also noteworthy is the synergy created through potential collaborations between eyewear companies and tech firms, akin to the partnership between Apple and ZeissKangnate Optical, being a seasoned player in the eyeglass market, is strategically positioned to capitalize on this evolving landscape.

In late September, Kangnate Optical announced that it had signed a product supply framework agreement with a multinational consumer electronics company, indicating a commitment to long-term collaborationSubsequently, the company reported that it had received formal orders from this partner as part of the aforementioned supply agreement.

As of December, Kangnate reiterated its positive progress on multiple research and development projects with several globally recognized tech and consumer electronics firms

They confirmed that payments related to research costs and initial order trials were being processed, further validating the momentum and potential growth opportunities ahead.

All these indicators suggest that as the era of AI eyeglasses advances, Kangnate Optical is well on the path to experiencing significant growthThese prospects may very well be one of the reasons behind the surge in popularity and demand for the company's shares.

Furthermore, in late November, Kangnate Optical announced an equity incentive plan, indicating their intention to grant 11.926 million shares to various executives and employeesThis represents approximately 2.8% of the total shares issued, with a grant price set at HKD 4.58 per shareThe achievement criteria are based on the year-on-year growth of net profit attributable to shareholders from 2025 to 2027, set at no less than 21%, 17%, and 15%, respectively.

Guoyuan International has remarked that this equity incentive scheme reflects the company’s confidence in maintaining steady growth amid the fluctuating consumer environment for its lens business

More importantly, it illustrates management's long-term growth strategy and the competitive edge of their products in the marketplaceThe timeline of the equity incentive plan spans from 2025 to 2027, and analysts suggest that given the previous profit projections—26% rise in net profit for 2024 (with a consensus expectation of 25%)—the incentive performance objectives for 2025 and 2026 of 21% and 17% net profit growth outperform earlier forecasts of 18% and 12% (which were in line with consensus expectations of 20% and 18%, respectively).

However, potential investors are advised to tread cautiouslyKangnate Optical’s stock has already hit new highs, indicating a significant level of profits that could prompt some investors to cash in, potentially leading to fluctuations in stock pricesTherefore, it is paramount for investors not to blindly chase after rising stocks or engage in panic selling, but to approach their investments with prudence.