Genius Electronic Optical (3406.TW): Core resilience with CPO upside optionality

We reiterate Buy and raise our price target to NT$1,250 from NT$700, rolling valuation to 2028E and moving from P/B to a P/E-based SOTP that separately values the core lens business and the emerging co-packaged optics (CPO) business. We believe Genius is making progress sampling three precision components inside the fiber array unit (FAU) targeting FAU integrators such as Coherent and FOCI, and see potential for the company to qualify the leading FAU module supplier into NVIDIA's CPO program. At the same time, its core business is outperforming Largan, growing +1% YoY in Q326 vs. -11% YoY for Largan as its share rises on periscope lens. September sales of NT$2.67bn (-2% MoM, +1% YoY) took Q326 to NT$7.82bn (+38% QoQ, +1% YoY), in-line with VA consensus, with Genius growing 10% YoY in 9M26 against 2% at Largan. Genius is targeting high precision optical components within the module, including a high-precision prism, V-groove/key slot, and MT ferrules. Our base case models a complete-FAU