【行业研究报告】京东方精电-Corp Day Takeaways: Chengdu auto display plant to drive growth in FY23E

2Dec20222Dec2022CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdateBOEVaritronix(710HK)CorpDayTakeaways:ChengduautodisplayplanttodrivegrowthinFY23EWehostedaninvestorcallwithBOEVaritronixduringourCorporateDayon1Dec.BOEVx’sstrong1H22revenue/netprofitgrowthof51%/164%YoYwasmainlydrivenbysoliddemandofautodisplaymodule,massproductionofnewcapacityandASPhikeofautodisplayproducts.Netmarginimproved2.2pptsHoHgivenoperatingleverageandeconomiesofscale.Lookingahead,mgmt.remainspositiveonautodisplaybusinessoutlookandexpectsstrongclientordersbackedby:1)massproductionofhigh-enddisplayproductsforbothtraditionalandNEVclientsinChinaandoverseas;2)systemproducts(mainlyforChina)willstartsalescontributioninFY23E;and3)stableindustrydemandwithimprovingASP.ReiterateBUYwithTPofHK$26.01.No.1inglobalautodisplayshipment;stabledemandandASPupsidetodriveprofitabilityinFY23E.BOEVaritronixmaintainedNo.1positioninglobalmedium-to-largesizeautomobiledisplaymodulesshipmentandindisplayareasshipment.AutodisplayshipmentalsoreachedNo.1globallywithmarketshareof15.7%in2Q22,accordingtoOmdia.Lookinginto2023,mgmt.expectsmoreorderwinsinhigh-enddisplayincludingOLED,BD-cell,curved-display,AR-HUDandrear-viewfromdomestic&overseas’high-endtraditionalandNEVcustomers.Inaddition,mgmt.expectssystemproductmainlyforChinesecustomerstocontributesalesinFY23E.Overall,mgmt.remainspositiveonstabledemandinautodisplaymarketandASPupsidetodriveprofitabilityinFY23E.ChengduautodisplayplanttofuelgrowthinFY23E.Mgmt.expectsChengduplanttoturnprofitableduetoitsfastramp-upincapacityin4Q22E.Mgmt.expectedmaximumcapacityof15mnpiecescouldgenerateRMB5bnsalesinFY23E.Mgmt.believesthenewChengduplantwillsupportrobustmarketdemandandimprovecostefficiency,leadingtobetterprofitabilityinthelongterm.LimitedimpactfromrecentCOVID-19.Mgmt.reiteratedlimitedimpactfromrecentpandemicthankstostronginternalcontrolandsupplychainmanagement.Overall,weremainpositiveonincreasingpenetrationofhigh-endautodisplayproducts,technologyupgradeforintelligentcock-pitandnewChengduplanttomeetstrongmarketdemand.Valuation/Keyrisks.Weestimaterevenue/earningstogrowat33%/47%CAGRover2021-24E,drivenby37%CAGRinautomotivedisplay.OurTPofHK$26.01isbasedon25xFY23EPE.UpcomingcatalystsincludeNEVboomingdemand,productpenetrationandcapacityexpansion.TargetPriceHK$26.01(PreviousTPHK$26.01)Up/Downside84.7%CurrentPriceHK$14.08ChinaTechnologyAlexNG(852)39000881alexng@cmbi.com.hkLilyYANG,Ph.D(852)39163716lilyyang@cmbi.com.hkHanqingLIlihanqing@cmbi.com.hkStockDataMktCap(HK$mn)10,377.0Avg3mthst/o(HK$mn)13.952wHigh/Low(HK$)18.86/5.84TotalIssuedShares(mn)737.0Source:FactSetShareholdingStructureBOETechnologyGroup54.3%KoChunShun10.0%Source:HKExSharePerformanceAbsoluteRelative1-mth21.0%-4.5%3-mth-21.8%-16.1%6-mth48.2%70.7%Source:FactSet12-mthPricePerformanceSource:FactSetEarningsSummary(YE31Dec)FY20AFY21AFY22EFY23EFY24ERevenue(HK$mn)4,5277,73810,56514,08118,011YoYgrowth(%)26.770.936.533.327.9EBITDA(HK$mn)2165137601,0321,382Netprofit(HK$mn)68.6327.8553.7756.41,032.4YoYgrowth(%)174.3377.668.936.636.5EPS(Reported)(HK$)0.090.450.761.041.42ConsensusEPS(HK$)0.000.450.710.981.35P/E(x)24.914.218.513.59.9P/B(x)0.40.81.71.31.2Yield(%)215.8236.788.7221.7302.6ROE(%)2.510.715.618.822.4Netgearing(%)(61.6)(34.3)(40.1)(13.5)(21.1)Source:Companydata,Bloomberg,CMBIGMestimates