【行业研究报告】丘钛科技-FY22 largely in-line; Auto/VR to accelerate growth

15Mar202315Mar2023CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdateQ-Tech(1478HK)FY22largelyin-line;Auto/VRtoaccelerategrowthQ-tech’searningsdeclineof80%YoYwasin-linewithprofitwarningearlier(down70-80%YoY).WebelievetheworstisoverandearningsgrowthwillresumeinFY23E,drivenbyhigh-endCCMsalesmix(35%+,vs30%inFY22)andstrongernon-smartphonesegment(50%+YoY).Toreflectinventorycorrectionin1H23Eandnon-mobileexpansion,weloweredourFY23-24EEPSby8-23%.Tradingat8.8x/6.5xFY23/24EP/E,webelievethestockhasattractiverisk-rewardgivenearningsrecoveryintoFY23-24E.MaintainBUYwithnewTPofHK$5.2,basedonsame10xFY23EP/E.FY22weaknessin-line.Q-techFY22revenue/netprofitwaslargelyin-line,down26%/80%YoY,mainlydueto:1)CCMshipment/ASPdeclineof12%/16%YoY;2)FPMshipment/ASPdeclineof3%/35%YoY.GPMdropped5.5pptsYoYto3.9%onintensifiedcompetition,lowutilizationandmaterialcosthikeonFXfluctuation.Conservativeonsmartphonedemandinnearterm.Mgmt.statedthat2023capexplanwillfocusonnon-smartphonedevelopmentandconservativeonsmartphonecapacityexpansion,implyingbumpydemandrecoveryinourview.Despiteshipmentweakness,mgmt.guided32M+CCMshipmentvolumemixof35%+(vs.30%inFY22)givenhigh-endsmartphonereplacementcyclewithOISandperiscopefeatureupgrade.Non-smartphonegrowthtoaccelerate.ForautoCCM,Q-techwonADASorderswithContinental,VOYAHandChangan,anditsToFand1M/2MDMScamenteredmassproductionforXpeng,ZEEKR.Inaddition,VRpancakelensmoduleswillentermassproductionin2023.Overall,weexpectnon-smartphoneCCMtodeliver112%/103%YoYsalesgrowthinFY23/24E.1H23Eweaknesspricedin;MaintainBUYwithnewTPofHK$5.2.WeloweredourFY23-24EEPSby8-23%toreflectsmartphonebumpyrecovery.Webelieve1H23inventorydigestionanddemandweaknessaremostlypricedin.Tradingat8.8xFY23EP/E,thestocklooksattractiveinourviewgivenearningsrecoveryinFY23/24E.WemaintainBUYwithnewTPofHK$5.2,basedonsame10xFY23EPE.Upcomingcatalystsincludeproductlaunches,autoclientwinsandshipmentrecovery.TargetPriceHK$5.20(PreviousTPHK$5.76)Up/Downside20.3%CurrentPriceHK$4.32ChinaTechnologyAlexNG(852)39000881alexng@cmbi.com.hkHanqingLIlihanqing@cmbi.com.hkStockDataMktCap(HK$mn)5,119.2Avg3mthst/o(HK$mn)4.952wHigh/Low(HK$)6.56/2.90TotalIssuedShares(mn)1185.0Source:FactSetShareholdingStructureHENingning63.6%HarvestFundManagementCoLtd2.5%Source:HKExSharePerformanceAbsoluteRelative1-mth-15.1%-6.9%3-mth-1.8%0.4%6-mth6.1%3.9%Source:FactSet12-mthPricePerformanceSource:FactSetEarningsSummary(YE31Dec)FY21AFY22AFY23EFY24EFY25ERevenue(RMBmn)18,66313,75915,08016,65820,036YoYgrowth(%)7.3(26.3)9.610.520.3Netprofit(RMBmn)862.8170.2510.8688.3904.8EPS(Reported)(RMB)0.730.150.430.580.76YoYgrowth(%)1.8(80.2)197.634.731.5ConsensusEPS(RMB)0.740.270.490.700.87P/E(x)15.331.48.86.55.0P/B(x)2.81.10.90.80.7Yield(%)0.00.02.33.14.0ROE(%)20.33.610.312.614.9Netgearing(%)(0.8)26.633.812.316.7Source:Companydata,Bloomberg,CMBIGMestimates