The independent financial analyst theScreener just lowered the general evaluation of TONGDA GROUP HOLDINGS (HK), active in the Computer Hardware industry. As regards its fundamental valuation, the title still shows 2 out of 4 possible stars. Its market behaviour, however, has slightly deteriorated and will be qualified as risky moving forward. theScreener considers that these new qualifications justify an overall rating downgrade to Slightly Negative. As of the analysis date February 18, 2022, t...
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
Our recent channel checks show that the recovery of the handset component sector remains on track, with key leaders in the handset camera component sector outperforming the industry. This is thanks to a combination of market share gains and penetration into new clients’ supply chains. On top of that, vehicle camera products are gathering more attention and will be a key long-term growth driver going forward. Maintain OVERWEIGHT. Top pick: Sunny and Q Tech.
China handset shipment in Sep 20 remained lacklustre due to the double whammy of Huawei’s shipment cuts and the delayed launch of the new iPhone. 5G handset model launches clearly failed to make a significant impact on overall sales, and total shipment growth will likely remain weak through 4Q20-1Q21. Nevertheless, we expect sales to recover sequentially after the new iPhone launch in Oct 20, while other Chinese brands will continue to absorb Huawei’s market share. Maintain MARKET WEIGHT. Top pi...
After the post-results selldown on the back of lacklustre results and guidance, we see two major obstacles in the way of a rebound in sentiment for the handset component names under our coverage, namely de-spec and sanctions on Huawei. While we believe that both obstacles have already been largely reflected in the current share prices, the ongoing unstable geopolitical environment will likely remain an overhang. Downgrade sector rating to MARKET WEIGHT. Top pick: Sunny Optical.
After the post-results selldown on the back of lacklustre results and guidance, we see two major obstacles in the way of a rebound in sentiment for the handset component names under our coverage, namely de-spec and sanctions on Huawei. While we believe that both obstacles have already been largely reflected in the current share prices, the ongoing unstable geopolitical environment will likely remain an overhang. Downgrade sector rating to MARKET WEIGHT. Top pick: Sunny Optical.
Tongda’s 1H20 net profit declined 90.8% yoy, at the mid point of its profit warning, mainly due to a sharp contraction in gross margins. The margin squeeze was due to intensifying competition, and deterioration in product mix during the COVID-19 outbreak. Going forward, we expect margins to rebound on the back of better shipment volume, but the impact from the pandemic should continue to linger through 2H20 to early-21. We factor in a weakened global economy, and trim earnings estimates for 20...
KEY HIGHLIGHTS Strategy Who’s Tougher On China? Trump or Biden? While there are some differences in their approach on China, China is unlikely to get a reprieve. Sector Consumer Bi-weekly. Results Anhui Conch Cement Co (914 HK/BUY/HK$57.40/Target: HK$72.18) 1H20: Another solid set of results that beats expectation. Brilliance Auto (1114 HK/BUY/HK$7.32/Target: HK$14.00) 1H20: Net profit grows 25% yoy, better than estimates; we raise target price to HK$14.00. Changsha Zoomlion Heavy Ind...
GREATER CHINA Strategy Who’s Tougher On China?: Trump or Biden? While there are some differences in their approach on China, China is unlikely to get a reprieve. Sector Consumer: Bi-weekly. Results Anhui Conch Cement Co (914 HK/BUY/HK$57.40/Target: HK$72.18): 1H20: Another solid set of results that beats expectation. Brilliance Auto (1114 HK/BUY/HK$7.32/Target: HK$14.00): 1H20: Net profit grows 25% yoy, better than estimates; we raise target price to HK$14.00. Changsha Zoomlion Heavy Industry...
Over the past two months, expectations on the handset component sector have shifted back and forth due to the disruption brought about by the pandemic and the US-China conflicts. After talking to the companies under our coverage, we believe the market has now come to the consensus that: a) 5G handset sales will not be enough to offset the COVID-19 impact; b) handset specification upgrade is slowing down temporarily; and c) US sanctions on Huawei have limited impact on the value chain in 2020. Ma...
While China has gradually lifted its lockdown restrictions since early April, the COVID- 19 outbreak has lingered overseas. Production and supply in the handset components sector has not been severely impacted despite market concerns. For instance, camerarelated players finished reported resilient shipment volumes in 1Q20. Our channel check with Xiaomi, a global leading smartphone brand, suggested end-demand is recovering and it believed pent-up demand to be released in 2H20, when 5G models will...
With the exception of camera-related component names, handset component companies reported weak 2019 results on average, mainly due to sluggish smartphone end-demand, keen competition and margin squeeze. The global COVID-19 outbreak caused economic uncertainty and demand shock to the sector, while managements remained optimistic of a rebound in 2H20. The catalyst for smartphone industry would be the launch of new 5G models in 2H20. Maintain OVERWEIGHT.
ASEAN Sector Gaming: Gaming industry further infected by Covid-19 and government’s mandated lockdown, with share prices capitulating amid panic selldown, resulting in extreme bargain prices. GREATER CHINA Results Ausnutria Dairy (1717 HK /BUY/HK$10.78/Target: HK$17.00): 2019: Results in line with profit alert. Tencent (700 HK/BUY/HK$334.00/Target: HK$475.00): 4Q19: Solid results; margins continue to improve; strong deferred revenue growth. Tongda Group (698 HK/HOLD/HK$0.485/Target: HK$0.55): ...
Due to the worse-than-expected gross margin, Tongda’s 2019 net profit declined 26% yoy, missing our/consensus forecasts by 26%/33%. We expect the keen competition among 2.5D glastic segment to continue in 2020 and pressure margins, while 3D and uni-body glastic require longer time to contribute materially. As the global COVID-19 outbreak poses uncertainty for end-demand, we are cautious on Tongda’s business outlook. Thus, we downgrade to HOLD with target price of HK$0.55. Entry price is HK$0...
KEY HIGHLIGHTS Results Ausnutria Dairy (1717 HK /BUY/HK$10.78/Target: HK$17.00) 2019: Results in line with profit alert Tencent (700 HK/BUY/HK$334.00/Target: HK$475.00) 4Q19: Solid results; margins continue to improve; strong deferred revenue growth. Tongda Group (698 HK/HOLD/HK$0.485/Target: HK$0.55) 2019: Profit misses estimates; cautious outlook for 2020. Downgrade to HOLD. Xtep (1368 HK/BUY/HK$2.32 /Target: HK$4.70) 2019: In-line. Valuations at rock-bottom. TRADERS’ CORNER Cathay ...
While workers in major cities are returning to work on 10 February, mobility restrictions and shortage of protective masks will lead to a slow start. Hence, 1Q20 is likely to be a washout. But investors have looked beyond the impact of COVID- 2019, with the index recovering more than half of the initial decline. Even with the sharp rebound, some stocks remain attractive, namely CK Asset, PICC P&C, Stella, and Xiabuxiabu.
The Wuhan coronavirus outbreak in China has forced the government to extend the Lunar New Year holiday in major provinces where most IT hardware components manufacturing facilities are located. Although the supply chain still faces shortage in labour and components during the current low season, the companies we cover are optimistic about the resumption of production in the near term. Thus, the overall negative impact on their 2020 results should not be significant. Maintain OVERWEIGHT.
5G smartphone shipments should record substantial growth in China in 2020, driven by the large-scale deployment of telecom carriers, affordable 5G tariff packages and attractive 5G handset prices. Boosted by 5G handset sales, we expect China’s overall handset shipment volume to move into positive growth territory of 3% in 2020 vs -6.2% in 2019. Thus, all handset component names would benefit, but to different extents. We prefer Sunny, Tongda and Pentamaster in this sector. Maintain OVERWEIGHT.
Tongda’s operations bottomed out in 2019 after a terrible 2018 that was dented by a poor metal casing business and one-off inventory write-down. Looking ahead, Tongda’s growth in 2020 would accelerate, driven by replacement demand from 5G handsets, higher iPhone sales and product mix upgrades. Unlike the other large-cap handset component names, Tongda is still trading below its historical mean despite the industry upcycle. Thus, we maintain BUY and raise our target price to HK$1.11.
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