20220908-招银国际-Apple_Launch_Event__new_iPhone_14_Airpods_Watch_inline__No_price_hike_is_the_major_surprise_5页_1mb

China Technology Sector Summary

Core Content

This document provides an analysis of Apple's product launch and its implications for the Chinese technology sector, particularly focusing on the supply chain companies that support Apple's iPhone, Apple Watch, and AirPods. It highlights the new iPhone 14 models, Apple Watch Ultra, and new AirPods Pro, along with their features and pricing. The report also evaluates the performance and investment potential of key supply chain firms, offering recommendations based on their exposure to Apple's product lines and expected growth.

Main Points

• iPhone 14 Launch: Apple released four models: iPhone 14, iPhone 14 Plus, iPhone 14 Pro, and iPhone 14 Pro Max. These models feature improved cameras, satellite connectivity, dynamic island, and always-on display. Most upgrades are concentrated in the higher-end Pro models.

• No Price Hike: Despite inflationary pressures and supply chain cost increases, Apple did not increase prices, which is a major surprise. This pricing strategy is expected to boost competitiveness and drive volume growth.

• iPhone Shipment Outlook: The report forecasts iPhone shipment of 235 million units for FY22E, which is flat YoY, compared to a -9% YoY industry decline. This is attributed to the loss of high-end market share by Samsung and Huawei, and weak demand from Android devices.

• Apple Watch Ultra: The new high-end Apple Watch Ultra includes features like a body temperature sensor, car crash detection, and low-power mode. It is priced at US$799 and is expected to gain traction in the endurance sports market.

• New AirPods Pro: The new AirPods Pro have limited spec upgrades, but they are still expected to maintain relevance in the market.

Key Companies and Investment Recommendations

Supply Chain Firms with Share Gain Potential

• Luxshare: Provides components for iPhone, Watch, and AirPods. Rated as BUY with a market cap of US$36,954 million. Price is 36.33 LC, with a target price of 74.2 LC. P/E ratio for FY22E is 25.5, and P/B is 5.6. ROE is 22.8%.

• Goertek: Supplies components for Apple Watch and AirPods. Rated as BUY with a market cap of US$16,167 million. Price is 32.96 LC, with a target price of 44.7 LC. Upside is 36%. P/E for FY22E is 20.6, and P/B is 3.5. ROE is 17.1%.

• FIT Hon Teng: Provides connectors and accessories for iPhone. Rated as BUY with a market cap of US$1,028 million. Price is 1.11 LC, with a target price of 1.8 LC. Upside is 60%. P/E for FY22E is 6.3, and P/B is 0.4. ROE is 6.0%.

• Tongda: Supplies metal/plastic casing for iPhone. Rated as BUY with a market cap of US$139 million. Price is 0.11 LC, with a target price of 0.2 LC. Upside is 96%. P/E for FY22E is 3.7, and P/B is 0.1. ROE is 2.3%.

Companies with Hold Ratings

• AAC Tech: Provides acoustics, haptics, and optics. Rated as HOLD due to margin concerns. Market cap is US$2,266 million. Price is 14.72 LC, with a target price of 14.0 LC. Downside is -5%. P/E for FY22E is 17.4, and P/B is 0.7. ROE is 4.0%.

• Sunny Optical: Provides camera modules. Rated as HOLD for fair valuation. Market cap is US$14,211 million. Price is 101.70 LC, with a target price of 102.3 LC. Downside is 1%. P/E for FY22E is 36.5, and P/B is 4.3. ROE is 11.8%.

• BYDE: Provides casing and ODM/OEM services. Rated as HOLD due to a -21% downside. Market cap is US$6,989 million. Price is 24.35 LC, with a target price of 19.3 LC. P/E for FY22E is 32.6, and P/B is 1.9. ROE is 6.0%.

Valuation Table Highlights

Key Takeaways

• Apple's new iPhone 14 series features improvements but no price increase, which is a strategic move to maintain market share.
• The Apple Watch Ultra is a standout product in the Apple Watch lineup, with advanced features and a competitive price.
• The report recommends investing in companies with high exposure to Apple's product lines, particularly Luxshare, Goertek, FIT Hon Teng, and Tongda.
• AAC Tech and Sunny Optical are rated as HOLD due to margin concerns and fair valuation, respectively.
• BYDE is also rated as HOLD due to a significant downside risk.