20240208-招银国际-丘钛科技-01478.HK-Jan_shipment_beat__Focus_on_high-end_smartphone_recovery_in_1H24E_8页_990kb

Q-Tech (1478 HK) Equity Research Update Summary

Key Highlights

• Analyst View: BUY recommendation maintained, supported by strong January 2024 shipment recovery in mobile and non-mobile camera modules (CCM) and fingerprint modules (FPM), attributed to renewed smartphone demand, high-end product ramp-up, and customer project cycles.
• Shipment Performance: January shipments showed significant growth, with mobile CCM volume up 11% month-on-month and 90% year-on-year, driven by high-end 32M+ CCMs increasing 5% MoM and 143% YoY.
• Market Outlook: Following a weak 2023, the report expects an Android smartphone recovery and spec upgrades (e.g., OIS, periscope lenses) in 1H2024, benefiting Q-Tech's high-end CCMs, targeting 43% sales contribution in FY24E.

Financial Projections

• Earnings Predictions: FY24E and FY25E EPS were trimmed by 33% and 36% respectively, reflecting weak FY23E earnings and mild shipment/GPM recovery, but with growth projected at 282.7% and 39.4% YoY for these years.
• P/E Ratio: Trading at 8.5x FY24E P/E, which is below the five-year average, considered extremely attractive by analysts.

Recommendation

• Maintain BUY with a new target price of HK$3.74, based on a 10x FY24E P/E assumption, providing a 30.9% upside from the current price of HK$2.86.

Risks

• Downside risks include potential slower-than-expected smartphone demand recovery and intensifying market competition, which could impact shipments and profitability.

Valuation Comparison

• Compared to peers, Q-Tech is favorably valued at 8.5x FY24E P/E, lower than averages for comparable companies. Long-term growth potential lies in non-smartphone CCM areas like automotive and AR/VR.

Analyst Certification

• Certified that views reflect personal opinions, no compensation ties to views, and no dealings in stock within specified periods.