20220927-招银国际-立讯精密-002475.SZ-Reiterate_BUY_on_stronger_2H22_growth_Recent_correction_is_overdone_7页_1mb

Luxshare (002475 CH) Summary

Core Content

Luxshare is a Chinese technology company that has been recognized for its strong growth potential and strategic expansion. The report reiterates a BUY recommendation with a target price of RMB52.3, which represents a 64% upside from the current price of RMB31.89. The analysis highlights the company's expected earnings growth and improved operating efficiency, particularly in the second half of 2022.

Main Points

• Earnings Growth: Luxshare is expected to deliver strong earnings growth in 3Q/4Q22E, with YoY increases of 59% / 54%, significantly higher than the 14% / 34% growth in 1Q/2Q22.
• Apple's Impact: As a major supplier for Apple's iPhone, Watch, and AirPods, Luxshare is poised to benefit from new product launches and margin recovery, particularly with the iPhone 14 Pro/Pro Max.
• Auto Sector Expansion: Luxshare has strategic cooperation with Chery Auto, positioning itself to capture growth opportunities in the auto components market, especially in high-voltage cable/harness products.
• Valuation: The stock currently trades at 18.3x FY23E P/E, which is close to 1 standard deviation below the 5-year historical average. The target price is based on a 30x FY23E P/E valuation.
• Catalysts: Upcoming catalysts include stronger iPhone shipments, NEV business progress, and potential yield improvements.
• Risks: Potential risks include weaker demand for Apple products, slower yield improvement, and challenges in integrating acquired businesses.

Key Information

• Earnings Summary:

  • Revenue growth is expected to be 29.1% in FY22E and 18.2% in FY23E.
  • Net profit is forecasted to grow by 40.7% in FY22E and 23.5% in FY23E.
  • EPS (Reported) is expected to reach RMB1.74 in FY23E, with a consensus of RMB1.90.
  • P/E ratio for FY23E is 18.3x, while P/B is 3.4x.

• Financial Performance:

  • Revenue has grown significantly from RMB62,516 in FY19A to RMB267,788 in FY24E.
  • Gross margin is projected to stabilize around 13.2% for FY24E.
  • Net margin is expected to increase from 5.0% in FY22E to 5.5% in FY24E.
  • ROE is forecasted to remain around 20.2% in FY24E.

• Market Cap and Performance:

  • Current market cap is RMB225,940.7 million.
  • The stock has shown a -16.9% 1-month return and a -0.8% 3-month return.
  • The 12-month price performance chart is referenced but not shown.

• Earnings Revision:

  • CMBIGM's estimates show a 10% downside compared to consensus for FY24E.
  • Revenue growth is expected to be slightly lower than consensus, with a -3% difference in FY22E and -6% in FY24E.
  • Net profit estimates are also slightly lower than consensus, with a -11% difference in FY24E.

• Valuation Comparison:

  • Luxshare's P/E ratio for FY22E is 22.6x, and for FY23E is 18.3x.
  • It is compared with other listed companies, such as Goertek and O-film, showing a BUY rating with a 60% upside for Goertek and NR for O-film.
  • P/B ratios are expected to decrease from 4.1x in FY22E to 2.8x in FY24E.

Conclusion

Luxshare is positioned for continued growth in the coming quarters, driven by Apple's product launches and margin recovery, along with its expansion into the auto components market. The current stock price is considered undervalued relative to historical averages, and the report reiterates a BUY rating with a RMB52.3 target price. The key risks include potential weakness in Apple's demand and challenges in integrating recent acquisitions.