20220318-招银国际-雷蛇-01337.HK-FY21_result_is_solid._All_eyes_on_progress_of_privatization_4页_858kb

Razer (1337 HK) Company Update Summary

Core Content Overview

Razer, a leading company in the gaming peripherals and services sector, reported its FY21 results, which showed a solid performance with full-year revenue reaching US$1.6bn, a 33% YoY increase, aligning with CMB International Global Markets (CMBIGM) estimates and exceeding the market consensus. However, net profit to shareholders was US$46.2mn, which fell short of expectations due to industry-wide supply chain and logistics challenges.

Key Financial Highlights

• Revenue: FY21 reached US$1.6bn, up 33.3% YoY. FY22E is estimated at US$1.855bn, with a 14.5% growth, outperforming peripheral peers like Logitech.
• Gross Margin: Improved to 24.0% in FY21 from 22.3% in FY20. FY22E is projected to be 24.5%, with margin pressure expected to ease in 2H22E.
• Net Profit Margin: Rose to 2.9% in FY21 from 0.5% in FY20, with an expected increase to 4.8% in FY22E.
• EBITDA: Increased to US$80mn in FY21, and is projected to reach US$110mn in FY22E.
• EPS: Rose to US$0.005 in FY21, with an estimated US$0.010 for FY22E.
• Target Price (TP): Maintained at HK$2.82, reflecting the proposed privatization price. The current price is HK$2.43, implying a +16.0% upside.
• Market Cap: As of the latest data, stands at HK$21,286mn.

Key Business Developments

• Privatization Process: The company is still in the process of privatization, with the next key date being April 4th, the deadline to dispatch the Scheme Document to the SFC.
• User Base Growth: Razer has a user base of 178mn, with a 44% YoY increase, indicating strong market penetration.
• Service Business Expansion: Continuous expansion in channels and content for the services business has contributed to overall growth.

Financial Summary

Income Statement (YE 31 Dec)

Balance Sheet (YE 31 Dec)

Cash Flow Summary

Key Ratios

Shareholding and Performance

• Shareholding Structure:

  • Chen Family Hivemind Holdings: 32.4%
  • Voyager Equity: 15.33%
  • Primerose Ventures: 3.77%

• Share Performance:

  • 1-month: -7.6%
  • 3-months: -3.3%
  • 6-months: +40.6%

• Valuation Metrics:

  • PE (x): 30.7 (FY22E), 18.5 (FY23E)
  • EV/EBITDA (x): 21.4 (FY22E), 14.8 (FY23E)

Analyst Ratings and Outlook

• CMBIGM Rating: HOLD
• Target Price (TP): HK$2.82
• Upside/Downside: +16.0%
• Main View: Despite potential slowdown in FY22E growth due to high base and macro uncertainties, Razer is expected to continue outperforming its peers in the peripheral segment. The completion of the privatization is considered highly probable, and the TP is maintained at HK$2.82.

Risk Factors

• Privatization Risk: Potential termination of the deal remains a risk.
• Macro Uncertainties: May affect revenue growth in FY22E.
• Supply Chain and Logistics Challenges: Expected to persist in 1H22E, but margin pressure is expected to ease in 2H22E.

Analyst Contact

• Lily Yang, Ph.D: (852) 3916 3716 | lilyyang@cmbi.com.hk
• Alex Ng: (852) 3900 0881 | alexng@cmbi.com.hk
• Lana Lin: (852) 3761 9097 | lanalin@cmbi.com.hk

Disclaimer

• The report is for informational purposes only and not tailored to individual investors.
• Past performance does not guarantee future results.
• CMBIGM is not liable for any loss or damage incurred from reliance on the information.
• The report is intended for specific recipients and may not be distributed to others without prior consent.