20140512-吉隆坡万信证券-1Q14_Results_Expected_With_Attractive_Stock_Price_11页_443kb
报告摘要
HC International (8292 HK) Summary
Core Content
HC International (HCI), a technology company in the software and services sector, has a market cap of USD1,407m. The stock price is currently HKD16.46, with a target price of HKD26.54, maintaining the "Buy" rating. The company's 1Q14 results were in line with expectations, showing a revenue of CNY224m (+38.8% y-o-y) and recurring earnings of CNY42.3m (+108.5% y-o-y), which missed forecasts by 5.6% due to higher administrative expenses. The recent stock price correction makes HCI an attractive investment opportunity.
Key Financial Highlights
- Revenue for 1Q14: CNY224m (+38.8% y-o-y, -5.9% q-o-q)
- Recurring Net Profit: CNY42.3m (+108.5% y-o-y, -22.2% q-o-q)
- Recurring Net Profit Margin: 18.9% (+6.3ppt y-o-y, -3.9 ppts q-o-q)
- Gross Profit Margin: 92.5% (-0.8ppt y-o-y, -0.6ppt q-o-q)
- Operating Profit Margin: 18.6% (vs RHB forecast 22.5%)
- EPS (Recurring): HKD0.0639 (down 5.8% from forecast)
Forecasts and Valuation Adjustments
- Recurring Earnings Trim: 3.1% for FY14, 2.2% for FY15, and 0.9% for FY16
- Target Price: Adjusted to HKD26.54 (from HKD28.28)
- Target P/E Ratio: 51.2x for FY14, based on a 0.9x PEG (lower than peers' 0.7x)
- EPS CAGR (FY13-FY16): 57%
Business Developments
- Micro Credit License: The application is at the final stage, with the expectation of obtaining a nationwide license in June 2014.
- JV Contribution: The joint venture with Digital China is expected to contribute CNY23.5m, CNY99.3m, and CNY126.5m to HCI's recurring earnings for FY14, FY15, and FY16 respectively.
Shareholder Structure
- Digital China: 21.0%
- Chairman Guo: 13.3%
- Jayhawk: 10.0%
Share Performance
- Absolute YTD Growth: 60.1%
- Relative YTD Growth: 66.3%
- 1m Growth: (5.7)%
- 3m Growth: 4.8%
- 6m Growth: 84.9%
- 12m Growth: 231.9%
Valuation Metrics
| Metric | Dec-12 | Dec-13 | Dec-14F | Dec-15F | Dec-16F |
|---|---|---|---|---|---|
| Total Turnover (CNYm) | 549 | 838 | 1,164 | 1,622 | 2,261 |
| Recurring Net Profit (CNYm) | 64 | 151 | 270 | 477 | 664 |
| Recurring Net Profit Growth (%) | 55.3 | 135.1 | 78.7 | 76.7 | 39.2 |
| Recurring P/E (x) | 114 | 51 | 32 | 18 | 13 |
| P/B (x) | 21.2 | 8.6 | 5.0 | 3.7 | 2.8 |
| P/CF (x) | 70.1 | 22.3 | 22.3 | 11.4 | 8.0 |
| EV/EBITDA (x) | 107 | 40 | 24 | 14 | 9 |
Peer Comparison
| Company | Ticker | Price | Mkt Cap (USDm) | 3-mth Avg T/O (USDm) | PER Hist (x) | PER FY1 (x) | PER FY2 (x) | EPS FY1 YoY% | EPS FY2 YoY% | 3-Yr EPS CAGR (%) | PEG (x) | Div Yld FY1 (%) | P/B FY1 (x) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| HC International | 8292 HK | 16.46 | 1,407 | 7.8 | 50.0 | 31.8 | 18.0 | 57.2 | 76.7 | 56.9 | 0.6 | 0.0 | 2.82 |
| Adjusted Sector Avg | - | - | - | - | 43.9 | 23.1 | 17.8 | 45.7 | 35.6 | 50.2 | 0.8 | 1.2 | 5.2 |
Strategic Outlook
- Online-to-Offline (O2O) Strategy: HCI's unique O2O strategy is seen as a key strength.
- Paying User Growth: Strong growth in paying users is a positive indicator.
- Future Growth: The upcoming internet financing business is expected to drive future growth.
Risk Factors
- Administrative Expenses: Increased admin expenses affected the recurring net profit.
- Seasonality: The company experienced a slight decline in revenue due to seasonality.
- Margin Improvement: The pace of margin improvement is slower than previously expected.
Conclusion
Despite the slight miss in recurring earnings due to higher administrative expenses, HCI remains a compelling investment opportunity with a strong growth trajectory and a solid O2O strategy. The recent stock price correction provides a good entry point, and the company's upcoming internet financing business is anticipated to contribute significantly to future earnings. The target price of HKD26.54 reflects a 0.9x PEG, which is higher than the sector average, indicating potential undervaluation.
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