Will it continue its momentum?
According to OSK's research report, Tongda Group's headline net profit came in at HKD300m (+19.9% y-o-y), broadly in line with RHB-OSK and Bloomberg consensus. Also, its gross profit margin (GPM) was 21.4% (FY11:19.2%)while the final DPS declared was HKD0.012, giving a full-year payout ratio of 31.2% (FY11:31.8%).
Revenue from handset casings only achieved a modest 9.6% y-o-y increase. As highlighted in our 25 Feb 2013 report, this was due to reduced sales to ZTE (763 HK, NR) as Tongda chose to focus on high-end smartphone models, which ZTE was slow to launch.
However, management expects a stronger performance this year as ZTE ramps up launches of high-end smartphones and as sales to Huawei and Lenovo (992HK, NR) continue to grow rapidly. In fact, handset casings revenue increased by a faster 20% y-o-y in 2M13.
As the GPM of smartphone casings is higher than others, we forecastthe group’s GPM to improve further to 21.7%/22.0% in FY13/FY14.
We trim our core EPS forecasts for FY13-14 by 1.4%/1.6%. Our TP edges down to HKD0.97 (from HKD0.98 previously) based on an unchanged 11x FY13 PER (against its current 6.5x FY13 PER). The counter also offers a solid 5.1% FY13F yield.
Do you know more about this story? Contact us anonymously through this link.