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Research Report

03/02/2020 18:01

{I-bank focus}Credit Suisse cuts TPs for components sector

[ET Net News Agency, 3 February 2020] Due to the Wuhan coronavirus outbreak, China
downstream production has extended its business resumption post-CNY (Chinese New Year) to
3-10 February subject to various provincial policies and quarantines likely will lead to
China retail sales drops.
Credit Suisse lowered its China smartphone shipment forecast by 12% to 63mn (-14% YoY)
in 1Q and only 1% to 390mn (+5% YoY) in 2020, as the research house thinks the demand will
recover from 2Q onwards.
It expects less impact (1-3% lower 2020 EPS) to Apple supply chain, given positive
guidance and some production in operation during CNY for new product ramp, but larger
impact (4-9% EPS cut) to Chinese smartphone supply chain on demand adjustment and
operating leverage.
Credit Suisse lowered its 2020 EPS forecast by 2% for AAC Technologies (02018) to
reflect lower shipment and more ASP pressure in China smartphones, earnings remain muted
in 1Q despite a low base but pick up strongly in 2Q on production recovery and iPhone SE2.
The new target price of HK$62 (from HK$64) was still based on 22x 2020 EPS. It maintained
its "neutral" call on AAC.
It raised 2019 EPS for Sunny Optical Technology (02382) by 2% to reflect higher
full-year shipment but lowered 2020 EPS by 4% to reflect lower shipment/GM (gross margin).
The new target price of HK$161 (from HK$168) was still based on upcycle P/E of 32x and
2020 EPS. It maintained its "outperform" call on Sunny.
Credit Suisse trimmed its 2020 EPS for Q Technology (01478) by 6% on lower unit/GM to
reflect negative impact in 1H, while keeping 2021 estimates largely the same. Its new
target price of HK$15.6 (from HK$16.6) was still based on 21x 2020 EPS. It maintained its
"outperform" call on Q Tech.
The research house also cut BYDE Electronic (00285) 2020-21 EPS by 8%/4%, to reflect
lower units and GM in the casing and EMS businesses. it maintained its "neutral" call on
BYDE, with a new target price of HK$16.2 (from HK$16.3), based on 15x 2020 EPS.
It trimmed its Tongda Group's (00698) 2020-21 EPS by 9%/3% to reflect lower unit/ASP and
GM. Its new target price of HK$0.8 (from HK$1.1) was based on 6.5x (from 7.5x) and 2020
EPS. Credit Suisse maintained its "neutral" call on Tongda. (KL)

Remark: Real time quote last updated: 02/04/2020 17:59
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