Q-TECH(1478.HK)：EARNINGS RECOVERY HAS JUST BEGUN; RAISE TP TO HK$6.47-格隆汇

机构：招银国际
研究员：Alex NG/Hanqing LI

　　Q-tech announced (11 Jul) a positive 1H24 profit alert, stating 400-500% YoY net profit growth (to RMB109-130mn), which tracks 29-34% and 40-47% of our and consensus FY24E estimates. The upbeat results were mainly driven by 1) a rising share of high-end CCM, 2) auto/IoT CCM growth, 3) rising UTR, and 4) better profitability of the associate (Newmax). For 2H24E, we remain positive on Android flagship model launches, high-end spec upgrade, auto/IoT CCM and FPM recovery to drive profitability. We raise FY25-26E EPS by 2-12% to factor in 1H24 earnings, stronger GPM and Newmax’s better profitability. Trading at 14.3x/10.3x FY24/25E P/E, we think the stock is attractive. Maintain BUY with a new TP of HK$6.47, based on a rolled-over 13x FY25E P/E (vs prior 11x P/E). n 1H24 net profit jumped 400-500% on better mix, strong auto/IoT CCM shipments and improving GPM. Q-Tech preannounced 1H24 net profit growth of 400-500% YoY (to RMB109-130mn), mainly due to: 1) global smartphone recovery and share gains in major clients; 2) non-mobile (auto/IoT) CCM growth of 100% YoY with an improving UTR; 3) share of high-end CCM (32M+) sales reaching 49% in 1H24 (vs 42% in FY23); and 4) narrowing loss of an associate (Newmax in our view). Overall, 1H24 CCM growth/high-end ramp-up/GPM recovery exceeded expectations, and we look forward to guidance revision during 1H24 earnings call in Aug.
　　2H24E outlook: high-end spec upgrade, rapid growth in non-mobile CCM, and FPM recovery. Looking ahead to 2H24E, we believe high-end spec upgrade (larger resolution, OIS and periscope) and flagship model launches will boost high-end CCM sales contribution (vs 45% target), driving moderate ASP growth in 2H24E. As for GPM, we expect the recovery to be on track in 2H24E, given rising UTR of 70-80% in FY24E, based on company guidance (vs. 60-70% in 1H24). For non-mobile CCM, we expect rapid growth in auto CCM driven by Huawei and overseas customer orders, while IoT CCM will deliver rapid growth thanks to order wins. For FPM, we are positive on ultrasonic FPM, customers’ orders and rising ASP (by 100%+ YoY) to drive segment recovery.
　　Our FY24-26E EPS are 36-45% above consensus; Raise TP to HK$6.47. We are positive on new model launches and high-end spec upgrade to boost ASP/earnings recovery in 2H24E, while non-mobile CCM and FPM segment recovery is another profit driver in FY24-25E. We raise FY25-26E EPS by 2-12% and lift our TP to HK$6.47, based on a rolled-over 13x FY25E P/E (vs prior 11x).Trading at 14.3x/10.3x FY24/25E P/E, we think the stock is attractive. Maintain BUY.