标题：Apex TechnologyComments on 2015 Annual Results：Core business profit beat slightly effects of consolidation yet to be seen
发布日期：2016-03-21 16:00:54
内容： Solid operation of core businesses (printing chip and compatibleprinter consumables), which both beat their earningscommitments. In 2015, the Company registered turnover ofRmb2,049,020,100 (+22.03% YoY) and net profit attributable to theListCo of Rmb281,260,800 (-17.92% YoY). The decline in net profit wasmainly due to increased depreciation and amortization of acquiredasset, SCC, based on fair value and initial R&D input into aproceeds-financed CPU project. Excluding these one-off items, theCompany maintained a steady growth of 20% in both operating incomeand profit. The shiny spot lies in its core businesses, chip andconsumables. The former raked in profit of Rmb242,084,800 (+15.64%YoY) and the latter Rmb175,434,800 (+15.80% YoY), both beating theirprofit commitments. Building a closed loop eco-system based on IC through intensivelyconsolidating resources along the entire value chain. In 2015, the Company actively sought for inorganic growth, eitheracquiring or taking controlling stakes in SCC, consumable assetfrom its parent company, ONGKONG SANDISK and Sec-Chip.Enhanced strengths through consolidating core-business-relatedassets are anticipated to be perceived in 2016 over time. Goingahead, the Company will likely to build a closed-loop eco-systembased on printer resources of its parent company, expanding fromgeneral consumables and chips to original consumables andprinter chips and escalating entry barriers through strongerbargaining power gained from presence along the entire valuechain. We expect in 2016 the Company to continue carrying outM&As of relevant IC design houses and consumablemanufacturers with its advantages as a listing vehicle. Synergies yet to be seen and operating income of SCC likely toimprove. In July 2015, Apex took over SCC (an international giantproducer of general printing consumables and chips). SCC postedflat turnover for 2015 YoY due to price war and the acquisition. In2016, its ASPs will likely to tick up to levels saw in 2014 with marketshares expanding, product and operating costs declining onrelevant control measures in place and launch of new productswhen consolidation between the Company and it in technology andmarkets are completed. As effects of the consolidation have yet tobe seen, SCC will be one of the key factors that would boost theCompany’s profitability. Localized printer strategy (information security and independentlydeveloped/controllable chips) paints the blueprint for theCompany’s promising future. ZTE being sanctioned by the US has already rang the alarm bell for Chinese players. Going ahead, localized manufacturing of printers andequipping them with chips produced by local makers will be inevitable. In 2015, the National IntegratedCircuit Industry Investment Fund has invested Rmb500mn in the Companyˇs CPU project, underscoringthe Companyˇs strategic significance in localization of printing chips in China. Seinetec, its parent group,has an annual shipment of ¨PANTUM〃 printers totaling 200,000 units while actively seeking for inorganicgrowth. The printer business of Seinetec implies huge opportunities for the Company. Risks: intensifying competition in printing sector, disappointing chip R&D etc. Earnings forecast, valuation and investment rating. The Company is the sole printing informationsecurity play in the A share market that boasts huge upside potential in the long run) and we remainupbeat on its strength in IC designing and growth potential in printing segment, forecasting its 2016-18net profit to be Rmb508/699/849mn respectively. We adjust its 2016-18E EPS estimates toRmb0.80/1.11/1.34 from Rmb0.97/1.30/NA. We apply 45x 2017E PE to it given average valuation in ICsegment and expectation on inorganic growth, arrive at the TP of Rmb49.95 and reiterate BUY rating.
发布日期：2016-03-21 16:00:54
内容： Solid operation of core businesses (printing chip and compatibleprinter consumables), which both beat their earningscommitments. In 2015, the Company registered turnover ofRmb2,049,020,100 (+22.03% YoY) and net profit attributable to theListCo of Rmb281,260,800 (-17.92% YoY). The decline in net profit wasmainly due to increased depreciation and amortization of acquiredasset, SCC, based on fair value and initial R&D input into aproceeds-financed CPU project. Excluding these one-off items, theCompany maintained a steady growth of 20% in both operating incomeand profit. The shiny spot lies in its core businesses, chip andconsumables. The former raked in profit of Rmb242,084,800 (+15.64%YoY) and the latter Rmb175,434,800 (+15.80% YoY), both beating theirprofit commitments. Building a closed loop eco-system based on IC through intensivelyconsolidating resources along the entire value chain. In 2015, the Company actively sought for inorganic growth, eitheracquiring or taking controlling stakes in SCC, consumable assetfrom its parent company, ONGKONG SANDISK and Sec-Chip.Enhanced strengths through consolidating core-business-relatedassets are anticipated to be perceived in 2016 over time. Goingahead, the Company will likely to build a closed-loop eco-systembased on printer resources of its parent company, expanding fromgeneral consumables and chips to original consumables andprinter chips and escalating entry barriers through strongerbargaining power gained from presence along the entire valuechain. We expect in 2016 the Company to continue carrying outM&As of relevant IC design houses and consumablemanufacturers with its advantages as a listing vehicle. Synergies yet to be seen and operating income of SCC likely toimprove. In July 2015, Apex took over SCC (an international giantproducer of general printing consumables and chips). SCC postedflat turnover for 2015 YoY due to price war and the acquisition. In2016, its ASPs will likely to tick up to levels saw in 2014 with marketshares expanding, product and operating costs declining onrelevant control measures in place and launch of new productswhen consolidation between the Company and it in technology andmarkets are completed. As effects of the consolidation have yet tobe seen, SCC will be one of the key factors that would boost theCompany’s profitability. Localized printer strategy (information security and independentlydeveloped/controllable chips) paints the blueprint for theCompany’s promising future. ZTE being sanctioned by the US has already rang the alarm bell for Chinese players. Going ahead, localized manufacturing of printers andequipping them with chips produced by local makers will be inevitable. In 2015, the National IntegratedCircuit Industry Investment Fund has invested Rmb500mn in the Companyˇs CPU project, underscoringthe Companyˇs strategic significance in localization of printing chips in China. Seinetec, its parent group,has an annual shipment of ¨PANTUM〃 printers totaling 200,000 units while actively seeking for inorganicgrowth. The printer business of Seinetec implies huge opportunities for the Company. Risks: intensifying competition in printing sector, disappointing chip R&D etc. Earnings forecast, valuation and investment rating. The Company is the sole printing informationsecurity play in the A share market that boasts huge upside potential in the long run) and we remainupbeat on its strength in IC designing and growth potential in printing segment, forecasting its 2016-18net profit to be Rmb508/699/849mn respectively. We adjust its 2016-18E EPS estimates toRmb0.80/1.11/1.34 from Rmb0.97/1.30/NA. We apply 45x 2017E PE to it given average valuation in ICsegment and expectation on inorganic growth, arrive at the TP of Rmb49.95 and reiterate BUY rating.
