标题：Hongfa Technology2015 results missed expectations
发布日期：2016-04-05 10:15:54
内容： Results missed expectations In 2015, revenue rose 4.55% to Rmb4.25bn and net profit attributable to shareholders climbed 9.87% to Rmb472mn,lower than market consensus. The company decided to distribute cash dividend of Rmb2 per ten shares (tax inclusive). Gross margin expanded notably by 2.51ppt thanks to improved product mix and increased percentage ofautomated product lines. Expense ratio went up due to a sharp increase in R&D spending. In 2015, overallexpense ratio rose 0.33ppt and administrative expense ratio climbed 1.49ppt because R&D spending jumped 16.6%YoY to Rmb207mn, outpacing revenue growth. Trends to watch Auto/power relays and low-voltage apparatus could extend strong growth. 1) Auto relays: YoY growth in1H15 reached 33.5% mainly driven by supply to multiple auto makers. At present, Hongfa has become a supplier tomajor automakers in China. In overseas markets, Hongfa could start supply to BMW and Audi in 2016. 2) Power relays:With breakthrough in overseas market, Hongfa has become a key supplier in France and South Korea and the supplyvolume increased sharply in 2015 and could continue to rise in 2016. 3) Low-voltage apparatus: Hongfa has developed35 products in eight series and will continue to increase investment to make this business a new growth driver. Growth of general relays will remain under pressure due to slower economic growth. General relays are mainlyused by home appliance and industrial control companies. In the industrial control market, Hongfa is now replacingPanasonic and developing large clients to offset weak demand from the household appliance sector. Earnings forecast We trim our 2016 revenue/earnings forecast by 4%/15% to Rmb4.89bn/567mn, and introduce 2017 revenue and profitforecast of Rmb5.36bn/667mn. Valuation and recommendation Maintain BUY. The stock’s 2016/17e P/E is at 29x/32x respectively. We cut TP by 17.8% to Rmb30 (28x 2016eP/E) given declined valuation of the whole sector. Risks Volatile exchange rate and raw material prices.
发布日期：2016-04-05 10:15:54
内容： Results missed expectations In 2015, revenue rose 4.55% to Rmb4.25bn and net profit attributable to shareholders climbed 9.87% to Rmb472mn,lower than market consensus. The company decided to distribute cash dividend of Rmb2 per ten shares (tax inclusive). Gross margin expanded notably by 2.51ppt thanks to improved product mix and increased percentage ofautomated product lines. Expense ratio went up due to a sharp increase in R&D spending. In 2015, overallexpense ratio rose 0.33ppt and administrative expense ratio climbed 1.49ppt because R&D spending jumped 16.6%YoY to Rmb207mn, outpacing revenue growth. Trends to watch Auto/power relays and low-voltage apparatus could extend strong growth. 1) Auto relays: YoY growth in1H15 reached 33.5% mainly driven by supply to multiple auto makers. At present, Hongfa has become a supplier tomajor automakers in China. In overseas markets, Hongfa could start supply to BMW and Audi in 2016. 2) Power relays:With breakthrough in overseas market, Hongfa has become a key supplier in France and South Korea and the supplyvolume increased sharply in 2015 and could continue to rise in 2016. 3) Low-voltage apparatus: Hongfa has developed35 products in eight series and will continue to increase investment to make this business a new growth driver. Growth of general relays will remain under pressure due to slower economic growth. General relays are mainlyused by home appliance and industrial control companies. In the industrial control market, Hongfa is now replacingPanasonic and developing large clients to offset weak demand from the household appliance sector. Earnings forecast We trim our 2016 revenue/earnings forecast by 4%/15% to Rmb4.89bn/567mn, and introduce 2017 revenue and profitforecast of Rmb5.36bn/667mn. Valuation and recommendation Maintain BUY. The stock’s 2016/17e P/E is at 29x/32x respectively. We cut TP by 17.8% to Rmb30 (28x 2016eP/E) given declined valuation of the whole sector. Risks Volatile exchange rate and raw material prices.
