标题：GoertekComments on 2015 Results & 1Q2016 Earnings Preannouncement：Earnings reversal around the corner on multiple tailwinds
发布日期：2016-04-08 10:32:18
内容： 2015 net profit slid 25% YoY on downbeat business climate forsmart phones. GoerTek reported net profit of Rmb1.25bn in 2015(-24.5%YoY), slightly below preliminary earnings guidance ofRmb1.28bn; operating revenue came in at Rmb13.7bn (+7.5%YoY);and its gross profit margin (GPM) was 24.81%, 2.59 percentage pointslower than a year ago. Specifically, the segment of electro-acousticcomponents generated operating revenue of Rmb9.5bn (-3% YoY), witha GPM of 25.18% (down by 3.32 percentage points YoY); and thesegment of electronic components contributed operating revenue ofRmb3.8bn (+46% YoY), with a GPM of 23.88% (up by 0.65 percentagepoint YoY). In-line 1Q16 earnings guidance (-10%-30% YoY) seems unlikely tohave near-term impact on the stock. GoerTek guided 1Q16net profitof Rmb190mn-240mn (-10%-30% YoY). This is aligned with consensusexpectation (-20% YoY), as investors have fully factored in thedownbeat outlook of smart phones in 2015 and in particular thepersistently pessimistic view of the iPhone6S sales. Therefore, weestimate that the downbeat guidance seems unlikely to negativelyimpact the stock price in the near term. We expect positive growth in 2Q16 net profit, which will helpupward revisions to consensus estimate. In contrast to theconsensus verdict of continued YoY decline in 2Q16 earnings, our latestestimates indicate that GoerTek will likely post positive net profit growthin 2Q16, given: (1) We estimate the YoY decline in the 2Q sales ofiPhone6S will be notably smaller, as the sequential drop in the sales willbe smaller than a year ago; and as iPhone 6S enters the final leg of itslife cycle, the unit price of its electro-acoustic components tends to fallby a smaller margin; and (2) The production of Sonyˇs PlayStationVirtual Reality (VR) headsets will begin in 2Q16. We think investorshave underestimated GoerTekˇs 2Q16 earnings, and forecast thatconsensus estimates will embrace upward revisions before the end ofApril, when the Company announces its 1Q earnings as well as theirguidance of 2Q earnings. Unit price hikes will surprise on the upside due to substantiallyupgraded speaker modules for iPhone7. Upgrades in speakermodules of iPhone7 (speaker box) is largely due to: i) The waterproofdesign of iPhone7 requires a redesigned speaker box; and ii) Theloudspeaker of iPhone 7 will likely be available on both the top and thebottom side, an upgrade from being available on the bottom side only.Our channel checks of the supply chain indicate that such upgrades willlead to unit price hikes of the magnitude well above marketexpectations. We estimate price hikes will be reflected in 3Q16earnings, and consensus estimate for the full-year earnings will subsequently be revised higher. We are upbeat on the full-year earnings given ¨a potential bottoming-out cyclically + the onset oforganic growth from VR¨. Potential risks: New businesses miss expectations; and disappointing progress in the VR industry. Earnings estimates, valuation and rating. We believe investors have significantly underestimated thecapabilities of GoerTek in the VR optical lens and the underlying algorithm. Investors tend to seeGoerTek as a play of ¨cell phone components + OEM manufacturing〃 that justifies undemandingvaluation, and have overlooked its strong capabilities in designing VR devices. We project huge potentialin the VR lens market, which could be at least comparable to that of cell phone lenses in five years. Assuch, we maintain the Companyˇs 2016E/17E EPS at Rmb1.14/1.40, and project 2018E EPS ofRmb1.74, equivalent to 2016E-18E PE of 23x/19x/15x. Reiterate BUY with a TP of Rmb40.
发布日期：2016-04-08 10:32:18
内容： 2015 net profit slid 25% YoY on downbeat business climate forsmart phones. GoerTek reported net profit of Rmb1.25bn in 2015(-24.5%YoY), slightly below preliminary earnings guidance ofRmb1.28bn; operating revenue came in at Rmb13.7bn (+7.5%YoY);and its gross profit margin (GPM) was 24.81%, 2.59 percentage pointslower than a year ago. Specifically, the segment of electro-acousticcomponents generated operating revenue of Rmb9.5bn (-3% YoY), witha GPM of 25.18% (down by 3.32 percentage points YoY); and thesegment of electronic components contributed operating revenue ofRmb3.8bn (+46% YoY), with a GPM of 23.88% (up by 0.65 percentagepoint YoY). In-line 1Q16 earnings guidance (-10%-30% YoY) seems unlikely tohave near-term impact on the stock. GoerTek guided 1Q16net profitof Rmb190mn-240mn (-10%-30% YoY). This is aligned with consensusexpectation (-20% YoY), as investors have fully factored in thedownbeat outlook of smart phones in 2015 and in particular thepersistently pessimistic view of the iPhone6S sales. Therefore, weestimate that the downbeat guidance seems unlikely to negativelyimpact the stock price in the near term. We expect positive growth in 2Q16 net profit, which will helpupward revisions to consensus estimate. In contrast to theconsensus verdict of continued YoY decline in 2Q16 earnings, our latestestimates indicate that GoerTek will likely post positive net profit growthin 2Q16, given: (1) We estimate the YoY decline in the 2Q sales ofiPhone6S will be notably smaller, as the sequential drop in the sales willbe smaller than a year ago; and as iPhone 6S enters the final leg of itslife cycle, the unit price of its electro-acoustic components tends to fallby a smaller margin; and (2) The production of Sonyˇs PlayStationVirtual Reality (VR) headsets will begin in 2Q16. We think investorshave underestimated GoerTekˇs 2Q16 earnings, and forecast thatconsensus estimates will embrace upward revisions before the end ofApril, when the Company announces its 1Q earnings as well as theirguidance of 2Q earnings. Unit price hikes will surprise on the upside due to substantiallyupgraded speaker modules for iPhone7. Upgrades in speakermodules of iPhone7 (speaker box) is largely due to: i) The waterproofdesign of iPhone7 requires a redesigned speaker box; and ii) Theloudspeaker of iPhone 7 will likely be available on both the top and thebottom side, an upgrade from being available on the bottom side only.Our channel checks of the supply chain indicate that such upgrades willlead to unit price hikes of the magnitude well above marketexpectations. We estimate price hikes will be reflected in 3Q16earnings, and consensus estimate for the full-year earnings will subsequently be revised higher. We are upbeat on the full-year earnings given ¨a potential bottoming-out cyclically + the onset oforganic growth from VR¨. Potential risks: New businesses miss expectations; and disappointing progress in the VR industry. Earnings estimates, valuation and rating. We believe investors have significantly underestimated thecapabilities of GoerTek in the VR optical lens and the underlying algorithm. Investors tend to seeGoerTek as a play of ¨cell phone components + OEM manufacturing〃 that justifies undemandingvaluation, and have overlooked its strong capabilities in designing VR devices. We project huge potentialin the VR lens market, which could be at least comparable to that of cell phone lenses in five years. Assuch, we maintain the Companyˇs 2016E/17E EPS at Rmb1.14/1.40, and project 2018E EPS ofRmb1.74, equivalent to 2016E-18E PE of 23x/19x/15x. Reiterate BUY with a TP of Rmb40.
