Investment Rating - The report maintains a "BUY" rating for Wingtech with a target price adjusted to RMB52, reflecting a potential upside of 43.8% from the current price of RMB36.17 [1][3]. Core Insights - Wingtech's Q3 2024 revenue reached RMB19.6 billion, marking a record quarterly revenue since 2020, with a year-over-year growth of 28.7% and a quarter-over-quarter growth of 12.9%, surpassing Bloomberg consensus by 16% [1]. - The gross profit margin (GPM) improved to 11% in Q3 2024, up from 9.2% in Q1 and 9.7% in Q2 2024, exceeding the consensus estimate of 10.5% [1]. - Net profit turned positive at RMB274 million in Q3 2024, recovering from a loss of RMB3 million in Q2 2024 [1]. - Both the ODM and semiconductor segments showed sequential growth in sales and GPM, indicating a gradual recovery from the cyclical trough [1]. Financial Summary - Revenue for FY24E is projected at RMB72.3 billion, with an 18.1% year-over-year growth, followed by RMB80.2 billion in FY25E and RMB84.8 billion in FY26E [2][8]. - Gross margin is expected to improve from 10.4% in FY24E to 14.8% in FY26E, while net profit is forecasted to recover from RMB911 million in FY24E to RMB3.8 billion in FY26E [2][8]. - The report revises EPS forecasts for FY25E and FY26E upwards by 22% and 15% respectively, reflecting further margin improvement [1]. Segment Performance - Semiconductor sales in Q3 2024 were RMB3.8 billion, accounting for 20% of total revenue, with a GPM returning to 40% [1]. - ODM sales reached RMB15.7 billion in Q3 2024, up 46% year-over-year and 15% quarter-over-quarter, with a GPM increase to 3.8% [1]. - The smartphone/tablet segment within ODM began to generate profit this quarter, while home appliances have been profitable for two consecutive quarters [1]. Valuation Metrics - The adjusted target price of RMB52 is based on a 25x P/E ratio for 2025E, which is 0.5 standard deviations below the one-year historical forward P/E [1][3]. - The report indicates that the worst has passed for both segments, with a turning point anticipated in the near future [1].

Investment Rating - The report maintains a "Buy" rating for the company and adjusts the target price to RMB 52, based on a P/E ratio of 25 times the estimated earnings for FY2025, which is 0.5 standard deviations below the historical average [1][2]. Core Insights - The company reported a record quarterly revenue of RMB 19.6 billion for Q3 2024, representing a year-on-year growth of 28.7% and a quarter-on-quarter growth of 12.9%, exceeding Bloomberg consensus estimates by 16% [1]. - The gross margin improved to 11%, up from 9.2% and 9.7% in the first and second quarters of 2024, respectively, and net profit turned positive at RMB 274 million after a loss in the previous quarter [1]. - Both the ODM and semiconductor segments showed sequential sales growth, indicating a recovery from cyclical lows [1]. Revenue and Profitability Forecast - Revenue is projected to grow from RMB 61.2 billion in FY2023 to RMB 72.3 billion in FY2024, reflecting an 18.1% year-on-year increase [3]. - The gross margin is expected to decline to 10.4% in FY2024 but is projected to recover to 14.8% by FY2026 [3]. - Net profit is forecasted to decrease to RMB 911 million in FY2024 but is expected to rebound significantly to RMB 2.6 billion in FY2025 [3]. Segment Performance - The ODM segment achieved sales of RMB 15.7 billion in Q3 2024, a 46% year-on-year increase, with smartphones and tablets contributing approximately 50% of the revenue [2]. - The semiconductor sales reached RMB 3.8 billion, accounting for 20% of total revenue, with a gross margin of 40% [1]. - The automotive sector contributed about 60% to semiconductor sales, driven by strong domestic demand [1]. Market Outlook - The report suggests that the worst periods for both business segments are over, indicating an impending turning point [1]. - Seasonal factors are expected to lead to a slight decline in semiconductor sales in Q4 2024, with a stable gross margin forecasted at 40.5% [1].

28 Oct 2024 Earnings Summary CMB International Global Markets | Equity Research | Company Update Topsports (6110 HK) More time is needed despite the attractive yield 1H25 results were inline with the profit warning, but the underlying was more fragile than we previously thought. Given the worsening outlook in 2H25E and time Nike may take to turn around (might be 1 to 2 years), we downgrade Topsports' rating to HOLD, even though it has a 8% FY2/25E yield. Topsports (6110 HK) reported inline 1H25 results. Top ...

Investment Rating - The report maintains a BUY rating for the company, indicating a potential return of over 15% over the next 12 months [2][6][17]. Core Views - The company has slightly exceeded retail sales growth expectations in 3Q24, but there are concerns regarding weak demand and inventory levels for FY24E. A gradual improvement into FY25E is anticipated [2][6]. - The management has reiterated a low-single-digit sales growth and low-teen net profit margin for FY24E, but the report adopts a more conservative stance, projecting only 2% sales growth and an 11% net profit margin [2][6]. - The company is focused on cost savings and efficiency improvements, including reductions in advertising and promotional expenses and store closures, but there are concerns about operating profit margins due to increased retail discounts and fixed operating expenses [2][6]. Financial Summary - Revenue is projected to grow from RMB 28,162 million in FY24E to RMB 30,195 million in FY25E, reflecting a growth rate of 7.2% [3][11]. - Net profit is expected to increase from RMB 3,103 million in FY24E to RMB 3,466 million in FY25E, with a net profit margin of 11.5% [3][11]. - The company’s earnings per share (EPS) is forecasted to rise from RMB 1.19 in FY24E to RMB 1.33 in FY25E [3][11]. Valuation Metrics - The target price for the company has been raised to HK$19.58, based on a 13x FY25E P/E ratio, while the current trading P/E is 11x [4][6]. - The report highlights a dividend yield of 4% for FY25E, which is considered attractive [2][6]. Market Performance - The company’s stock has shown a 23.3% upside potential from the current price of HK$15.88 to the target price [4]. - Recent retail sales trends indicate a mixed performance, with e-commerce growth being more resilient compared to offline sales [2][6].

Investment Rating - The report maintains a "Buy" rating for Great Wall Motors [1][2] Core Views - Great Wall Motors' Q3 2024 core earnings align with estimates, and overseas sales growth is expected to support profitability in FY25 [1] - The company plans to launch seven new models in FY25, which may positively impact sales in the Chinese market [1] - The report anticipates a 29% year-on-year increase in overseas sales, targeting 580,000 units in FY25 [1][2] - The net profit for Q3 2024 was RMB 3.4 billion, which was 5.7 billion lower than expected due to unexpected foreign exchange losses and delays in VAT refunds [1][2] Financial Summary - Revenue projections for FY25 have been raised from 1.3 million units to 1.36 million units, with a 3% growth expected in China due to new model launches [2] - The net profit forecast for FY25 has been increased by 7% to RMB 14 billion, while the FY24 net profit estimate has been reduced by 5% [2] - The target price has been adjusted from HKD 14.00 to HKD 17.00, reflecting improved market sentiment [2][4] Performance Metrics - Revenue (in million RMB) is projected to grow from 204,470 in FY24 to 236,000 in FY25, and further to 258,850 in FY26 [3][10] - Net profit is expected to increase from 12,768 in FY24 to 14,023 in FY25, and then to 13,887 in FY26 [3][10] - The gross margin is projected to be 20.0% in FY24, improving to 20.3% in FY25, before slightly declining to 19.7% in FY26 [8][10] Market Position - Great Wall Motors aims to enhance its overseas market presence through local assembly plants and expects stable profit margins in overseas markets despite increasing competition by FY26 [1][2] - The company is focusing on launching new models in the electric vehicle segment, which is seen as crucial for maintaining competitiveness in the evolving automotive landscape [1][2]

Investment Rating - Maintain BUY rating for Great Wall Motor with a target price raised from HK$14.00 to HK$17.00, indicating an upside potential of 18.2% from the current price of HK$14.38 [2][3]. Core Insights - Great Wall Motor's 3Q24 core earnings were in line with estimates, with revenue about 5% higher than previous forecasts, although net profit was impacted by unexpected foreign exchange losses and VAT refund delays [2]. - The company is expected to achieve overseas sales growth of 29% YoY in FY25E, supported by new models and increased local content [2]. - A decline in sales volume in China is anticipated for FY24E, but the introduction of seven new models in FY25E could revitalize sales [2]. Financial Performance Summary - Revenue is projected to grow from RMB 173,212 million in FY23A to RMB 204,470 million in FY24E, reflecting an 18.0% YoY growth [1]. - Net profit is expected to rebound significantly from RMB 7,021.6 million in FY23A to RMB 12,768.3 million in FY24E, marking an 81.8% increase [1]. - The company's gross margin is projected to stabilize around 20.0% in FY24E, with a slight narrowing expected in FY26E due to increased competition in overseas markets [2]. Earnings Revisions - FY25E net profit forecast has been revised up by 7% to RMB 14 billion, while FY24E net profit has been cut by 5% due to the earnings miss in 3Q24 [2][5]. - Sales volume forecast for FY25E has been increased from 1.3 million units to 1.36 million units, indicating a 3% growth in China [2]. Valuation Metrics - The P/E ratio is projected to decrease from 16.5x in FY23A to 9.1x in FY24E, reflecting improved earnings expectations [1][7]. - The dividend yield is expected to rise from 2.2% in FY23A to 3.9% in FY24E, indicating a more attractive return for investors [1][7].

Investment Rating - The report maintains a "BUY" rating for Goertek with a new target price (TP) of RMB27.39, reflecting a 16.1% upside from the current price of RMB23.60 [3][9]. Core Insights - Goertek's 3Q24 revenue and net profit increased by 2% and 138% year-over-year (YoY), respectively, surpassing market expectations due to improved efficiency and cost control [1][4]. - The company is expected to continue its profitability recovery into 4Q24 and FY25E, driven by strong demand for AR/VR and gaming products, including launches from major players like Meta and Sony [1][9]. - Earnings estimates for FY24-26E have been raised by 0-6% to account for better operating leverage and expense control [1][5]. Financial Performance Summary - **Revenue**: FY24E revenue is projected at RMB103,204 million, with a YoY growth of 4.7%. For FY25E, revenue is expected to reach RMB116,686 million, reflecting a 13.1% growth [2][12]. - **Net Profit**: FY24E net profit is estimated at RMB2,868 million, showing a significant YoY increase of 163.6%. For FY25E, net profit is projected at RMB3,725 million, a 29.9% growth [2][12]. - **Earnings Per Share (EPS)**: The reported EPS for FY24E is RMB0.84, with a substantial increase of 163.6% YoY. For FY25E, EPS is expected to be RMB1.10, a 29.9% increase [2][5]. Margin Analysis - **Gross Profit Margin (GPM)**: The GPM for 3Q24 improved to 11.4%, up 1.2 percentage points YoY, attributed to better efficiency and scale effects [1][4]. - **Operating Profit Margin (OPM)**: The OPM for FY24E is projected at 3.1%, increasing to 3.6% in FY25E [5][6]. Market Position and Outlook - Goertek is well-positioned to capitalize on the upcoming product cycles in the XR and gaming segments, with expected net profit growth of 164% and 30% YoY for FY24 and FY25, respectively [1][9]. - The company’s leadership in the XR/acoustics/gaming segments is anticipated to drive market share gains as the industry recovers [9][10].

Investment Rating - The report initiates coverage on EDA Group Holdings with a "BUY" rating, setting a target price of HK$3.57 per share, indicating a potential upside of 53.2% from the current price of HK$2.33 [2]. Core Insights - EDA Group is positioned as a leading provider of end-to-end supply chain solutions for B2C export e-commerce, leveraging its proprietary EDA Cloud platform to enhance operational efficiency and customer connectivity [13][25]. - The B2C export e-commerce supply chain solutions market is projected to grow significantly, with a market size of RMB402.4 billion in 2022 and an expected CAGR of 9.1% from 2022 to 2027, driven by the increasing adoption of pre-sale stocking models [8][39]. - EDA's technology capabilities and asset-light model, which includes self-operated and partnered warehouses, provide a competitive edge, allowing for scalable growth and improved profitability [10][24]. Company Overview - EDA Group Holdings is a comprehensive supply chain solutions provider for e-commerce vendors, offering services that include cross-border logistics, overseas warehousing, and fulfillment delivery, all integrated into the EDA Cloud platform [13]. - The company primarily utilizes a pre-sale stocking model, which allows e-commerce vendors to store products in overseas warehouses, facilitating faster and more reliable delivery to end consumers [34][39]. Financial Performance - EDA's revenue for FY22 was RMB709 million, with a projected revenue growth of 70.6% to RMB1,209 million in FY23, and further growth to RMB2,776 million by FY26, reflecting a CAGR of 31.9% [4]. - Adjusted net profit is expected to grow from RMB36.8 million in FY23 to RMB222.6 million by FY26, indicating a CAGR of 34.3% [4]. Market Analysis - The B2C export e-commerce market in China has seen rapid growth, with a GMV of RMB3.2 trillion in 2022, and is expected to reach RMB6.0 trillion by 2027, driven by improved payment systems and increased online shopping habits [30]. - The supply chain solutions market is fragmented, with over 4,000 players, and EDA ranks seventh among providers utilizing the pre-sale stocking model, holding a market share of approximately 0.4% [9]. Competitive Advantages - EDA Cloud platform serves as a key competitive advantage, providing a seamless supply chain experience and enabling efficient resource allocation among logistics and supply chain service providers [10][25]. - The company has established long-term relationships with high-quality customers, with an average business relationship duration of four years with its five largest customers, enhancing customer retention and satisfaction [12][26]. Growth Catalysts - Key growth catalysts for EDA include the mitigation of geopolitical risks, expansion of partnerships with leading e-commerce platforms, and stronger-than-expected earnings growth [8].

Investment Rating - The report initiates coverage on EDA Group with a "Buy" rating and sets a target price of HK$3.57, representing a 53.2% upside from the current price of HK$2.33 [1]. Core Insights - EDA Group is positioned to benefit from the rapid growth of the B2C export e-commerce market, with a projected revenue CAGR of 31.9% from 2023 to 2026 and an adjusted net profit CAGR of 34.3% [1][2]. - The company ranks seventh among B2C export e-commerce supply chain solution providers in mainland China, with a market share of approximately 0.4% as of 2022 [1][6]. - EDA's cloud platform is a key competitive advantage, enhancing operational efficiency and enabling seamless integration of logistics and supply chain services [1][7]. Summary by Sections Company Overview - EDA Group provides end-to-end supply chain solutions for e-commerce vendors, integrating cross-border logistics, overseas warehousing, and fulfillment services into its proprietary EDA Cloud platform [10][15]. Market Analysis - The B2C export e-commerce supply chain solutions market experienced a CAGR of 28.8% from 2017 to 2022, reaching a market size of RMB 402.4 billion in 2022, with expectations to grow to RMB 621.3 billion by 2027 [5][27]. - The market is characterized by a shift towards pre-sale inventory models, which are expected to grow at a CAGR of 14.5% from 2022 to 2027, driven by improved shopping experiences and faster delivery times [5][27]. Financial Forecast - Revenue projections for EDA indicate growth from RMB 709 million in FY22 to RMB 2,776 million by FY26, with a significant increase in adjusted net profit from RMB 36.8 million in FY22 to RMB 222.6 million by FY26 [2][4]. Competitive Advantages - EDA's cloud platform is highlighted as a critical asset, facilitating efficient connections between logistics providers and B2C e-commerce platforms, thus improving operational efficiency [7][20]. - The company maintains long-term strategic partnerships with major clients, enhancing its ability to deliver differentiated value and ensuring stable revenue streams [8][22]. Customer Base - EDA has served over 850 clients, with a growing number of core customers contributing significantly to its revenue, indicating a robust and expanding customer base [8][22].

Investment Rating - The report maintains a "BUY" rating for the company, with an adjusted target price (TP) of RMB186, reflecting a 19.1% upside from the current price of RMB156.16 [1][3]. Core Insights - The company reported a solid performance in Q3, with revenue increasing by 115.2% year-over-year (YoY) and 9.4% quarter-over-quarter (QoQ), while net profit rose by 104.4% YoY and 3.3% QoQ, aligning with expectations [1]. - Management indicated that the sequential revenue growth slowdown was due to supply chain bottlenecks and unfavorable USD/RMB exchange rate fluctuations, but double-digit growth was still achieved when excluding these impacts [1]. - Strong demand for high-speed optical products, particularly 400G and 800G, is expected to drive growth, with mass shipments of 1.6T products anticipated in the coming months [1]. - Price increases in the optical supply chain driven by AI demand may lead to higher raw material costs, but the company is well-positioned to pass these costs onto customers due to strong product demand [1]. Financial Performance Summary - Revenue is projected to grow from RMB24.27 billion in 2024E to RMB34.15 billion in 2025E, representing a 40.7% increase [7]. - Net profit is expected to rise from RMB5.28 billion in 2024E to RMB7.63 billion in 2025E, reflecting a 44.5% growth [7]. - Gross profit margin (GPM) is expected to remain stable around 33.3% in Q3 2024, while net profit margin (NPM) is projected at 21.4% [1]. Market Position and Shareholder Structure - The company has a significant shareholding structure, with Shandong Zhongji Investment Holdings Co. holding 11.3% and Wang Weixiu holding 6.2% [3]. - The stock is currently trading at 22.5x 2025E P/E, which is below its 5-year historical average of 26.9x [1][3].