| RESEARCH 5 Apr, 2024 EEKA Fashion | 03709.HK COMPANY UPDATE Stable development with new catalysts H F NGO, Brian, CFA STOCK RATING TARGET PRICE SENIOR ANALYST BUY HK$ 16.78 brianngo@westbullsec.com.hk EEKA Fashion (03709.HK) reported a YoY 22.1% growth in revenue to RMB 6.9bn, and its gross +852 3896 2965 margin slightly surged to 75.3%, leading to a YoY 121.8% increment in the bottom-line. The Group 2701 – 2703, 27/F, Infinitus Plaza, 199 Des Voeux Rd also announced a dividend of HKD 0.7/share, amounting ...

Investment Rating - The report assigns a "Buy" rating to the company, with a target price of HK$ 3.31, down from a previous target of HK$ 3.73 [2][5]. Core Insights - The company reported revenues and net profit attributable to the parent company of RMB 3.31 billion and RMB 510 million, respectively, slightly exceeding expectations [2]. - Strong performance from applications like Sugo and TopTop offset the weak contribution from Mico, which saw a year-on-year decline of over 30% [2][5]. - The MENA market is identified as a key growth driver, with Sugo and TopTop revenues growing approximately 3x and 2x year-on-year [2]. - The company aims to develop two social applications with monthly revenues exceeding USD 10 million over the next three years [2]. Financial Summary - Total revenue projections for the upcoming years are as follows: RMB 3,307.8 million in 2023, RMB 4,190.7 million in 2024, RMB 4,542.0 million in 2025, and RMB 4,880.5 million in 2026, reflecting a year-on-year growth of 18.1% in 2023 and 26.7% in 2024 [9]. - Gross profit is expected to reach RMB 1,722.1 million in 2025, with a gross margin of 51.1% [9]. - Net profit projections are RMB 601.8 million in 2025, with a year-on-year growth of 3.7% [9]. Market Position and Competitors - The report highlights that Mico's performance remains weak, and new games and social applications have not yet achieved breakeven [17]. - The company is compared with peers in the gaming and social media sectors, indicating a competitive landscape [17].

Investment Rating - The investment rating for Newborn Town (09911.HK) is "BUY" with a target price of HK$ 3.31, reduced from the previous target price of HK$ 3.78 [20][28]. Core Insights - Newborn Town reported a total revenue of RMB 3.3 billion and a profit attributable to shareholders of RMB 512.8 million, slightly exceeding estimates. The strong performance of apps like Sugo and TopTop in the MENA market contributed significantly, with revenue increases of approximately 3x and 2x year-on-year respectively. However, the app Mico experienced a significant decline of over 30% year-on-year, which was unexpected and negatively impacted overall performance [9][26][28]. - The company aims to develop two more flagship social networking apps with expected monthly revenues exceeding USD 10 million within three years, although details on these apps remain limited [9][28]. Financial Performance - Revenue projections for the upcoming years are as follows: RMB 4,190.7 million in 2024, RMB 4,542.0 million in 2025, and RMB 4,880.5 million in 2026, reflecting year-on-year growth rates of 26.7%, 8.4%, and 7.5% respectively [6][16]. - Gross margin has shown resilience, maintaining above 50%, with a reported gross margin of 52.1% for 2023, an increase of 14.3 percentage points from previous estimates [10][22]. - The net profit attributable to shareholders is projected to be RMB 449.5 million in 2024, RMB 472.1 million in 2025, and RMB 499.3 million in 2026, indicating a growth trajectory despite challenges [24][32]. Market Position and Competitors - Newborn Town's market capitalization is approximately HK$ 3.1 billion, with a current stock price of HK$ 1.85 [5][21]. - The company is positioned within a competitive landscape, with peers showing varied performance metrics, highlighting the challenges faced in replicating successful app performance [14][31].

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HK$ 2.85, down from a previous target of HK$ 6.13 [2][11]. Core Insights - The company, 英恒科技 (01760.HK), experienced a decline in gross margin by 2.9 percentage points year-on-year to 18.7%, which was below expectations and significantly lower than the average gross margin [2]. - The slowdown in revenue growth was noted across various business segments, with the new energy segment remaining the primary revenue contributor, while the intelligent driving network was identified as the main growth driver [2]. - The company has faced intense competition, leading to a shift in pricing strategy to cope with market pressures, resulting in a gross margin of only 17.1% for the second half of the fiscal year 2023 [2]. - The report indicates a significant reduction in profit forecasts by approximately 51% to 58% due to the challenges faced, including low gross margins and high R&D expenditures [2]. Financial Summary - For the fiscal year 2023, the company achieved total revenue of RMB 5.8 billion, representing a year-on-year growth of 20.1% [11]. - The projected revenues for the upcoming years are RMB 6.84 billion in 2024, RMB 7.52 billion in 2025, and RMB 8.17 billion in 2026, with respective growth rates of 17.9%, 10.0%, and 8.6% [15]. - The net profit for 2023 is projected to decline by 24.0%, with further reductions expected in 2024 and 2025 [15]. Operational Challenges - The company is experiencing increased operational capital pressure due to rising financing costs and a longer cash conversion cycle, which has led to a higher net debt-to-equity ratio of 48.1% [2][14]. - The report highlights that the company has not seen signs of improvement in the first quarter of 2024 amidst ongoing price wars in the downstream market [2]. Market Position - The company is positioned within a highly competitive landscape, with significant pressure on product pricing and profit margins due to aggressive competition in the automotive sector [4][22]. - The report notes that the company’s pricing strategy has been adjusted to "cost + ~20%" but has not yielded significant changes in market conditions [2]. Conclusion - Overall, the report reflects a cautious outlook on the company's performance, emphasizing the need for strategic adjustments to navigate the challenging market environment while maintaining a "Buy" rating based on potential recovery and growth opportunities [2].

Investment Rating - The report maintains a "BUY" rating for Intron (01760.HK) with a target price of HKD 2.85 per share, down from HKD 6.13 [2][10]. Core Insights - Intron reported a year-on-year revenue increase of 20.1% to RMB 5,802.3 million for FY 2023, but the gross margin fell by 2.9 percentage points to 18.7%, which was lower than estimates [3][4]. - The company experienced a significant decline in net profit, retreating by 23.0% year-on-year, attributed to increased R&D expenses and a competitive pricing environment [4][10]. - The revenue growth was driven primarily by NEV Solutions, but competition led to manufacturers opting for lower-cost solutions, impacting growth in advanced driver-assistance systems (ADAS) [4][10]. - A shift in pricing strategy was noted, with a gross margin of 17.1% in the second half of 2023, indicating adjustments to cope with market pressures [4][10]. - The report anticipates continued challenges in 2024, with profit margins expected to remain under pressure due to lower gross margins and high R&D expenses [4][10]. Financial Summary - Revenue projections for the next few years are as follows: RMB 6,840.5 million in 2024, RMB 7,524.0 million in 2025, and RMB 8,174.4 million in 2026, reflecting a year-on-year growth rate of 17.9%, 10.0%, and 8.6% respectively [15]. - The gross profit is projected to increase from RMB 1,083.6 million in 2023 to RMB 1,247.8 million in 2024, with gross margins expected to stabilize around 18.8% in 2026 [15][17]. - The net profit is forecasted to decline significantly in 2024, with estimates of RMB 219.4 million, before recovering to RMB 301.3 million in 2025 and RMB 398.7 million in 2026 [15]. Operational Outlook - The report indicates a cautious operational outlook, with estimates cut by 51% to 58% due to ongoing difficulties, including lower gross margins and increased financial expenses [4][10]. - The company is expected to face a tightening working capital situation due to a longer cash conversion cycle and high R&D expenses [13][17].

Investment Rating - The report assigns a "BUY" rating for Pentamaster (01665.HK) with a target price of HK$ 1.18, reflecting a potential upside from the current price of HK$ 0.82 [1][7]. Core Insights - The medical segment of Pentamaster has shown significant growth, with a year-on-year increase of 75.2% to MYR 148.2 million, contributing to a gross margin surge to 31.9% in Q4 [1]. - The overall revenue for FY 2023 reached MYR 691.9 million, marking a 15.2% growth, while the net profit increased by 6.7% [1][7]. - The automotive segment remains a key contributor, accounting for 47.6% of total revenue, although it has faced order delays impacting momentum [1][7]. - The report anticipates sustained robust performance in the medical segment for at least the next two years, driven by strong order visibility from key customers [1][7]. Financial Performance Summary - Revenue projections for the upcoming years are as follows: MYR 813.0 million in 2024, MYR 960.7 million in 2025, and MYR 1,047.5 million in 2026, indicating a growth trajectory [1][11]. - Gross profit is expected to increase from MYR 209.6 million in 2023 to MYR 336.8 million by 2026, with gross margins improving from 30.3% to 32.1% over the same period [1][11]. - Net profit is projected to grow from MYR 142.2 million in 2024 to MYR 225.2 million in 2026, reflecting a consistent upward trend [1][11]. Segment Analysis - The medical segment is highlighted as a primary driver for future growth, while the automotive segment is experiencing temporary setbacks due to market fluctuations [1][7]. - The semiconductor segment has shown stable growth, but the electro-optical segment is expected to remain weak due to stagnation in the smartphone market [1][7]. Operational Developments - The operational timeline for Campus 3 has been adjusted, with full operations expected to commence in Q1 2025, and production starting in Q3 2024 [1][7].

檳傑科達 | 01665.HK 評級 敖曉風, Brian, CFA | --- | --- | --- | --- | --- | --- | |------------------------------------------------------------------------------------------|----------------------|-------------------------------------------------------------------|--------------------------------------------------------|---------------------------------------------|----------------------------------| | | | | | | | | | 香港上環德輔道中 | 199 | 號無限極廣場 | 2701 – | 2703 室 | | 潤較去年同期上升約 6.7% ，與我們預期相乎。汽車業務分部繼續成為集團主要的貢獻業 | 檳傑科達 | ( ...