Q-TECH(1478.HK)：POSITIVE FY25 PROFIT ALERT; NON-MOBILE(HANDHELD/AUTO/XR)GROWTH TO CONTINUE INTO 2026

Core Viewpoint - Q-Tech announced a positive profit alert for FY25, with expected earnings growth of 400-450% YoY, driven by non-mobile business segments and operational improvements [1][2] Financial Performance - Non-mobile business (IoT, auto, XR) contributed significantly with a 110% YoY growth in CCM shipments, supported by strong demand and leading customer orders [2] - Gross profit margin (GPM) improved due to upgrades in mid-to-high-end mobile CCM and FPM, along with better product mix and operational efficiency [2] - One-off gain from the disposal of 51.08% equity in Q-Tech India and a turnaround in Newmax's performance, reporting a profit of RMB103 million compared to a loss of RMB37 million in FY24 [2] Future Outlook - For FY26, non-mobile CCM is expected to be a key growth driver, with projected revenue growth of 42% YoY, accounting for 40% of Q-Tech's revenue [3] - Smartphone CCM is anticipated to decline by 16% YoY due to industry challenges, including a 7% drop in shipments and a 10% decrease in average selling price (ASP) [3] - Long-term growth is supported by Q-Tech's vertical integration capabilities and a strong global client base, particularly in the drone, handheld camera, XR, AI glasses, and robotics sectors [3] Valuation and Recommendations - The company maintains a BUY rating with a new target price of HK$13.18, based on a 17x FY26E P/E, reflecting adjustments due to smartphone industry headwinds [4][6] - The stock is currently trading at 13.2x/10.5x FY26/27E P/E, which is considered attractive [6] - Upcoming catalysts include potential IoT client wins, orders for handheld and drone products, and guidance for FY26E [6]