Investment Rating - The report maintains a "BUY" rating for Tongda with a new target price (TP) of HK$0.13, reflecting a potential upside of 73.6% from the current price of HK$0.08 [3][8][9]. Core Insights - The anticipated recovery in Android smartphone demand and growth in smart technology segments are expected to drive earnings recovery in 1H24. The report estimates 1H24 revenue and net profit at HK$2.6 billion and HK$35 million, respectively, indicating a 10% decline in revenue but an 82% increase in net profit year-on-year [1][4]. - The report highlights a positive outlook for 2H24 and FY25, driven by stable average selling prices (ASP) in handsets, order wins in household and sports goods, and the ramp-up of the Malaysian plant to meet non-handset customer demand [1][4][8]. Summary by Sections Earnings Summary - For 1H24, revenue is projected at HK$2,550 million, with a year-on-year decline of 10%. The consumer electronics segment is expected to generate HK$1,998 million, primarily impacted by the disposal of the Apple business [1][6]. - The report forecasts a significant recovery in net profit for FY24, with an expected increase of 82% year-on-year, attributed to the recovery in the Android business and improved operating efficiencies [1][7]. Financial Projections - The revised estimates for FY24E and FY25E show a decrease in EPS by 23-32% due to the impact of the Apple business disposal and increased competition in the Android market. The new EPS estimates are HK$0.016 for FY24E and HK$0.022 for FY25E [4][5]. - Revenue projections for FY24E and FY25E are HK$5,603 million and HK$5,819 million, respectively, reflecting a year-on-year growth of 3.9% in FY25E [4][5]. Valuation Metrics - The stock is currently trading at a P/E ratio of 4.8x for FY24E and 3.5x for FY25E, which is considered attractive compared to historical averages [3][8][9]. - The report emphasizes that the new target price of HK$0.13 is based on a rolled-over P/E of 6.0x for FY25E, indicating a favorable valuation for potential investors [3][8].
通达集团：1H24E preview： eyes on Android recovery and smart tech growth