闻泰科技：Both semi/ODM segments showed turnaround signals with sequential growth

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].