WINGTECH(SH:600745) Zhao Yin Guo Ji·2024-10-28 02:23Investment 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].