Q-TECH(1478.HK)：1Q24 SHIPMENT REBOUND ON TRACK; AUTO & IOT AS NEXT GROWTH DRIVERS-格隆汇

机构：招银国际
研究员：Alex NG/Hanqing LI

　　We recently spoke to Q-Tech’s mgmt. and we maintain our positive view on high-end Android recovery to drive ASP/shipment upside in FY24E. Q-tech also expected GPM improvement in 1H24E thanks to better product mix and easing competition. For 1Q24, Q-Tech posted impressive growth of 23%/179% YoY in mobile/non-mobile CCM shipment, thanks to inventory restocking, customers’ project cycles and auto/IoT order wins. We raised our FY24/25E EPS by 2-5% to factor in better ASP/shipment. Trading at 9.7x/7.1x FY24/25E P/E, we think the stock is attractive (vs 18x P/E for 8-yr hist. avg.). Maintain BUY with new TP of HK$3.93, based on 11.0x FY24E P/E (vs 10x prior) for higher earnings visibility. Catalysts include product launches and better monthly shipment.
　　1Q24 shipment recovery on track due to restocking and order cycles.
　　Q-Tech reported 1Q24 mobile CCM shipment of 23% YoY and high-end 32M+ CCM mix of 45% (vs 42% in FY23). For Mar 23, mgmt. attributed strong MoM growth of 32% to post-CNY seasonal rebound and customers’ project cycle. For non-mobile CCM, 1Q24 shipment jumped 179% YoY thanks to auto/IoT CCM demand. Overall, we are positive on high-end Android and auto/IoT momentum into 2Q24E backed by product launches.
　　2024 Outlook: CCM GPM recovery; auto/IoT CCM the bright spots. Looking into 2024, mgmt. guided mobile CCM shipment to grow 5%+ YoY, driven by Android recovery, order wins and spec upgrade (OLS/periscope /Iris diaphragm). Additionally, mgmt. expected 32M+ CCM mix of 45%+ (vs 42% in FY23), and industry GPM will recover driven by demand recovery and easing competition. For auto CCM, mgmt. guided 100-200% YoY given order wins from domestic tier-1 and overseas clients. For IoT CCM, mgmt. expected growth will come from DJI projects. Overall, mgmt. guided non- smartphone CCM shipment to jump 50%+ YoY in FY24E.
　　2023 results in-line. Revenue/net profit decline of 9%/52% YoY in FY23 was mainly due to soft smartphone demand and GPM pressure. However, 2H23 revenue recovered to 6% YoY (vs -23% YoY in 1H23) and 2H23 GPM improved 1.1pts HoH to 4.5% thanks to restocking and better product mix.
　　Expect earnings recovery in FY24/25E; Maintain BUY. While 2H23 GPM recovery and shipment rebound have been priced in, we expect high-end Android recovery and spec upgrade will boost further ASP/earnings upside in FY24E. Our FY24-26E EPS are 8-31% above consensus. Trading at 9.7x/7.1x FY24/25E P/E, we think the stock is attractive. Maintain BUY.