GOERTEK(002241)：FOCUS ON VR/AR/GAMING BUSINESS AND MARGIN RECOVERY IN FY24/25E-格隆汇

机构：招银国际
研究员：Alex NG/Claudia LIU

　　Following a challenging 2023, we expect AI-driven upgrade and AR/VR product launches will boost revenue and profitability recovery in FY24E, and impact of share loss of the major TWS project should normalise in 2H24E. In the longer term, we believe Goertek will continue to benefit from AR/VR secular trend with more product launches from major players such as Meta, Sony, Google, Samsung and Huawei. For FY23, revenue/earnings decline of -6%/-38% YoY was mainly dragged by TWS order loss and weak VR/AR demand, but we are encouraged by continued GPM recovery in 4Q23 (10.6% vs. 7.7%/10.1% in 2Q/3Q23). To reflect FY23 results and gradual recovery in FY24/25E, we trimmed FY24/25E EPS by 9%/11% and adjusted TP to RMB17.56, based on same 25x FY24E P/E (7-yr hist avg). Maintain BUY.
　　2024/25 Outlook: Riding on “AI+XR” trend, PS5/Quest 3 ramp-up and margin recovery. For 2024, we are positive on shipment momentum of PS5/Quest 3 and stabilised hearable product segment, and we also believe Apple’s Vision Pro and edge-AI trend will accelerate AR/VR/XR product cycle, benefiting Goertek as a global AR/VR/XR OEM leader. In 2024/25, we expect AR/VR/XR product pipeline will come from major players such as Meta, Sony, Google, Samsung and Huawei. Overall, we expect acoustics precision component and smart products segment (gaming, AR/VR) will rebound 4%/9% YoY in FY24E (vs -7%/-7% in FY23), while hearable products (AirPods, Android TWS) will drop 22% YoY in FY24E. GPM will recover to 10.5%/10.5% in FY24/25E (vs 8.9% in FY23E), given improving utilization and hearable product margin recovery.
　　FY23 earnings bottoming with 4Q GPM recovery. FY23 sales/net profit decline of 6%/38% YoY were mainly impacted by TWS share loss and VR/AR demand weakness, but we are positive on improving 4Q GPM to 10.6% (vs. 7.7%/10.1% in 2Q/3Q23), backed by better utilization and cost control. In 2H23, precision components/hearable products/smart product segments posted -6%/+10%/-23% YoY, and GPM recovered to 20.4%/8.4%/8.7% in 2H23 (vs. 20.6%/4.1%/5.9% in 1H23).
　　Maintain BUY. We think AR/VR technology leadership and product roadmap in TWS/XR/acoustics/gaming segments will enable it to benefit from industry recovery and new MR product cycle in FY24/25E. Maintain BUY with lowered TP of RMB 17.56. Upcoming catalysts include new XR product launches and continued margin recovery