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机构：信达国际
研究员：Hayman Chiu
We arranged a call for several investors in end-Jan with Truly’s management to discuss their business outlook. As announced on Jan 7, Truly FY21 revenue arrived at HK$22.6bn (+1.9% Yoy) and ~5% below our estimates. Management shared with us that the growth was mainly contributed by automotive products (>40% Yoy) while industrial, medical and IoT sales was largely flat Yoy mainly due to chip shortage and higher logistics costs. Based on our calculation, non- handset revenue (i.e. auto + industrial, medical and IoT) would account for 49% of total sales in FY21E (vs. ~43% in FY20), we continue to stick to our previous view that non-handset related revenue contribution would surpass that of handset, accompanied by gradual margin expansion due to shift of revenue mix to non-handset segment which enjoys better margin.
A recap that in 9M21, Truly’s share of profit from associates turned positive and reached ~HK$48mn. Both Huizhou’s plant (G4.5 TFT-LCD and G4.5 AMOLED) is still running at full capacity, while Shanwei and Renshou plant’s ramp up continue to be on track with utilization rate reached >70%/>60% respectively and would be fully ramped up by 3Q22E. As mentioned in our last update, with CAPEX peaked out and expects to be ~HK$900-1,000mn /year in FY22E/23E, Management maintained its 30-40% payout ratio guidance.
Automotive products expect to outperform in FY22E
We expect automotive products (incl. display, touch and CCM) sales to reach HK$5bn mark in FY21E. Management targets sales to reach HK$10bn in FY23E which implies 41% CAGR in FY21E-23E. As auto products enjoys higher ASP and GM (estimated to be > low-mid teens) and has a longer life product life cycle (>5 years) than handset related products, this would enhance order and earnings visibility in the long run. We expect ASP upside thanks to improved product mix (i.e. large screen, multiscreen, HD and spec upgrade to curve panel etc.)。 Meanwhile the demand for optical surface treatment (OST) of automotive touch panel and cover glass would also provide added value. In the long run, automotive CCM would be another growth driver for Truly’s automotive products with increasing ADAS and smart cockpit penetration.
According to Management, international customers currently contributed ~80% of segment revenue and would still be Truly’s main growth driver in the coming 1-2 years, while Sino-foreign JVs and domestic customers (including new EV plays) each took up low-teens and high single digit of segment revenue.
Volume to support stable handset related business growth
Management still targets CCM and FPM business to remain stable growth, mainly due to volume/ shipment growth (CCM upgrade, side-mounted and UDFP in mid-end smartphones), while ASP and GM upside would be hindered due to ongoing competition. We modelled both CCM and FPM GM at mid-single digit, in which CCM would be slightly higher. Truly’s current CCM and FPM capacity is at 30kk/ month and 10kk/month (vs. Q-Tech at 53kk/month and 14kk/month in FY20)。