研究报告全文：MN14Mar2023CMBInternationalGlobalMarketsEquityResearchCompanyUpdateFITHonTeng6088HKFY22PreviewStrongexecutionof33StrategyRaiseTPtoHK266TargetPriceHK266FITHonTengwillreportFY22resultsthisweekWeestimateFY22ErevenuePreviousTPHK184netprofittoincrease234YoYtoUS4578mn185mn115aboveUpDownside267consensusmainlydrivenbystrongsmartphoneaudiosalessolidEVsegmentCurrentPriceHK210andmarginrecoveryacrossallsegmentsBysegmentweexpectsmartphonenetworkingcomputingEVsystemproducttogrow13-15-72013ChinaTechnologyYoYinFY22ELookingaheadwearepositiveonFITsaccelerated33AlexNGStrategybackedbypotentialTWSorderwinsandsynergyofautomotive85239000881componentsupplierPrettlinFY2324EWefactoredinacquisitionofPrettlinalexngcmbicomhkourmodelandraisedTPtoHK266basedon11xFY23EPEvsprior8xPE33discountto5-yearavggivenacceleratedgrowthon33StrategyandLilyYANGPhDmarginrecoveryReiterateBUY85239163716lilyyangcmbicomhkFY22PreviewStrongEVmobilityandweaknetworkingcomputingClaudiaLIUsegmentsWeestimateEVmobilitywillgrow20YoYgivenorderwinswithclaudialiucmbicomhkChineseEVcustomersandtier-onesandsmartphonesegmentwillgrow13YoYgivenApplesmarketsharegainOnthebackofweakconsumerStockDatamarketandproductmixweexpectnetworkingcomputingsegmentstoshrinkMktCapHKmn157694Avg3mthstoHKmn21157YoYOverallweestimaterevenuenetprofittoincrease23452wHighLowHK246088YoYinFY22ETotalIssuedSharesmn72670SourceFactSetPositivesynergyfromPrettlSWHacquisitionAcceleratedexecutionof33StrategyWebelievePrettlsexpertiseinsensorconnectivityandShareholdingStructureFoxconnFarEastLtd712electrificationcoretechnologyinautomotiveandnewmobilityindustryalignLuSung-Ching59wellwithFITsautomotivebusinessWeexpecttheacquisitiondealwillcloseSourceHKExby2Q23Eandsalescontributionwillbeconsolidatedonfinancialsin2H23ESharePerformanceWeliftedourtoplineestimatesby47andEPSestimatesby15inAbsoluteRelativeFY2324EFollowingimpactofglobalpandemicin2022wethinkthePrettls1-mth-0580marginwillstarttorecoverin2H23EWebelievetheacquisitiondealwilllead3-mth8584tosignificantsynergyintermsofproductportfolioclientbaseandglobal6-mth1009952SourceFactSetmanufacturingfacilities12-mthPricePerformanceOurFY22-24EEPSare22-33aboveconsensusRaiseTPtoHK266WeraisedTPtoHK266basedonhigher11xFY23EPEvsprior8xPE33discountto5-yearhistavggivenimprovinggrowthon33StrategyandmarginrecoveryTradingat87x76xFY2324EPEwethinkrisk-rewardisstillattractiveUpcomingcatalystsincludePrettlacquisitionprogresssharegaininAppleandimprovingmarginsEarningsSummarySourceFactSetYE31DecFY20AFY21AFY22EFY23EFY24ERevenueUSmn43154490457851805893YoYgrowth134120132138NetprofitUSmn4261368186021672477YoYgrowth8182213360165143EPSReportedUScents064204267311355ConsensusEPSUSnana218234283PEx4241321018776PBx1108070707Yield3991644212424742829ROE2060758388SourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk14Mar2023OverviewofPrettlSWHgroupPRETTLSWHgroupisoneoftheleadingdevelopersandmanufacturersofbest-in-classsensorconnectivityandelectrificationsolutionsforAutomotiveandNewMobilityOEMsaswellasTier1AutomotivesystemsuppliersTheCompanyisfoundedin2015withitsheadquarterslocatedinGermanyIthasaglobalfootprintof16locationsacross12countriesandabout8000skilledemployeesworldwideUponthecompletionoftheacquisitiondealSWHGroupwilloperateasasubsidiaryofFITHonTengwhilemaintainingitsoperationalindependenceandcompanycultureTheSWHGroupshighlevelexecutiveswillstayintheleadandfurtherstrengthenandexpandthetechnologyproductportfolioThetransactionwillcreateverticalintegrationbycombiningSWHGroupshigh-qualitymoduleandcomponentproductsandFITscurrentsystemproductAlsoSWHGroupsglobalnetworkofmanufacturingsalesandRDenablesFITtohorizontallyexpanditskeyEVcomponentstrengthFigure1PrettlSWHsautomotiveapplicationsFigure2PrettlSWHsE-BikeapplicationsSourceCompanydataCMBIGMSourceCompanydataCMBIGMFigure3PrettlSWHsfootprintFigure4CorporationbetweenFITandPRETTLSourceCompanywebsiteCMBIGMSourceCompanywebsiteCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE214Mar2023FY22EResultsPreviewFigure5FY22EresultspreviewUSmnFY19FY20FY21FY22EYoYConsensusDiffRevenue4372431544904578245391Grossprofit754580673739107262Operatingprofit2751251772313119021Netprofit235431381853416115EPSUScents3570642042673120022Grossmargin17213415016212ppt16002pptOperatingmargin6329395111ppt4209pptNetmargin541031401ppt3605pptSourceCompanydataBloombergCMBIGMestimatesFigure6RevenuebreakdownUS000FY21FY22EFY23EFY24EComputing880770819116860072903076YoY--755Smartphones1253290141621814870291561380YoY-1355Networking894110759994835993944672YoY--151013EVMobility133600160320382934650071YoY-2013970EVbusiness133600160320192384230861PrettlSWH--190550419210SystemsProducts1099230124213014284491642717YoY-131515Others200210180189185595191163YoY--1033Total4490215457796651800715893077YoY20132138SourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE314Mar2023EarningsRevisionFigure7CMBIGMearningsrevisionsNewOldChangeUSmnFY22EFY23EFY24EFY22EFY23EFY24EFY22EFY23EFY24ERevenue457851805893457849985504047Grossprofit7398429677237918772710Operatingprofit2312673042202462745911Netprofit185215246182205230257EPSUScents267311355263296332257Grossmargin16216316415815815904ppt04ppt05pptOperatingmargin51525248495003ppt02ppt02pptNetMargin40424240414201ppt0ppt0pptSourceCompanydataCMBIGMestimatesFigure8CMBIGMestimatesvsconsensusCMBIConsensusDiffUSmnFY22EFY23EFY24EFY22EFY23EFY24EFY22EFY23EFY24ERevenue4578518058934539478851841814Grossprofit7398429677267738372915Operatingprofit231267304190214243212525Netprofit185215246161175193152328EPSUScents267311355218234283223326Grossmargin16216316416016116202ppt01ppt03pptOperatingmargin51525242454709ppt07ppt05pptNetMargin40424236373705ppt05ppt05pptSourceCompanydataCMBIGMestimatesFigure9PLforecastUSmnFY19FY20FY21FY22EFY23EFY24ERevenue437243154490457851805893YoY92-134120132138Costofsales-3618-3735-3817-3839-4338-4926Grossprofit754580673739842967GPM172134150162163164YoY65-23116199139148SGA-269-230-266-256-290-336ofrev-62-53-59-56-56-57RD-250-235-301-298-337-386ofrev-57-54-67-65-65-66Operatingprofit275125177231267304OPM632939515252YoY-108-547416309157137Netprofit23543138185215246NPM541031404242YoY06-8192238343165143SourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE414Mar2023ValuationMaintainBUYwithnewTPofHK266Ournew12mTPofHK266isbasedon11xFY23EPE33discountto5-yearhistavggivenacceleratedgrowthon33StrategyandprobabilityrecoveryTradingat87xFY23EPEwethinkrisk-rewardisstillattractiveUpcomingcatalystsincludePrettlacquisitionprogressApplesharegainandimprovingmarginsFigure10PeersvaluationMarketUpCapPriceTPDownPExPBxROECompanyTickerRatingUSmnLCLC-sideFY22EFY23EFY22EFY23EFY22EFY23EGlobalConnectorsTETELUSNR3940812453NANA1711893734220184AmphenolAPHUSNR454877650NANA2572566758281249FabrinetFNUSNR432211806NANA1971533429187208Aviat6807JPNR1545225300NANA151128141292102Hirose6806JPNR47061702000NANA209165181788102Luxshare002475CHBuy296842880523822041663731182186ChengUei2392TTNR6583930NANA1028808088189Foxconn2354TTNR24765360NANA130122060553572317TTNR4663610300NANA10091090998102HonHaiAverage1691512623142142ChinatechnologyFITHonTeng6088HKBuy1941209266271018707077078AACTech2018HKHold26301722156-922415808083751SunnyOptical2382HKHold12411888596383282313833115144Tongda698HKBuy1490120283403001012330BYDE285HKHold61152130204-426215517156499Qtech1478HKBuy705466582420987100948106TKGroup2283HKBuy1701603411139310706186207YOFC6869HKNR28971530NANA90751009108114Cowell1415HKNR18081690NANA224873026183203Average169112141395106SourceBloombergCMBIGMFigure1112MforwardPEbandFigure1212MforwardPBband60305550254540203530152520101505105000Jul-17Jul-18Jul-21Jul-22Jul-19Jul-20Apr-18Oct-18Apr-20Oct-20Apr-22Oct-22Oct-17Apr-19Oct-19Apr-21Oct-21Jan-20Jan-21Jan-18Jan-19Jan-22Jan-23Jul-20Jul-21Jul-22Jul-17Jul-18Jul-19Oct-19Apr-20Apr-21Apr-22Oct-17Apr-18Oct-18Apr-19Oct-20Oct-21Oct-22Jan-18Jan-19Jan-20Jan-22Jan-23Jan-211-yrForwardPBMean1-yrForwardPEMeanMean1SDMean-1SDMean1SDMean-1SDSourceCompanydataCMBIGMSourceCompanydataCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE514Mar2023FinancialSummaryINCOMESTATEMENT2019A2020A2021A2022E2023E2024EYE31DecUSmnRevenue437243154490457851805893Costofgoodssold361837353817383943384926Grossprofit754580673739842967Sellingexpense11197105101114133Adminexpense159134161156176203RDexpense250235301298337386Others391170465259Operatingprofit275125177231267304ShareoflossesprofitsofassociatesJV298444Interestexpense712112Pre-taxprofit266117167227264302Incometax337431414854Minorityinterest201112Netprofit23343137186217248BALANCESHEET2019A2020A2021A2022E2023E2024EYE31DecUSmnCurrentassets274228483034298635443720Cashequivalents892766769827873970Accountreceivables930872103390912881211Inventories703944982100211331289STbankdeposits11812698989898Non-currentassets166517911973201620492071PPE566728823867900921Deferredincometax115135133133133133InvestmentinJVsassos2224172172172172Intangibles745709634634634634Othernon-currentassets218195211211211211Totalassets440746395007500355935791Currentliabilities166217901937178822092213Short-termborrowings494604690635678726Accountpayables108610321138104414221378Taxpayable6312994949494Othercurrentliabilities202615151515Non-currentliabilities668659674674674674Long-termborrowings574575576576576576Obligationsunderfinanceleases232946464646Othernon-currentliabilities715552525252Totalliabilities233024492611246228822887Sharecapital134135139139139139Otherreserves202521452348249226602852Totalshareholdersequity207721902396254127102904Minorityinterest1131235Totalequityandliabilities440746395007500355935791PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE614Mar2023CASHFLOW2019A2020A2021A2022E2023E2024EYE31DecUSmnOperatingProfitbeforetaxation266117167227264302Depreciationamortization255241146156167178Taxpaid743931414854Changeinworkingcapital1692799310133123Others3474104112Netcashfromoperations31311585353250301InvestingCapitalexpenditure240335241200200200Acquisitionofsubsidiariesinvestments000000Others17821461121315Netcashfrominvesting417356220188187185FinancingDividendpaid59030414754Netborrowings0086554248Proceedsfromshareissues000000Sharerepurchases2610000Others207365131313Netcashfromfinancing64711201081818NetchangeincashCashatthebeginningoftheyear1065892766769827873Exchangedifference4430000Cashattheendoftheyear892766769827873970GROWTH2019A2020A2021A2022E2023E2024EYE31DecRevenue92134120132138Grossprofit6523116199139148Operatingprofit108547416309157137Netprofit038182213360165143PROFITABILITY2019A2020A2021A2022E2023E2024EYE31DecGrossprofitmargin172134150162163164Operatingmargin632939515252ReturnonequityROE1162060758388GEARINGLIQUIDITYACTIVITIES2019A2020A2021A2022E2023E2024EYE31DecCurrentratiox161616171617Receivableturnoverdays777737840725908750Inventoryturnoverdays709923939952954955Payableturnoverdays10961008108899211961021VALUATION2019A2020A2021A2022E2023E2024EYE31DecPE1215511341048978PB131108070707Divyield003991644212424742829SourceCompanydataCMBIGMestimatesNoteThecalculationofnetcashincludesfinancialassetsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE714Mar2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBISwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE8