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Huagong Tech Co:Data Update,1Q-3Q16revenueNP 75percent72percent of 2016GSe,in line

发布时间:2016-10-20    研究机构:高盛高华证券

Changes and Implications

HG Tech announced 3Q16 results post market close on Oct 19, 2016, withrevenue/net profit of Rmb807mn/Rmb50mn (+23%/+146% yoy), bringing1Q-3Q16 revenue/net profit to Rmb2,451mn/168mn (+28%/53% yoy),which achieved 75%/72% of our 2016 forecast. Company attributed thestrong top-line growth to small power laser equipment order delivery andoptoelectronic product sales.

3Q gross margin/EBIT margin declined by 1pp/1pp yoy to 22%/6%. 1Q-3Qgross/EBIT margin of 24%/7% were largely in line with 2016 GSe of25%/7%. Company commented that optoelectronic products are underpricing pressure due to fierce competition. Bottom-line is mainly boostedby non-operating income of Rmb42mn (66% contribution to net income).

Factoring in 3Q actual data into our model, our 2016E-18E EPS and 12-month TP pf Rmb14.80 remain unchanged. We do not view these changesas material and therefore make no change to our investment thesis orrating.

Valuation

Our 12-month target price of Rmb14.80 is based on 12m EV/GCI vs.

CROCI/WACC, cash multiple 3.1X with 10% premium. We maintain ourNeutral rating given the divergent performance in its different businesssegments. Key risks include increased competition from local/foreignbrands, margin deterioration due to business shifting away from highmarginlaser holographic products.

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