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28 January 2014
Susanna Chui
(852) 2235 7131
Trading data
52-Week Range (HK$)
3 Mth Avg Daily Vol (m)
No of Shares (m)
Market Cap (HK$m)
Major Shareholders (%)
Auditors
Result Due
3.10/5.91
5.31
1,167.37
5,813.48
Southern Asia
Management (25%)
ERNST & YOUNG
FY13E: Mar Company description
Established in 2000, Juteng is the largest plastic
notebook casing maker, with ~30.0% share of the
global notebook casing market followed by Hon
Hai and Huan Hsin. Its customers are mainly
major notebook ODMs, such as Compal
(2324.TT), Wistron (3231.TT), Quanta (2382.TT),
Pegatron (4938.TT), and Inventec (2356.TT), for
major PC-brand vendors, such as Lenovo
(992.HK), HP (HPQ.US), ASUS (2357.TT), Acer
(2353.TT), and Dell (DELL.US). The company is
shifting focus from plastic casings to
metal/composite casings, and penetrating into
tablet market (Google (GOOG.US)’s Nexus 7)
from 2H12 and smartphone market (Moto X) from
2H13.
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A diversifying casing leader
Rating Buy Initiation
Target Price HKD 7.62
Current price
HKD 5.00 Upside +52%
A leader in notebook casing, harvesting from diversification
Juteng is the largest plastic notebook casing maker, with ~30.0% share of
the global notebook casing market followed by Hon Hai and Huan Hsin.
The company is shifting focus from plastic casings to metal/ composite
casings, and penetrating into tablet/ smartphone market from 2H12 and
2H13 respectively, supported by its comprehensive product offering and
solid relationships with ODMs/ OEMs.
Notebooks turning to metal/ composite casing
We expect its notebook revenue decline to moderate to -2.7% in FY14E
from -4.2% in FY13E, on the back of market decline slowdown and
product-mix improvement. Revenue from metal/ composite material
casings has been catching up, given the general trend for ultrabooks/
convertible notebooks, and higher ASPs of metal/ composite casings
(>US$10/piece) compared with those of plastic casings (~US$5/piece).
Growth coming from tablets and smartphones
Tablet shipment surpasses notebook shipment from 2013, and
smartphone shipment has been even 5.6 times of notebook one. With
increasing market share from customers and higher ASPs, we expect
tablet/ smartphone revenue to grow 71.0%/ 279.9% in FY14E. Its tablet/
smartphone sales mix will further expand to ~15.0%/10.0% in FY14E from
~10.0%/3.0% in FY13E.
A large potential from Google/ Moto and Microsoft/ Nokia
In 2013, Microsoft has announced the acquisition of Nokia, followed by
the Google/ Moto acquisition in 2011. We believe Google and Microsoft
are exercising the similar strategy to monetize their Android and Windows
platforms, through the capabilities of their hardware devices. They could
potentially be a major clan in the smartphone market. Juteng, one of the
players in Google and Microsoft’s supply chain, will probably catch up with
their device strategies.
We initiate coverage on Juteng with BUY
We initiate coverage on Juteng with BUY. The company is trading at 6.1x
FY14E PER, which is 47.5% lower than average 11.6x of the peers. With
dominant industry position in casing with new growth driver of tablets/
smartphones, we believe Juteng’s valuation will rise to near average of
the peers. We initiate coverage on the stock with target price of HK$7.62,
based on 9.3x FY14E PER and 20.0% discount to average of the peers.
HKD million FY11A FY12A FY13E FY14E FY15E
Revenue 8,235 9,201 9,242 10,534 12,031
Net Profit 257 601 715 928 1,089
Consensus NP 715 941 1,120
EPS (HKD) 0.23 0.53 0.63 0.82 0.96
P/E (x) 22.0 9.4 7.9 6.1 5.2
Sources: Bloomberg, CIRL estimates
Juteng International | 3336.HK
China Puti
Page 2 of 19
A leader in notebook casing, harvesting from
diversification
Established in 2000, Juteng is the largest plastic notebook casing maker, with ~30.0%
share of the global notebook casing market followed by Hon Hai and Huan Hsin. Its
customers are mainly major notebook ODMs, such as Compal (2324.TT), Wistron
(3231.TT), Quanta (2382.TT), Pegatron (4938.TT), and Inventec (2356.TT). The
company is shifting focus from plastic casings to metal/composite casings, and
penetrating into tablet market (Google (GOOG.US)’s Nexus 7) from 2H12 and
smartphone market (Moto X) from 2H13.
Exhibit 1: Global notebook casing market share
Source: Company data, CIRL
Exhibit 2: FY13E revenue mix by customers
Source: Company data, CIRL
Juteng, 30%
Hon Hai, 20%Huan
Hsin, 10%
Others , 40%
Compal23%
Wistron19%
Quanta17%
Pegatron17%
Inventec15%
Others9%
Page 3 of 19
Exhibit 3: Top 5 notebook ODMs’ market share and major customers
FY13E Market share Major customers - OEMS
Compal 25% Lenovo, Dell, Acer
Wistron 12% Lenovo, Dell, Acer, ASUS
Quanta 24% Apple, AUSU, HPQ
Pegatron 6% Apple, AUSU, Toshiba
Inventec 9% HP, Toshiba, Fujitsu
Source: Company data, CIRL
Exhibit 4: FY13E revenue mix by product
Source: Company data, CIRL
Comprehensive product offering
Jutung is market leader in notebook plastic casings, and has diversified into
metal/composite casings, such as carbon fibre or glass fibre. Its metal notebook
casings have been adopted by Samsung (5930.KS) and HP (HPQ.US) for their
unibody aluminium and magnesium casings, while it is also supplying carbon fibre
notebook casings to Sony (6758.JT), Dell (DELL.US), and Lenovo (992.HK).
Exhibit 5: Juteng’s product range
Material Magnesium Aluminium Plastic Glass fibre Carbon fibre
Process Thixomolding Unibody,
stamping
Injection Injection Thermoplastic,
thermosets
Major clients Dell, HP Samsung Major notebook
OEMs (except
Apple)
Acer Sony, Dell,
Lenovo
GPM 30-35% 20-35% 10-20% 35% and above 35% and above
Source: Company data, CIRL
NB - Plastic casing55%NB - Metal and
composite material casings
27%
Tablet10%
Smartphone3%
Others5%
Page 4 of 19
Currently, only Juteng, BYDE (285.HK) and Jabil (JBL.US) have such comprehensive
product range. And Juteng is even two years ahead of competitors in its development
of composite materials, and is able to deliver composite material products in a shorter
throughput time, better production yield rate, and lower costs than those of its
competitors.
Exhibit 6: Only Juteng, BYDE and Jabil have such comprehensive product range
Ju-Teng Foxconn Tech Huan Hsin Catcher Casetek BYDE Jabil / Green
Point
Stock ticker 3336.HK 2354.TT HUAN.SP 2474.TT 5264.TT 285.HK JBL.US
EMS/ODM
connection
JVs with Compal
and Wistron
30% owned by
Hon Hai
Precision
JV with Inventec n.a. 68%-owned by
Pegatron
n.a. 100%-owned by
Jabil
Material - plastic ✓ ✘ ✓ ✘ ✘ ✓ ✓
Material - metal ✓ ✓ ✘ ✓ ✓ ✓ ✓
No. of CNC
machines
3,000 16,000 n.a. 16,000 5,500 5,000 5,000
Material –
composite
(carbon fibre)
✓ ✘ ✘ ✓ ✘ ✓ ✓
Material –
composite
(glass fibre)
✓ ✘ ✘ ✘ ✘ ✓ ✓
Source: Company data, CIRL
Besides materials, Juteng has also diversified into tablets and smartphones. Juteng
has penetrated the tablet market via Google’s Nexus 7 from 2H12, and started to ship
metal casings for tablets in 2H13, including Microsoft (MSFT.US)’s new Surface. For
smartphones, Juteng supplies the Moto X model with casings, which adopt
sandwich-structured composite attaching two plastic skins to a fabric core.
As composite casing and smart devices will be the trend, we think Juteng which is
capable of dealing with comprehensive solutions will be the winner.
Solid relationships with ODMs/ OEMs
Juteng has strong long-term relationships with the Top 5 notebook ODMs (Quanta,
Compal, Wistron, Inventec and Pegatron) and OEMs (Lenovo, HP, Acer (2353.TT),
Asustek (2357.TT), Dell). The company is involved in several joint ventures with
Page 5 of 19
Compal and Wistron, which are the two largest contributors to the company’s revenue.
We believe the solid relationships can secure good order allocations from these
ODMS/ OEMs.
Exhibit 7: Juteng’s major joint ventures with ODMs
JV Entity Stake owned by Juteng Product
Compal Compal Precision (prev.
Wah Yuen Holding)
57% Notebook metal and
plastic casing
Wis Precision - Kunshan Notebook plastic casing
Wistron Lian-Yi Precision 71% TV casing
Wis Precision - Taizhou Notebook plastic casing
Source: Company data, CIRL
Page 6 of 19
Notebooks turning to metal/ composite casing
The notebook segment is still Juteng’s key revenue contributor. We expect the rate of
notebook revenue decline to slow to -2.7% in FY14E from -4.2% in FY13E, on the
back of stabilized market and product-mix improvement from plastic casings to metal/
composite material casings. Revenue from metal/ composite material casings has
been catching up, given the general trend for ultrabooks/ convertible notebooks to
have thin-and-light designs, and higher ASPs of metal/ composite casings
(>US$10/piece) compared to those of plastic casings (~US$5/piece).
2014 notebook shipment decline will moderate, and ultrabooks/ convertible
notebooks will outperform
Windows 8 launch in 4Q12 has admittedly failed to deflect 2013’s declining PC
shipments. Due to the continuous cannibalization from more powerful and cheaper
tablets, we believe notebook units will continue to decline into 2014 despite slower
rate of decline. IDC also forecasts notebook decline to moderate to 6% in 2014 after
declining 10% in 2013.
Exhibit 8: Worldwide notebook shipment
Source: IDC, CIRL
Ultrabooks and convertible notebooks will outperform, however. To reduce
cannibalization impacts from tablets, Intel, Microsoft and PC brand vendors took
aggressive actions in 1) ultrabooks with thinner and lighter form factors, power-saving
platforms and longer battery life; and 2) convertible notebooks with one product
accounting for two (notebook and tablet) functionalities;
202 185 155
134 115
4 10
21 31
42
-
50
100
150
200
250
2011 2012 2013E 2014E 2015E
mn
un
its
Traditional notebook shipment
Ultrabooks and convertible notebook shipments
Page 7 of 19
As some PC vendors cut their selling prices to <US$600 to promote their ultrabooks/
convertible notebooks, we believe their penetration rate will increase to 19% of the
total notebook, and the shipment will continue to grow at 48% in 2014.
Exhibit 9: Ultrabooks and convertible notebook shipment
Source: IDC, CIRL
And corporate notebooks will improve as Win XP is being phased out
We believe corporate users may be at last transitioning away from Windows XP
before the expiry of support in April 2014. It is clearly leading to more stability in the
corporate segments. ODMs such as Inventec has also guided that commercial NB
shipments will be flat but consumer NB shipments will decline.
Metal/ composite casings catching up, given the trend for ultrabooks/
convertible notebooks with thin-and-light designs
The trend of thinner and lighter ultrabooks/ convertible notebooks and corporate
notebooks, will definitely favor demand for metal/ composite material casing, given
their functionality and differentiation.
Juteng has a comprehensive product range in casing material, ranging from plastic,
aluminium, magnesium, carbon fibre, to glass fibre composite material. And it is two
years ahead of competitors in its development of composite materials and is able to
deliver composite material products in shorter throughput times, better production
yield rate, and lower costs than those of its competitors. Therefore, we believe Juteng
is well positioned to seize emerging opportunities in ultrabook/ convertible notebook
and corporate notebook casings with its strength in offering composite material.
0%
5%
10%
15%
20%
25%
30%
-
5
10
15
20
25
30
35
40
45
2011 2012 2013E 2014E 2015E
mn
un
its
Ultrabooks and convertible notebook shipments Penetration rate
Page 8 of 19
Stable notebook revenue growth from product-mix improvement
Metal/ composite casings command much higher ASPs (>US$10/piece) compared
with those of plastic casings (~US$5/piece). With better product-mix, we expect
notebook revenue decline to moderate to -2.7% in FY14E from -4.2% in FY13E.
Page 9 of 19
Growth from tablets and smartphones
Tablet shipment surpasses notebook shipment from 2013, and smartphone shipment
has been even 5.6 times of notebook one. In order to capture these two huge markets,
Juteng has penetrated tablet market (Google’s Nexus 7) from 2H12 and smartphone
market (Moto X) from 2H13. With robust market growth, increasing market share from
new customers, and higher ASPs albeit using fewer pieces per set than notebooks,
we expect its tablet/ smartphone sales mix will further expand to ~15.0%/10.0% in
FY14E from ~10.0%/3.0% in FY13E.
Exhibit 10: Google’s Nexus 7 and Moto X
Source: Company data, CIRL
Exhibit 11: Global smart device shipment
Source: IDC, CIRL
202 185 155 134 115 4 10 21 31 42
60 116 197 266 338 473
716
976 1,219
1,425
-
500
1,000
1,500
2,000
2,500
2011 2012 2013E 2014E 2015E
mn
un
its
Smartphones
Tablets
Ultrabooks and convertible notebooks
Traditional notebooks
Page 10 of 19
Tablet shipment surpasses notebook shipment from 2013
The global tablet shipments will surpass notebook shipments significantly in 2013. We
believe the momentum will persist in 2014, given increasing number of cheaper tablet
products pushed by local brands in China and PC camps (needing tablet sales to help
reduce slowing notebook demand impacts). We estimate global tablet shipments will
grow by 35% yoy to 266m units in 2014 from 197m units in 2013.
Exhibit 12: Global tablet shipment
Source: IDC, CIRL
Exhibit 13: Tablet with Windows (most PC camp) platform is gaining market share
Source: IDC, CIRL
473
716
976
1,219
1,425
0.00
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
1,600.00
2011 2012 2013E 2014E 2015E
mn
un
its
68%56% 56% 54% 51%
32%43% 41% 41% 42%
0% 1% 3% 5% 7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013E 2014E 2015E
iOS Android Windows (mostly PC camp)
Page 11 of 19
Continuous robust smartphone momentum, in the “fashion” story
We see 2014 as another year of strong growth for smartphones, with still low
penetration rate of 34% in 2013. We estimate global smartphone shipments will grow
by 25% yoy to 1,219m units in 2014 from 976m units in 2013.
However, consumers may get bored of specification migrations. We can see
smartphone vendors’ flagship smartphones have moved up to quad-core
processor/5”+ display/13MP+ camera. With slow innovation curve, the “fashion” story
like the one in notebook market will occur once again in smartphone market. After
New HTC One (Metal + Plastic) and Moto X (sandwich-structured composite attaching
two plastic skins to a fabric core, supplied by Juteng), more and more smartphones
will be expected to turn from plastic casing to metal/ composite casing.
Samsung has announced a new smartphone, Galaxy J, a device which mashes
Galaxy S4 and Galaxy Note 3, in the metal look. It has been rumored the coming
Galaxy S5 and Galaxy F (a premium edition of Galaxy S5) will be built from metal/
composite materials. And in Consumer Electronics Show (CES), China smartphone
brands, such as ZTE and TCL, have adopted metal/ composite casing for the new
models in 2014.
Exhibit 14: Global smartphone shipment
Source: IDC, CIRL
473
716
976
1,219
1,425
0.00
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
1,600.00
2011 2012 2013E 2014E 2015E
mn
un
its
Page 12 of 19
Exhibit 15: Smartphone highlight in CES 2014
Huawei
Mate2
LG
G Flex
ZTE
Grand S2
ZTE
Iconic Phablet
ZTE
Sonata
Sony
Z1S
Plastic Plastic Metal Composite
(metal + plastic)
Plastic Glass
Sony
Z1 compact
TCL
Idol X+
TCL
Idol Alpha
Asus
Zenfone
Asus
Padfone mini
Acer
Liquid Z5
Glass Plastic Composite
(metal +
transparent
material)
Plastic Plastic Plastic
Source: Company data, CIRL
Rising tablet/ smartphone contribution
Juteng has diversified into tablets and smartphones. The company has penetrated
into tablet market via Google’s Nexus 7 from 2H12, and started to ship metal casings
for tablets in 2H13, including for Microsoft (MSFT.US)’s new Surface. For
smartphones, Juteng supplies the Moto X model from 2H13 with casings, adopting
sandwich-structured composite attaching two plastic skins to a fabric core.
These order gain has proven its capability in composite-material and tablet/
smartphone market, and also new relationship with internet/ software companies
(Google and Microsoft). We believe there will be potential for the company to catch up
with Google and Microsoft’s device strategies.
Page 13 of 19
And it can also leverage on these relationships with its long built customers, notebook
ODMs and OEMs. ODMs have provided optimistic guidance about smart device
shipments in 2014, due to OEMs’ more aggressive launch of cheaper tablets and
smartphones.
Exhibit 16: ODMs’ FY14E guidance
Compal NB OEMs will reduce the number of ODM vendors to 2~3 from 3~4 and most orders will
move to Compal and Quanta in FY14. It expects 40mn (2% yoy) NB units and
15mn/20mn (100% yoy) tablets/smartphones in 2014.
Quanta It sets a NB shipment target of 42~44mn units (up 3~5% yoy), but flat tablet shipments
of 20mn.
Wistron It expects NB shipment to be 19~20mn units (down 18% yoy), but FY14 smart device
shipment will grow to 32~33mn units (up around 15% yoy).
Pegatron It forecasts a decline as industry level in the computing segment while the consumer
and communication segment will continue to grow.
Inventec It guides that commercial NB shipments will be flat but consumer NB shipments will
decline. It expects its non-notebook businesses to drive its growth in 2014. Specifically,
it is positive on growth from its smart device s and solar business; and expects stable
growth for its server business.
Source: Company data, CIRL
Therefore, we expect tablet/ smartphone revenue to grow 71.0%/ 279.9% in FY14E,
with its customers’ increasing exposure to tablets and smartphones, of which market
is delivering rapid growth.
Page 14 of 19
A large Potential from Google/ Moto and
Microsoft/ Nokia
In 2013, Microsoft has announced the acquisition of Nokia, followed by the Google/
Moto acquisition in 2011. As Apple has a full stack of hardware (smart devices) and
operating system (iOS, the 2rd
mobile operating systems), Google and Microsoft are
exercising the similar strategy to merchandise hardware devices, which would in turn
solidify their foothold in operating system (Android and Windows platforms, the 1st and
3rd
mobile operating systems) and monetize them. Especially for Windows Phone
which is still a minority player, Nokia seems to be its ultimate solution in combating the
threats from the popularity of smart devices that use Android and iOS platform.
Microsoft has aggressive target, and Google is not expected to be far behind
Microsoft has set to have 15% market share and 255M unit shipments by 2018.
Though it is a long way to this aggressive target, Nokia’s Lumia series appears to be
off to a solid start. Windows Phone’s share in global smartphone market has
increased to 3.6% in 3Q13 from 2.0% in 3Q12, thanks to the satisfactory sales of
Lumia series in developing markets such as India. We believe Google’s target will not
be far behind. Therefore, there will be potential for Moto and Nokia to become the
notable competitors to Apple and Samsung down the road.
Exhibit 17: Google and Microsoft aim at increasing share and monetization of their platforms
Source: Company data, CIRL
36%
47%
57%53%
59%
69%75%
70%75%
79% 81%
18% 19%14%
23% 23%17% 15%
21%17%
13% 13%
3% 2% 1% 1% 2% 3% 2% 3% 3% 4% 4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13
Android iOS Windows Phone
Page 15 of 19
Providing devices in differentiating form and in competitive price
To fight for market share and monetization of their Android and Windows platform,
Google and Microsoft probably have to cut margins in providing devices either in
differentiating form for flagship devices or in competitive price for affordable devices.
Exhibit 18: Moto X has provided the fresh look in alternate materials
Source: Company data, CIRL
Moto X has tried the fresh look in alternate materials, of which woven white and black
(supplied by Juteng) are sandwich-structured composite attaching two plastic skins to
a fabric core. As for Nokia, its portfolio continues to expand from flagship devices like
the Nokia Lumia 928/1020/1520, to affordable devices like the Lumia 520/625/1320.
Potentially catching up with Google and Microsoft
Google and Microsoft will prefer casing makers, with low exposure to Apple and also
comprehensive product range. Therefore, Juteng has become one of the players in
Google and Microsoft’s supply chain and will probably catch up with their device
strategies.
Page 16 of 19
More metal/composite, higher GPM
Riding on improving product mix (notebook - plastic casing segment decreasing from
~61% in FY12 to ~37% in FY15E), the overall GPM will be pulled up. It is because
GPM on plastic casings is about 10-15%, but that for others can be 15-35%.
Exhibit 19: Juteng’s product mix
Source: Company data, CIRL
Exhibit 20: Juteng’s FY13E margins
GPM
Notebook - Plastic casing 10-15%
Notebook - Metal and composite material casings 30-35%
Tablet 15-20%
Smartphone 30-35%
Overall 19%
Source: Company data, CIRL
72%61%
55%45%
37%
20%
25%27%
25%
23%
0%4% 10%
15%
20%
0% 0%3%
10% 15%
8% 10% 5% 5% 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013E 2014E 2015E
Others
Smartphone
Tablet
NB - Metal and composite material casings
NB - Plastic casing
Page 17 of 19
Financial analysis and valuation
We forecast revenue to grow by 0.4%/14.0%/14.2% for FY13E/FY14E/FY15E
mainly driven by the growth of tablet/ smartphone segments.
GPM keeps uptrend from 15.2% in FY12 to 20.2% in FY15E, riding on improving
product mix (notebook - plastic casing segment decreasing from ~61% in FY12 to
~37% in FY15E). GPM on plastic casings is 10-15%, but that for others can be
15-35%.
SG&A expense will increase from 6.0% in FY12 to 7.2% in FY15E, on the back of
developing tablet/ smartphone segments. We expect that net profit will rise
18.9%/29.9%/17.4% to HKD714.6mn/ HKD928.1mn/ HKD1,089.5mn in
FY13E/FY14E/FY15E.
Payout will maintain a ~23.0% of net profit in FY13E-FY15E representing
2.8%/3.7%/4.3% of FY13E/FY14E/FY15E dividend yield.
We initiate coverage on Juteng with BUY. The company is trading at 6.1x FY14E
PER, which is 47.5% lower than average 11.6x of the peers. With dominant industry
position in casing with new growth driver of tablets/ smartphones, we believe Juteng’s
valuation will rise to near average of the peers. We initiate coverage on the stock with
target price of HK$7.62, based on 9.3x FY14E PER and 20.0% discount to average of
the peers.
Risk Factors
Downside risks include: 1) slower than expected growth of tablets/ smartphones; 2)
slower than expected expansion of market share; 3) slower than expected growth of
its clients; 4) more-than-expected competition; and 5) rapidly changing technology
trends.
Page 18 of 19
Exhibit 21: Financial statement
Source: Company data, CIRL
Exhibit 22: Peer comparison
Source: Bloomberg, CIRL
Income statement Cash flow
Year to Dec (HKD mn) FY11A FY12A FY13E FY14E FY15E Year to Dec (HKD mn) FY11A FY12A FY13E FY14E FY15E
Revenue 8,235 9,201 9,242 10,534 12,031 Pre-tax profit 287 788 1,124 1,355 1,590
Gross profit (reported) 868 1,401 1,631 1,959 2,311 Taxes paid (47) (85) (173) (269) (257)
EBITDA 830 1,440 1,810 2,103 2,394 Depreciation 527 589 631 672 701
Depreciation (491) (589) (631) (672) (701) Associates 7 0 0 0 0
EBIT 339 850 1,179 1,431 1,693 CFO bef. WC change 774 1,292 1,581 1,758 2,034
Net interest income (exp.) (45) (62) (56) (77) (102) Change in working cap (73) (1,171) (72) (409) (475)
Associates (7) 0 0 0 0 Cashflow from operation 702 121 1,510 1,349 1,559
Exceptionals/others 0 0 0 0 0 CAPEX (1,590) (978) (1,014) (936) (936)
Profit before tax 287 788 1,124 1,355 1,590 Free cash flow (888) (857) 496 413 623
Tax expenses (50) (129) (269) (257) (302) Dividends 91 138 164 213 250Minority interest 20 (59) (140) (169) (199) Balance sheet adj. (217) (152) 0 0 0
Net profit 257 601 715 928 1,089 Sharse issued 346 (80) 0 0 0
Others 0 0 26 49 37
Balance sheet Net cash flow (669) (951) 686 676 910
Year to Dec (HKD mn) FY11A FY12A FY13E FY14E FY15E Net cash (debt) start (1,256) (1,924) (2,876) (2,189) (1,514)
Cash & equiv 698 1,206 1,526 3,264 5,405 Net cash (debt) at year-end (1,924) (2,876) (2,189) (1,514) (604)
Trade receivables 2,732 3,239 3,274 3,754 4,314
Other receivables 0 0 0 0 0 Ratios
Inventories 1,029 937 888 986 1,102 Year to Dec FY11A FY12A FY13E FY14E FY15E
Other current assets 568 980 980 980 980 Growth rate (%)
Fixed assets 5,805 6,193 6,577 6,841 7,076 Revenue 14.91 11.74 0.4 14.0 14.2Intangible assets 38 40 40 40 40 EBITDA (4.69) 73.45 25.7 16.2 13.8Investment, associates etc 503 653 653 653 653 EBIT (25.59) 150.49 38.7 21.4 18.3
Total assets 11,373 13,249 13,937 16,517 19,570 Net profit (22.51) 134.18 18.9 29.9 17.4
EPS (23.30) 134.41 18.9 29.9 17.4
Account payables 1,796 1,629 1,543 1,712 1,913 Margins (%)
Other payables 0 0 0 0 0 Gross margin (reported) 10.5 15.2 17.7 18.6 19.2Short-term debt 541 2,499 2,133 3,195 4,426 EBITDA 10.1 15.6 19.6 20.0 19.9Other current liabs 1,052 917 1,013 1,002 1,046 EBIT 4.1 9.2 12.8 13.6 14.1Long-term debts 2,081 1,583 1,583 1,583 1,583 Net margin 3.1 6.5 7.7 8.8 9.1
Deferred tax and others 4 5 5 5 5 Other ratios
Other long-term liabs 0 0 0 0 0 ROE (%) 4.4 9.1 9.3 10.3 10.3
Total liabilities 5,474 6,633 6,275 7,496 8,973 ROA (%) 2.3 4.5 5.1 5.6 5.6
Net gearing (%) 32.6 43.5 28.6 16.8 5.7Share capital 112 115 115 115 115 Interest coverage (x) 7.5 13.7 21.1 18.7 16.6Reserves 4,630 5,271 6,176 7,366 8,743 Receivables days 121.1 128.5 129.3 130.1 130.9
Shareholders' equity 4,742 5,386 6,291 7,481 8,858 Payables days 89.0 76.2 74.0 72.9 71.8
Minorities 1,157 1,230 1,371 1,540 1,739 Inventory days 51.0 43.9 42.6 42.0 41.4
Total equity 5,899 6,617 7,662 9,022 10,597 Effective tax rate (%) 17.5 16.3 23.9 19.0 19.0
Net cash (debt) (1,924) (2,876) (2,189) (1,514) (604)
Market cap PE (x) PB (x) Dividend yield (%)
Ticker (HKD mn) FY12A FY13E FY14E FY12A FY13E FY14E FY12A FY13E FY14EFoxconn Technolo 2354.TT 22,803.77 10.3 12.8 12.0 1.4 1.2 1.1 1.4 1.4 1.4Catcher Tech 2474.TT 38,809.28 13.6 11.3 11.2 2.4 2.2 1.9 3.0 3.3 3.7Casetek Holdings 5264.TT 13,823.49 0.0 8.8 8.9 - 2.6 2.1 0.0 2.7 3.9Byd Electronic 285.HK 8,224.20 17.5 11.7 9.2 0.8 0.7 0.7 0.0 1.2 1.4Jabil Circuit JBL.US 28,931.64 9.5 8.1 16.5 1.8 1.7 1.6 1.8 1.8 1.8
Average 10.2 10.5 11.6 1.6 1.7 1.5 2.1 2.1 2.4
Ju Teng Intl Hdg 3336 HK 5,790.1 9.4 7.9 6.1 1.1 0.9 0.8 2.4 2.9 3.8
Page 19 of 19
Rating Policy
Rating Definition
Stock Rating Buy Outperform HSI by 15%
Neutral Between -15% ~ 15% of the HSI
Sell Underperform HSI by -15%
Sector Rating Accumulate Outperform HSI by 10%
Neutral Between -10% ~ 10% of the HSI
Reduce Underperform HSI by -10%
Analysts List
Antony Cheng Research Director (852) 2235 7127 [email protected]
Hayman Chiu Senior Research Analyst (852) 2235 7677 [email protected]
Kenneth Li Senior Research Analyst (852) 2235 7619 [email protected]
Lewis Pang Research Analyst (852) 2235 7847 [email protected]
Susanna Chui Research Analyst (852) 2235 7131 [email protected]
Shawn Yang Research Assistant (852) 2235 7617 [email protected]
Analyst Certification
I, Susanna Chui hereby certify that all of the views expressed in this report accurately reflect my personal views about
the subject company or companies and its or their securities. I also certify that no part of my compensation was / were,
is / are or will be directly or indirectly, related to the specific recommendations or views expressed in this report / note.
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contained in this report have been compiled or arrived at from sources believed to be reliable, Cinda International
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