20220829-招银国际-闻泰科技-600745.SH-2Q_results_in_line__Maintain_BUY_3页_788kb

Wingtech (600745 CH) Company Update Summary

Core Content Overview

Wingtech (600745 CH) reported its 2Q22 results, showing revenue and net profit to shareholders increased by 7.2% and 16.9% YoY, respectively, but declined by 7.5% and 35.1% QoQ to RMB13.7bn and RMB679mn. The company maintains its BUY rating with an unchanged target price of RMB93.12, indicating confidence in its future performance.

Key Business Segments

1. Semi IDM/ODM Business

• Performance:
  • 1H22 semi revenue grew 13.7% YoY to RMB7.7bn, driven by strong demand in auto and industrial sectors.
  • Auto and industrial revenue accounted for 72% of semi sales, up from 67% in FY21.
  • Profitability improved, with NPM rising to 22.7% in 1H22 from 19.1% in FY21.
• Outlook:
  • Auto semi is still in short supply, but demand is expected to continue.
  • Price trends for power semi components are stable or upward.
  • Wingtech plans to mass-produce IGBT products in 2022/23, expanding its product range and benefiting from the growing demand for auto power semi.

2. ODM Business

• Performance:
  • 1H22 ODM sales grew 7.8% YoY, despite a 10.6% decline in Android smartphone shipments.
  • Net profit was negative at RMB-216mn due to early-stage non-mobile projects.
• Outlook:
  • New projects are expected to contribute in 2H22.

3. Optical Module Business

• Performance:
  • Net profit turned positive in 2Q22, with RMB2mn in 2Q22 vs. RMB-39mn in 1Q22.
  • FX impact was noted, but profitability is improving.
• Outlook:
  • Breakeven is expected in 2H22.
  • New projects with key overseas clients are anticipated to drive growth.

Financial Highlights (YE 31 Dec)

Key Ratios

Stock Performance

• Market Cap (HK$ mn): 77,909
• Avg 3 mths t/o (HK$ mn): 1.927
• 52w High/Low (HK$): 143.88/58.35
• Total Issued Shares (mn): 1,246.3

Shareholding Structure

Analyst Ratings and Catalysts

• Rating: BUY (Maintain)
• Target Price: RMB93.12 (unchanged)
• Upside Catalysts:
  • New 12-inch factory to begin production in 2H22
  • ODM's new projects to contribute in 2H22
• Downside Risks:
  • Macroeconomic challenges (overseas inflation, economic slowdown)
  • Easing auto semi shortage

Summary of Key Points

• Wingtech's 2Q22 results were in line with expectations.
• Semi IDM business is a key growth driver, with strong demand in auto and industrial sectors.
• ODM business remains weak due to smartphone shipment declines but is expected to improve.
• Optical module business profitability is improving, with a potential breakeven in 2H22.
• The company is maintaining its BUY rating due to attractive valuation and growth prospects.
• The target price of RMB93.12 implies a potential upside of +48.9% from the current price of RMB62.51.
• Financial performance shows consistent growth in revenue and profitability across the forecast period.
• The company's balance sheet is stable, with increasing cash reserves and improving liquidity ratios.

Risk and Disclaimer Notes

• The report is not a recommendation to buy or sell securities.
• Information is based on publicly available data and may not reflect actual outcomes.
• CMBIGM does not provide individually tailored investment advice.
• Investors are advised to consult professional financial advisors before making decisions.
• The report may be subject to conflicts of interest due to CMBIGM's market-making activities.
• The report is for intended recipients only and must not be reproduced or distributed without consent.

CMBIGM Ratings

• BUY: Potential return of over 15% over next 12 months
• OUTPERFORM: Industry expected to outperform the broad market benchmark