• Buy Entry – 15 Target – 20 Stop Loss – 12.5
  • PC Partner Group Limited is an investment holding company principally engaged in the electronics and personal computer (PC) parts and accessories businesses. Its main business includes the design, development and manufacturing of video graphics cards for desktop PCs, the provision of electronics manufacturing services, as well as the manufacturing and trading of other PC related product components. The Company is also engaged in the provision of technical support services through its subsidiaries. Its primary products are video graphics cards, motherboards and mini-PCs. Its primary brands include ZOTAC, Inno3D and Manli. Its businesses are mainly conducted in Mainland China, Hong Kong, Macau, Korea and the US.
  • Expecting 3Q21 to reach a new record. Prices of graphic cards continue to rise. The price hikes of RTX 3080 or lower, GTX 10 series, and RX 6000 series range from 3% to 7% in September. AMD (AMD US) announced its 3Q21 results. Its Computing and Graphics segment revenue jumped by 44% YoY or 7% QoQ to US$2.4bn. In 1H21, PC Partner’s graphic card revenue grew by 140.8% YoY to HK$6.0bn. The group’s gross profit margin increased to 27.2% from 9% during the same period. It is expected that PC Partner Group’s 3Q21 results will be stellar. 
  • Metaverse theme hype. Facebook (FB US) recently changed its name to META, announcing the metaverse as its core development for the next decade. Previously, Nvidia (NVDA US) also announced plans to develop the metaverse area. In the foreseeable future, the demand for graphic cards will have exponential growth. PC Partner can be viewed as one of the few metaverse-themed stocks listed in Hong Kong. AMD announced its next-gen Zen 4-based EPYC “Genoa” CPUs at its Accelerated Data Center event, as well as the world’s first MCM-based “Aldebaran” GPU that will power AMD’s new Instinct MI250X and MI250 accelerators. Meanwhile, they also announced that they have secured Meta, the company formerly known as Facebook, as a new customer. Meta will be using AMD EPYC CPUs inside of its data centres.
  • Cryptocurrencies on the long-term bull trend. Another driver for sales growth is the positive uptrend of the crypto market. Both Bitcoin and Ethereum remained at a healthy uptrend. An increasing number of institutions have accepted cryptocurrencies as one part of their asset allocations. With higher crypto prices, mining activities remain buoyant globally, pushing higher demand for graphic cards.  
  • The company’s valuation is attractive. The stock is currently trading at only 5.8x PE.
1263 HK (Source: Bloomberg)