Margin improvement to drive 2022 performance
? Ju Teng reported its 2021 results earlier, which show a recovery hoh in 2H21 vs. 1H21,
but the magnitude was lower than expected.
? The Company’s 2021 performance was hit by an unfavourable product mix, Rmb
appreciation and higher logistics costs. But the impact of the ASP hike is expected to
emerge in 2022.
? Overall shipments may see weakness, but a pick-up in the commercial segment is
expected to drive shipments of metals casings. The high requirements of Window s 11
are expected to drive replacement demand.
? Ju Teng’s soft 2021 net profit figures have been priced in, in our view.
? We maintain our ADD rating with a higher target price of HK$2.28. The upw ard revision
is due mainly to a higher book value (our target P/B ratio remains unchanged at 0.4x).