Earnings First Take: Inflection point confirmed; 1Q22 net profit increased by 141% y-o-y, higher than market expectations
- Revenue increased by 56% y-o-y in 1Q22, thanks to the higher fibre and cable ASP and sales volume
- Gross profit grew by 60% y-o-y, with gross profit margin expanding 0.5ppt
- Net profit expanded by 141% y-o-y, beat market expectations
- Expect positive share price reaction, as the strong results confirmed YOFC is hitting an infection point
What’s New
– YOFC (6869 HK) announced its 1Q22 results on 29 Apr 2022 after market close.
– Revenue increased by 56% y-o-y to Rmb2,981m in 1Q22, thanks to the fibre and cable ASP recovery and higher sales volume.
– Gross profit grew by 60% to Rmb609m in 1Q22, with gross margin expanding 0.5ppt y-o-y to 20.4%.
– Net profit expanded by 141% y-o-y to Rmb204m in 1Q22, higher than market expectations due to a stronger than expected revenue growth.
– Net profit excluding extraordinary items increased by 111% y-o-y to Rmb157m.
Our View:
– We expect positive share price reaction as 1Q22 beat market expectations.
– The stronger than expected results confirmed our investment thesis that YOFC is hitting an infection point in 2022 with the fibre and cable price recovery due to improved market supply-demand dynamics (refer to report dated 7 Apr 2022: Hitting an inflection point).
– We will host a 1Q22 post results investor group call at 4:30pm on 5 May 2022.
– We currently rate BUY on the counter; TP of HK$15.8.