News Alert : Weak 1H22 earnings of key subsidiary, Kunshan QT China, like to create short term share pressure
- 1H22 revenue of Kunshan QT China, the entity to be listed in A share, is estimated to decline by 21.2% yoy to Rmb6.7bn due to the weak smartphone demand
- 1H22 net profit is estimated to decline by 68.9% y-o-y to Rmb 177.2mn mainly due to the shrinking margin due to the lockdown in China
- Expect short-term price pressure
What’s New
– Q Tech disclosed its 1H22 result forecasts of Kunshan QT China, the entity to be listed in A-share before the market open today. This is to fulfill the requirement in the 3rd round comment in its A-share listing procedures.
– Kunshan QT China’s camera module shipment in 1H22 is estimated to decline by 16.3%, missing the management’s guidance of double-digit growth.
– 1H22 revenue is estimated at Rmb 6.7bn, down 21.2% y-o-y, due to the weak smartphone shipment caused by 1) inflation concern and 2) geopolitical conflict and pandemic lowdown leading to weak consumer sentiment.
– 1H22 net profit is estimated at Rmb 177.2mn, down 68.9% y-o-y. This is mainly due to the shrinking margin caused by the lower utilization rate in factories during the lockdown in China, 1) higher component cost, and 2) higher logistics cost in the logistics and supply chain constraint
Our View:
– Expect short-term stock price pressure due to the weak 1H sales and earning growth.
– However, we expect the weak smartphone shipment to bottom out in 2H22 due to the ease of logistic and supply chain constraints and a better consumer sentiment when lockdown’s impact diminished.
– We maintain BUY on sector outlook recovery with TP of HK$8.9.