CIMB: China Technology – Handsets (Overweight)

Huawei’s return sparks spec upgrade cycle

• Smartphone sales growth, high-end phone sales acceleration, new upgrade cycle, and non-smartphone revenue growth are the sector’s key drivers.
• We expect Huawei’s upcoming new models with innovative features to spark a new wave of device spec upgrades, boosting high-end phone sales.
• We upgrade the China smartphone sector from Neutral to Overweight. Our sector top picks are Xiaomi, AAC Tech, and Sunny Optical, in that orde