闻泰科技(600745)
Wingtech released3Q24results and we attended the mgmt.call.Q3revenue wasRMB19.6bn(a record quarterly revenue since2020),up28.7%YoY/12.9%QoQ,beating Bloomberg consensus by16%.GPM was11%vs.9.2%/9.7%in1Q/2Q24,beating consensus of10.5%.Net profit was RMB274mn,turningpositive after Q2loss(-RMB3mn).Both ODM and semiconductor segmentsachieved sequential growth in sales(15%/6%QoQ)and GPM(both up1.8ppt),suggesting the business gradually recovered from the cyclical trough.We reviseup EPS forecast for25/26E by22%/15%on further margin improvement.Maintain BUY with TP adjusted to RMB52,based on25x2025E P/E basedon0.5SD below1-yr historical forward P/E(previously23.5x reflecting1SDbelow)as we think the worst has passed for both segments and turningpoint is in near sight.
Semiconductor sales grew on strong domestic auto demand andseasonal consumer electronics procurement;margin back to40%.3Qsemiconductor sales were RMB3.8bn(20%of3Q revenue),down4%YoYbut up6%QoQ.Revenue mix remained similar(vs.1H24),with autocontributing~60%.For3Q24,1)auto sales increased modestly,with mixedgrowth from domestic(strong)and overseas(weak);2)consumer electronicssales grew by double digits QoQ,driven by soaring computing demand andrecovering personal electronics restocking behaviour due to the upcomingholiday season;3)industrial/power/NE had weaker recovery with mild growthsequentially.Heading into Q4,we anticipate semiconductor sales to decline3%QoQ on seasonality,and Q4GPM to remain stable at40.5%.
Legacy ODM grew with revenue structure improvement;net lossnarrowed.ODM sales was RMB15.7bn in3Q24(80%of3Q revenue),up46%YoY and15%QoQ.Within the segment,smartphone/tablet contributed~50%of revenue(vs.~100%previously).The rest came from homeappliances/auto/IoT sales.Smartphone/tablet business began to profit thisquarter,while home appliances profited for two consecutive quarters.GPMrose to3.8%(vs.2%in2Q24)due to higher ASP,lower BOM costs and betteroperating efficiency.Excluding FX impacts,net loss narrowed in Q3at lessthan RMB10mn vs.RMB42mn in Q2.We expect Q4ODM sales to slightlydecrease2%,a mixed impact from seasonality and platform transition.
Maintain BUY,with TP adjusted to RMB52,based on25x2025E P/Ewhich is0.5SD below1-yr historical forward P/E as both segmentsindicate a turning point towards recovery.Potential risks include:slower-than-expected recovery in demand,heightened China-US trade relations,and unfavorable exchange rates.
