yum cha 飲茶 · hk$1,148m, showing the results of the new management team’s (mainly appointed...

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Yum Cha 飲茶 May 16, 2018

INDICES Closing DoD%

Hang Seng Index 31152.0 (1.2)

HSCEI 12440.8 (0.8)

Shanghai COMP 3192.1 0.6

Shenzhen COMP 1839.9 0.9

Gold 1290.5 (1.7)

BDIY 1476.0 0.3

Crude Oil, WTI(US$/BBL) 71.3 0.5

Crude Oil, BRENT(US$/BBL) 78.4 0.3

HIBOR, 3-M 1.8 0.1

SHIBOR, 3-M 4.1 0.3

RMB/USD 6.4 0.6

RESEARCH NOTES

CHINA TRAVEL INTERNATIONAL [0308.HK; HK$3.25; NOT RATED] - With its

steadily growing core business, as well as one-off gains, the Company recorded

strong 2017 net profit. Going forward, under the leadership of the new management

team, in addition to improving core business, CTI is likely to unlock more asset value

in 2018. Attention should be paid to the progress of asset disposals in Hong Kong, as

well as the property contribution from Zhuhai OSR. The Company is also heading in

new directions, such as asset-light business and M&A. Nonetheless, CTI is targeted

to achieve double-digit growth in profit in 2018. If this is achieved, then its 2018E

PER of 14.6x doesn’t look excessive. A near-term catalyst is the potential disposal of

its Mongkok office (estimated value: HK$1bn).

MAN WAH [1999.HK; HK$6.51; NOT RATED] - Man Wah’s relatively weak FY2018

results were somewhat anticipated, given rising commodity prices and RMB appreci-

ation. On the positive side, the China business performed well and will be the most

important driver for the Company. Even though the US and Europe segments may

continue to remain flat for FY2019E, the growth in China may still be sufficient to help

earnings resume growth, as long as there is no drastic increase in production costs

or FX movement. The market was also concerned about the CFO change in March

and a potential China-US trade war, but we believe the share price correction is over-

done. We may see some selling pressure triggered by the downward earnings revi-

sion by analysts, but we believe that will offer an opportunity to revisit the stock, as it

was trading at <15x forward PER.

TMT HARDWARE UPDATE - The market turned cautious on HK-listed hardware

names, especially handset components and communications equipment given US

government re-activated the exports ban to ZTE [0763.HK] and negative industry

news flow such as TSMC’s downward revision of guidance, US’s potential investiga-

tion of Huawei and weak market sentiment. The market reacted positively to the mes-

sage from President Trump regarding resolving ZTE’s case. However, we maintain

the view that market sentiment may swing until the issue is resolved. The Q1 2018

results from handset components names such as AAC [2018.HK] did surprise the

market on the downside and create concerns on growth outlook those Companies

and put pressure on their shares.. However, we maintain the view that the risk did

materialize and we hold the contrarian view that it is time to revisit hardware names.

DATA RELEASES DUE THIS WEEK

7-18 May Foreign Direct Investment YoY

9-15 May Money Supply M2 YoY

9-15 May New Yuan Loans CNY

Source: Bloomberg

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COMPANY UPDATE

Analyst: Tony Li, CFA ([email protected]; Tel: (852) 3698 6392 )

CHINA TRAVEL INTERNATIONAL [0308.HK, HK$3.25, NOT RATED] – Positive 2018 Growth Outlook amid Transformation

Market Cap: US$2,257m; Free Float: 39.8%

CHINA TRAVEL INTERNATIONAL [0308.HK, NOT RATED] Summary. With its steadily growing core business, as well as one-off gains,

the Company recorded strong 2017 net profit. Going forward, under the

leadership of the new management team, in addition to improving core

business, CTI is likely to unlock more asset value in 2018. Attention should

be paid to the progress of asset disposals in Hong Kong, as well as the

property contribution from Zhuhai OSR. The Company is also heading in new

directions, such as asset-light business and M&A. Nonetheless, CTI is

targeted to achieve double-digit growth in profit in 2018. If this is achieved,

then its 2018E PER of 14.6x doesn’t look excessive. A near-term catalyst is

the potential disposal of its Mongkok office (estimated value: HK$1bn).

Recap: New Management Delivered Strong Results in 2017. Continuing

the momentum of 1H17, CTI demonstrated a strong all-round turnaround in

its full-year 2017 results, as the full-year net profit increased 226% YoY to

HK$1,148m, showing the results of the new management team’s (mainly

appointed in 2016) efforts to improve operations and unlock the value of its

assets. The strong profit growth could be attributed to the low base effect in

2016, which included factors such as the following: (1) profit in 2016, dropped

74% YoY compared to 2015, as it no longer reflected the power plant

business which was discontinued in 2015; and (2) a one-off impairment of

HK$116.6m was incurred in 2016 on the Xianyang Ocean Spring Resort

(OSR) project.

Excluding the low-base effect, the overall core business in 2017 steadily

recovered, with the Hotel Operations segment the best part, demonstrating

34% YoY net profit growth, thanks to a rebound in the Hong Kong tourism

and hotel market. The Company also booked property sales of HK$586m in

Anji and Zhuhai, but it did not contribute much profit (only ~HK$5m) in 2017.

Meanwhile, the Company recorded a one-off after-tax gain of ~HK$560m due

to the closure of its CTS Tycoon Golf Course business; this one-off gain was

a big part of the profit gain in 2017.

Core Business on Track for Ramping Up. To recall, CTI introduced a new

management team in 2016 and 2017. 2018 will be the first full year for the

new team to demonstrate its capability to ramp up its existing business.

For the existing mainland Chinese tourist attractions owned by the Company,

management expects organic growth to be gradual, as domestic tourism

demand is expected to be solid in 2018, while CTI has been introducing new

initiatives for assets with potential. This is especially the case for the Henan

Songshan scenic spot. According to the management, foot traffic for

Songshan could be on par with that of similar competitors, such as

Huangshan Tourism [600054.CH] or Emei Shan Tourism [000888.CH].

However, revenue per tourist for Songshan is significantly lower than that of

its peers, as fewer tourism transportation and accommodation facilities are

offered there. The Company is currently upgrading the scenic spot, which will

offer more transportation services in the future.

Other existing businesses are also in the process of transformation, thanks to

the share option incentive scheme. The Company’s asset-light business will

be the focus, which could improve the overall margin and ROE. Management

consulting for third party tourism projects is one example of such initiatives.

China Heaven Creation International Performing Arts, the arts performance

consulting arm of CTI, has also shown good progress in early 2018 after its

revenue increased 113% YoY to HK$130m in 2017.

Source: Bloomberg

May 16, 2018

Unlocking Asset Value Still A Priority in 2018 to Buy Time to

Grow the Core Tourism Business. The ramp-up of the existing

tourism business will take time, and it is expected that many initiatives

will be completed only in 2019. So for 2018 and 2019, asset

operations will be a temporary way to support profit growth and deliver

shareholder returns.

Hong Kong: Given its long operating history in Hong Kong, CTI owns

a handful of properties in business districts which have appreciated in

value over the course of many years. The plan is to: (1) dispose of a

commercial property in Mongkok with an estimated value of HK$1bn

(book value: ~HK$100m); (2) relocate its offices in Central to other

areas and dispose of some of its offices; (3) revamp its warehouse in

Hung Hom into service apartments; and (4) enhance its hotel portfolio

assets and consider the possibility of disposal. In 2018, the Mongkok

property disposal is the most likely possibility.

(continued on next page)

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Turnover (RHS) Price (LHS)

HKD 2016 2017 2018E 2019E

Revenue (m) 4,066 4,909 5,391 6,022

COGS (m) (2,254) (2,964) (3,035) (3,370)

Gross profit (m) 1,812 1,945 2,356 2,651

Gross margin (%) 45 40 44 44

EBIT (m) 598 1,400 1,434 1,229

Net profit (m) 352 1,148 1,057 1,356

Net margin (%) 9 23 20 23

EPS 0.06 0.21 0.19 0.24

ROE (%) 2.34 7.43 7.93 7.14

Dividend yield (%) 0.9 2.62 3.51 3.66

PER (x) 50.6 15.4 16.8 13.8

PBR (x) 1.2 1.1 1.0 0.9

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COMPANY UPDATE



Mainland China: Xianyang OSR, a loss-making tourism project, is a likely candidate for disposal in 2018, as property prices have gone up in the

region. Meanwhile, property projects, mainly the Zhuhai OSR project, will be ready for delivery and will contribute profit for CTI in 2018. Phase 1 of this

property project, co-developed with Evergrande, turned more favourable in 2017, along with the local property market. The total GFA for this phase is

approximately 240k sqm, with an ASP of almost RMB10k.

Zhuhai OSR Phase 1 could contribute a large, one-off gain to CTI (CTI holds a 49% stake in phase 1). As Evergrande usually records a gross profit

margin of nearly 30%, and an EBIT margin from the mid-teens to 20%, it is reasonable to estimate that CTI could book a HK$200-300m gain under

"Associates" in 2018E.

Exploring M&A Options with its Healthy Balance Sheet. As at 31 Dec 2017, CTI held net cash of close to HK$4.5bn, which could support an

acquisition to fuel growth. Currently, the Company is exploring projects in southern China. For example, it is looking at setting up a resort in Guangzhou

through acquisition. CTI aims to set up a long-term income-producing project there, funded by partial property sales. This would allow the Company to

explore more growth opportunities without dragging down its overall financials.

Valuation Not Excessive if >10% Core Profit Target Growth Achieved. CTI reported a 2017 core profit of HK$1,106m, and it targets double-digit

growth in 2018E. If this is achieved, it will then be trading at 14.6x 2018E PER. We believe this doesn’t look excessive compared to its 5-year historical

average forward PER (Figure 2). The Company aims to distribute some of the gains (including one-off items) to shareholders, so there will also be

upside to the consensus dividend yield of 3.51% if the disposal gain is larger than expected.

We see potential for the Company to attract more southbound investors if the new management team continues to deliver results. Leading tourism

plays such as Huangshan Tourism (600054.CH) are trading at 21x 2018E PER and 2.2x PBR.

Risks: (1) Lower-than-expected disposal gain from Hong Kong assets; (2) flat or deteriorating existing core businesses, especially passenger

transportation operations due to rising oil prices in 2018; and (3) a delay in Zhuhai OSR property delivery.

May 16, 2018

Sources: Company, Capital IQ, CGIS Research

Figure 1: 2017 Results Review

Unit: HK$m 2016 2017 YoY Change

Revenues

Travel Agency, Travel Document and Related Operations 1,203 1,232 2.4%

Hotel Operations 758 793 4.6%

Passenger Transportation Operations 276 430 55.7%

Tourist Attraction Operations 1,850 2,476 33.8%

Corporate and Others 20 16 -22.4%

Elimination of Intersegment (42) (37) -10.3%

4,066 4,909 20.7%

Net Profit After Tax

Travel Agency, Travel Document and Related Operations 137 143 3.8%

Hotel Operations 110 148 34.1%

Passenger Transportation Operations 150 132 -12.0%

Tourist Attraction Operations 123 699 466.2%

Corporate and Others (169) 27 -116.0%

Attributable to:

Shareholders 352 1,148 226.1%

Shareholders - Core Business Only 413 1,106 167.8%

Non-Controlling Interests 156 137 -12.4%

508 1,285 152.8%

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COMPANY UPDATE



May 16, 2018

Sources: Bloomberg, CGIS Research

Figure 2: Forward PER

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Forward PER (Bloomberg consensus) 5-year average

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COMPANY UPDATE


MAN WAH HOLDINGS [1999.HK, HK$6.51, NOT RATED] – FY18 RESULTS UNEXCITING, BUT WORRIES OVERBLOWN

Market Cap: US$3,178m; Free Float: 36.0%

MAN WAH HOLDINGS [1999.HK, NOT RATED] Summary. Man Wah’s relatively weak FY2018 results were somewhat

anticipated, given rising commodity prices and RMB appreciation. On the

positive side, the China business performed well and will be the most

important driver for the Company. Even though the US and Europe

segments may continue to remain flat for FY2019E, the growth in China may

still be sufficient to help earnings resume growth, as long as there is no

drastic increase in production costs or FX movement. The market was also

concerned about the CFO change in March and a potential China-US trade

war, but we believe the share price correction is overdone. We may see

some selling pressure triggered by the downward earnings revision by

analysts, but we believe that will offer an opportunity to revisit the stock, as it

was trading at <15x forward PER.

The Company. Established in 1992, Man Wah Holdings is a producer of

sofas, mattresses, panel furniture and furniture accessories. It distributes

domestically in China and exports to customers in overseas markets, such

as North America and Europe. Its Chairman, Dr. Wong Man Li, holds a 64%

stake in the Company.

FY18 Margin Deterioration Worse Than Expected. Man Wah reported

relatively weak FY2018 results (year ended 31 March 2018), as net profit

dropped 12.4% YoY to HK$1,536m during the period, extending the

weakness of 1HFY18. Reported EPS was HK$0.40, 7% lower than market

consensus of HK$0.43.

The main reason for the weak results was across-the-board margin

deterioration. GPM dropped by 4.55 ppt to 37.33%, while NPM dropped by

7.21 ppt in FY2018. This could be attributed to factors such as (1) the

significant rise in the cost of raw materials because of the rebound in

commodity prices. For example, metals and chemicals, which we estimate to

account for ~30% of COGS, had close to a 30% YoY increase in average

unit cost in FY18; (2) an increase in transportation costs due to higher oil

prices, which affected both COGS and SG&A; (3) FX issues. FY18 recorded

an FX loss of HK$22m versus an FX gain of HK$171m in FY17; and (4) a

higher effective tax rate due to the higher contribution from China.

Top-line Doesn’t Look Bad. Although the results were weak, overall

revenue in FY18 reached HK$10,027m, up 28.9% YoY and was stronger

than expected. This was attributed mainly to: (1) robust performance in

China, as its revenue grew by 43.7% YoY to HK$4,831m; and (2) a full-year

contribution from Home Group (+330% YoY to HK$871m). Home Group,

acquired by Man Wah in Dec 2016, is a European sofa producer and

supplier to retailers such as Ikea. If the contribution from Home Group is

excluded, sales in the Europe and US markets were flat due to keen

competition.

Fast-growing China Business the Most Important Driver. As China has

become the largest revenue contributor of the Company, Man Wah will

continue to expand its domestic business through franchisees. Its target is to

open not less than 300 shops in China to facilitate growth. The tightening of

the property market in 2018 is expected to drag down same-store sales

growth, but the Company sees replacement demand for sofas remaining

rigid. Also, motion recliners, a key product of Man Wah, are expected to gain

more market share in China, according to Euromonitor.

Source: Bloomberg (Y/E March) **Before earnings revision by the market

May 16, 2018

Measures Taken to Stabilize Margins in FY19E. Rising material

and transportation costs, as well as RMB appreciation, dragged down

the GPM of Man Wah. Going forward, the impact of RMB movement

may have a relatively lower impact on Man Wah, as the contribution

from the domestic market continues to increase. The Company is

also taking measures to mitigate the impact of rising costs, such as

introducing new products with higher margins and raise the selling

cost slightly. Management was more conservative on raising the

ASP, as this may trim its market share.

Plans to Mitigate Potential Trade War: Vietnam Expansion. While

Man Wah is currently not affected by the proposed tariffs imposed by

the Trump administration, the Company is considering investing in

Vietnam to mitigate the potential threat from a rising trade conflict.

With a budget of US$50m-80m, it may either acquire existing

factories or set up a new factory there. This may be sufficient to

replace 70-80% of its export capacity when fully set up.

(continued on next page)

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(HK$ million)(HK$)

Turnover (RHS) Price (LHS)

HKD FY17 FY18 FY19E FY20E

Revenue (m) 7,779 10,027 11,605 13,110

COGS (m) (4,521) (6,284) (7,068) (7,945)

Gross profit (m) 3,258 3,743 4,537 5,166

Gross margin (%) 42 37 39 39

Net profit (m) 1,752 1,536 1,985 2,237

Net margin (%) 23 15 17 17

EPS 0.46 0.40 0.52 0.59

ROE (%) 35.94 27.92 30.83 31.34

Dividend yield (%) 4.3 3.84 4.70 5.64

PER (x) 14.3 16.2 12.5 11.0

PBR (x) 4.9 4.2 3.6 3.4

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COMPANY UPDATE



Valuation and Our Take. Man Wah’s share price has retreated 11.4% YTD. In addition to the anticipated weak results, the correction was caused by

worries over the CFO change in Mar 2018 and a potential Sino-US trade war. However, we believe these worries have been overdone, as we

understand these two factors have had no material impact on the Company’s operations.

Before the earnings revision by the street, the Bloomberg consensus’ FY2019E net profit is HK$1,985m. We expect there to be a cut in the earnings

estimate, given the weaker-than-expected margins in FY2018. Still, our preliminary FY19E EPS forecast of HK$0.48 implies 18.8% growth and

translates into a valuation of 13.7x 2019E PER, which is not demanding from the angle of PEG ratio. We believe any near-term share price weakness

may offer a good entry point. Currently, all of its major A-share peers are trading at >20x forward PER.

Risks: (1) Weaker-than expected growth in mainland China; (2) higher-than-expected rise in raw material and transportation costs; (3) worse-than-expected RMB appreciation; and (4) deterioration in the China-US relationship, leading to further trade disputes.

May 16, 2018

Figure 1: FY2018 Results Review (Year ended 31 March)

Sources: Company, CGIS Research

HK$'000 FY2017 1H 2018 2H 2018 FY2018YoY

FY18 vs FY17

Revenues 7,779,015 4,626,881 5,399,692 10,026,573 28.9%

COGS (4,520,832) (2,854,174) (3,429,459) (6,283,633) 39.0%

Gross Profit 3,258,183 1,772,707 1,970,233 3,742,940 14.9%

Selling & Distribution Expenses (1,173,878) (740,562) (952,661) (1,693,223) 44.2%

Administrative Expenses (365,441) (206,010) (236,042) (442,052) 21.0%

Other Income 159,752 194,186 170,444 364,630 128.2%

Other Gain/loss 184,001 (34,721) 8,553 (26,168) N/A

Net Finance Expenses (10,271) (9,678) (13,864) (23,542) 129.2%

Earnings before Taxes 2,052,346 975,922 946,663 1,922,585 -6.3%

Income Tax Expenses (293,222) (176,029) (192,610) (368,639) 25.7%

Net Profit after Tax 1,759,124 799,893 754,053 1,553,946 -11.7%

Net Income Attributable to Shareholders 1,752,370 793,046 742,862 1,535,908 -12.4%

Minority Interest (Profit) 6,754 6,847 11,191 18,038 167.1%

EPS - Basic (HK$) 0.46 0.21 0.19 0.40 -11.9%

EPS - Diluted (HK$) 0.45 0.21 0.19 0.40 -11.9%

GPM 41.88% 38.31% 36.49% 37.33% -4.55 ppt

OPM 26.52% 21.30% 17.79% 19.41% -7.11 ppt

EBT Margin 26.38% 21.09% 17.53% 19.17% -7.21 ppt

NPM 22.53% 17.14% 13.76% 15.32% -7.21 ppt

HK$'000 FY2017 FY2018 YoY

By Segment

Sofa and ancillary products 6,981,725 8,075,623 15.7%

Other products 594,802 925,934 55.7%

Home Group business 202,488 870,956 330.1%

Jiangsu Yulong business - 154,060 N/A

Total 7,779,015 10,026,573 28.9%

By Geography

PRC (including Hong Kong) 3,362,407 4,831,080 43.7%

North America 3,498,762 3,590,250 2.6%

Others (including Europe) 917,846 1,605,243 74.9%

Total 7,779,015 10,026,573 28.9%

Figure 2: Revenue Breakdown


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COMPANY UPDATE



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Sofa and ancillary products -GPM:40.1%

Other products - GPM: 28.1%

Home Group business - GPM:24.6%

Jiangsu Yulong business - GPM:20.3%

May 16, 2018

Figure 3: Branded Retail Stores in China


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Figure 4: Gross Profit Distribution by Segment and GPM

Sources: Company, CGIS Research estimates

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COMPANY UPDATE



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BEst P/E Ratio (Curr Ann) 5-year average

May 16, 2018


Figure 5: Peers Comparison


*Year end for Man Wah is 31 March

**Before earnings revision by the market

Figure 6: Forward PER (before market earnings revision)

Company Ticker Trading Price Mkt Cap

Currency US$m FY0 FY1 FY2 FY0 FY1 FY2 FY0 FY1 FY2 FY0 FY1 FY2

Peers Listed in Hong Kong

Man Wah Holdings Ltd 1999 HK HKD 6.51 3,178 16.19 12.50 10.98 4.65 3.62 3.36 31.80 30.83 31.34 3.84 4.70 5.64

Morris Holdings Ltd 1575 HK HKD 1.60 204 8.05 - - 3.39 - - 59.04 - - 4.75 - -

Samson Holding Ltd 531 HK HKD 0.83 330 3.60 - - 0.88 - - 24.12 - - 8.43 - -

Simple Average 9.28 12.50 10.98 2.97 3.62 3.36 38.32 30.83 31.34 5.67 4.70 5.64

Peers Listed in A-share

Suofeiya Home Collection C-A 002572 CH RMB 36.10 5,241 35.74 27.04 20.06 7.29 6.14 5.03 21.85 23.05 25.56 1.25 1.51 1.97

Jason Furniture Hangzhou C-A 603816 CH RMB 73.14 4,923 36.75 29.00 21.99 8.78 6.13 5.00 25.75 21.52 22.87 1.31 0.94 1.32

Markor Intl Home Furnishin-A 600337 CH RMB 5.82 1,653 27.81 21.01 16.97 2.08 1.98 1.82 9.23 10.72 12.17 1.89 2.41 2.75

Yotrio Group Co Ltd-A 002489 CH RMB 4.35 1,488 - 108.75 - 2.91 - - -4.09 - - 0.23 - -

Guangzhou Holike Creative -A 603898 CH RMB 29.75 1,498 25.75 20.91 15.96 4.53 3.88 3.23 21.75 19.03 20.56 1.10 1.22 1.52

Qumei Home Furnishings Grp-A 603818 CH RMB 13.47 1,025 26.16 20.69 15.83 4.03 3.49 2.95 16.44 17.10 18.74 0.76 0.52 0.56

Simple Average 30.45 37.90 18.16 4.94 4.32 3.61 15.16 18.28 19.98 1.09 1.32 1.62

PER(x) PBR(x) ROE(%) Div YIeld(%)

1

COMPANY / INDUSTRY NEWS

Analyst: Mark Po, CFA; Tel: (852) 3698 6318; [email protected]

TECHNOLOGY HARDWARE INDUSTRY UPDATE – The Apr 2018 data offers no major positives, but in our view, the

risks did materialise. We hold the contrarian view that it is time to revisit hardware names.

Overall: The Apr 2018 growth rate offered no major positives, but the risks did materialize. The market turned cautious on HK-listed hardware names, especially handset components and communications equipment, given the US government’s re-activation of the export ban on ZTE [0763.HK] and negative industry news flow, such as TSMC’s downward revision of guidance, the US government’s potential investigation of Huawei, and weak market sentiment. The market reacted positively to the message from President Trump regarding resolving the ZTE case, but we maintain the view that market sentiment may swing until the issue is resolved. The Q1 2018 results from handset component names such as AAC [2018.HK] surprised the market on the downside and created concern about the growth outlook for those companies, putting pressure on their shares. However, we main-tain the view that the risks did materialize, and we hold the contrarian view that it is time to revisit hardware names.

Growth rate of the hardware sector picked up in April. The Apr 2018 figures vs. Mar 2018 figures released by Taiwan-listed technology names indicate that in general, the growth rate of the hardware sector picked up in Apr 2018 vs. Mar 2018. We agree that the outlook for May is not as posi-tive as previously expected, but the Apr and Mar 2018 data suggests that the hardware sector is still growing. We also saw some positive signals such as Mediatek’s guidance for 2Q 2018, Largan’s Apr 2018 turnover and guidance, and strong turnover growth of passive components, which supports our view. On average, Hong Kong-listed TMT hardware names underperformed their regional and global peers, except for their Taiwanese peers, and the HSI and MSCI on a one-month basis, which in our view, was due to share price corrections partly because of the weaker-than-expected Q1 2018 results of some hardware names. Regarding near-term performance, we now take view that the Android camp will outperform the Apple camp This is in line with previous discussions that Chinese Android brands will launch new models in 2H 2018 and the fact that recently launched models such as Huawei’s P20 Pro have been well-received by the market, which will boost sentiment on handset names with high exposure to Chinese Android.

Android camp shipments remained intact. Taiwan-listed technology names (materials and equipment, wafers, semiconductors, IC design, wafers, LEDs, optical communications, PCBs, TFT-LCDs, casings, lenses, DRAMs, ODMs, optical components and casings, networking, PCBs, auto electron-ics, terminals and distribution) reported their Apr 2018 turnover. Sector wide, materials and equipment, wafers, foundries, optical communications, PCBs, TFT-LCD, DRAMs, packaging & testing, casings, components, ODMs, OBMs and distribution saw higher YoY top-line growth in Apr 2018 vs. Mar 2018. We would like to highlight that despite the MoM drop, MediaTek’s Apr 2018 7.14% YoY increase in turnover further improved from a 3.4% YoY decrease in turnover in Mar 2018, which may indicate that shipments in the Android camp remain resilient. Among the major Apple-related com-panies, TSMC, Hon Hai, Largan and Flexium reported faster turnover growth in Apr 2018 vs. Mar 2018. Regarding specific components, we reiterate the view that two components, 3D sensing and flexible/substrate grade PCBs, should continue to outperform the other components. We maintain the view that Apple continues to have first-mover advantage over the Android camp, especially in securing the supply of 3D-sensing modules (VCSEL supply chain). We still expect wider application of 3D-sensing by Apple in 2H 2018. We believe that 3D-sensing will be a major theme for both Apple and Chinese Android in 2H 2018. Industry news flow suggest that the Android phones with the 3D-sensing feature will be launched in 2H 2018. Re-garding the PC side, PCB names such as MSI and Gigabyte continued to deliver decent YoY growth in Apr 2018 vs. Mar 2018. Acer reported higher YoY growth in Apr 2018 vs. single-digit growth in Mar 2018. Apart from hyper-scale servers, downstream demand for PCs remains resilient. Increasing investment in data centres relating to cloud computing, Big Data analysis and the Industrial Internet remains a driver of the PC market. We still main-tain the view that news flow on the PC industry hasn’t indicated any significant downside at this stage.

Q-Tech: margin disappointment due to unfavourable product mix. In the Hong Kong market, both Sunny Optical and Q-Tech reported resilient Apr 2018 shipment figures. But Q-Tech suffered from margin deterioration because of an unfavourable product mix. Sunny Optical's handset lens set shipments rose 60.9% YoY (+16.7% MoM) to 7 0.84m units in Apr 2018. Shipments of handset camera modules rose 35.4% YoY (+14.4%) to 28.6m units in Apr 2018. Vehicles lens set shipments increased 31.0% YoY (+14.0% YoY) to 3.3m units. Q-Tech’s total Apr 2018 camera module shipments increased 24% YoY and 10.0% MoM to 19.3m units. In the camera module segment, 8MP and below increased 33.5% YoY and 11.1% MoM to about 11.2m units in Apr 2018, and 10MP and above rose 13.0% YoY and 8.6% MoM to about 8.2m units. Q-Tech also reported a 9.6% YoY increase and 1.1% MoM decrease in shipments of fingerprint modules to about 7.5m units. Q-Tech's volume shipments were resilient after a strong pick-up in Mar 2018.

Handsets: Concerns about Sunny Optical’s growth outlook removed . We saw a pick-up in the YoY growth of the Sunny Optical camera module segment in Apr 2018, which should remove market concerns about the growth outlook for the Company. Sunny Optical is a major beneficiary of the pick-up in shipments by the Android camp and the increasing adoption of tri-camera models. Sunny Optical continues to outperform its peers, espe-cially Largan. Shares of Q-Tech corrected substantially after it issued a profit warning last week. We agree that the profit warning was a negative sur-prise, but highlight that the share price correction, and earnings and rating downgrade reflect concerns about the impact of low quality growth (low-end products driving volume growth). We share the view that it will take time for the market to rebuild confidence in Q-Tech, but we note that the Company is recovering from a challenging 1H 2018 and that most of the negatives have been seen. Unless the market environment turns unfavourable again, Q-Tech is likely to report a good HoH recovery in 2H 2018. We maintain the view that 3D-sensing/camera modules (especially the tri-camera, which is a hot topic) remain key components attracting market attention. The market reacted negatively to AAC’s Q1 2018 results, given concerns about the growth outlook and margin trend. We remain optimistic about AAC, as we believe that concerns about a slowdown in global handset shipments, mar-gin pressure and slower turnover growth have been priced in somewhat. We maintain the view that the market is likely to focus more on news flow on Apple’s new iPhone design and specifications. AAC’s development of the optics business and other new growth drivers will support its future growth. We believe the market is likely to re-rate AAC if the Company has a major breakthrough in lens technology, especially the coming sensing-related WLG hybrid lens solution. We still don’t see any re-rating catalysts for Cowell [1415.HK] or Truly [0732.HK]. We maintain the view that PentaMaster [1665.HK] will be a beneficiary of the increasing adoption of 3D-sensing components by Apple. FIT Hon Teng’s [6088.HK] post-2017 results correction reflected the negatives and concerns somewhat, so long-term investors can take this as a revisit opportunity.

May 16, 2018

2


Analyst: Mark Po, CFA; Tel: (852) 3698 6318; [email protected]

The Apr 2018 data offers no major positives, but in our view, the risks did materialise. We hold the contrarian view

that it is time to revisit hardware names.

PCs: Unlikely to see major downside surprises. PCB and gaming notebook suppliers, including MSI and Gigabyte, continued to do well in Apr

2018 after good growth in Mar 2018. We still hold the view that the PC supply chain shouldn’t offer any major downside surprises. Server shipments,

especially hyper-scale servers, and notebooks remained resilient. The market still seems to have a cautious view on Lenovo’s Q3 results, given the

slowdown in the handset division. We will closely monitor Lenovo’s performance to see whether there is a major re-rating catalyst. We don’t see a

major re-rating catalyst for Ju Teng [3336.HK] even though news flow on the PC industry has improved for quite some time. The strong figures re-

leased by MSI and Gigabyte may be treated as a positive indicator for PCBs and laminates, which is positive for Kingboard Laminates [1888.HK] and

Kingboard Chemical [0148.HK], which owns both Kingboard Laminates and Elec & Elteck [1151.HK].

Semiconductors: Faster growth in April vs. March. The semiconductor supply chain in Taiwan, including foundries, and packaging and testing,

reported faster YoY turnover growth in Apr 2018 vs. Mar 2018. The foundries segment reported healthy YoY growth in Apr 2018, driven by TSMC,

UMC and Vanguard. Shares of names in the HK-listed semiconductor supply chain outperformed on a one-month basis which in our view, was due to

expectations of strong government support for the local IC industry and solid Q1 2018 results released by SMIC [0981.HK] and Hua Hong [1347.HK].

Power management in the IC segment is attracting market attention, as it is the driving force of demand for 8” wafer capacity. In regard to power man-

agement ICs, both ASMC [3355.HK] and Hua Hong [1347.HK] have high exposure to this segment, and their near-term growth is more visible. If de-

mand from Chinese Android makers continues to pick up in Q2 and Q3 2018, then the operating environment for SMIC will become more favourable,

given its higher exposure to the smartphone segment. On the macro front, news flow regarding China’s increasing purchases of ICs from the US and

the Chinese government’s policy remain swing factors for sentiment on the Chinese semiconductor supply chain.

Displays: China shipments improving. The recent releases by Skyworth [0751.HK] and TCL Multimedia [1070.HK] show that China shipments im-

proved in Q1 2018 vs. a very challenging 2017. Shares of Skyworth and TCL Multimedia have underperformed despite the recovery in the China TV

market and the more favourable operating environment. We believe that it will take time for the market to pick up interest in the Chinese TV makers

after a challenging 2017. We maintain that the group restructuring and TV business (including smart TVs) will drive the growth of TCL Multimedia. We

expect TCL Multimedia to report strong Q1 2018 results later, given strong shipment figures. We also believe that the smart TV platforms of Skyworth

and TCL Multimedia will create a long-term growth opportunity.

Optical communications: Revenue growth continued to show improvement in April. The average YoY turnover growth rate of Taiwanese optical

communications names continued to improve in Apr 2018 vs. Mar 2018. Recent messages from Taiwanese optical communications names have reaf-

firmed our positive view of this segment. We maintain the view that O-Net [0877.HK] and YFOC [6869.HK] are treated as proxies for optical communi-

cations and 5G investment. We believe that progress in YOFC’s A-share IPO is on track and that the Company will return to the A-share market by the

end of 2018.

Others: Pay attention to major IPOs. Regarding other hardware names, we believe that Foxconn Industrial Internet and CATL are the two hottest

IPOs in the market, and that the market is looking for proxies in the HK market for these two IPOs. We also believe TUS [0873.HK] may look interest-

ing, given the development of IoV in China.

3


Sources: Bloomberg , CGIS Research

Figure 1: Monthly YoY turnover growth of Taiwan-listed companies Sector Ticker Name 07/17 08/17 09/17 10/17 11/17 12/17 Jan-Feb/2018 03/18 04/18 YoY growth picked up in Jul vs Jun 2017 YoY growth picked up in Aug vs Jul 2017 YoY growth picked up in Sep vs Aug 2017 YoY growth picked up in Oct vs Sep 2017 YoY growth picked up in Nov vs Oct 2018 YoY growth picked up in Dec vs Nov 2019 YoY growth picked up in Jan-Feb vs Dec YoY growth picked up in Mar vs Jan-Feb YoY growth picked up in Apr vs Mar

Materials & Equipment 2360 TT Equity CHROMA ATE INC -28.6 31.7 52.2 94.2 138.2 27.6 29.8 17.3 39.7 Yes Yes Yes Yes Yes Yes

2395 TT Equity ADVANTECH CO LTD 4.7 6.8 11.1 14.1 10.6 2.7 16.2 9.4 12.3 Yes Yes Yes Yes Yes

6414 TT Equity ENNOCONN CORP 180.3 203.2 237.5 280.0 273.7 327.1 201.8 185.5 194.0 Yes Yes Yes Yes Yes Yes

6166 TT Equity ADLINK TECHNOLOGY INC 24.8 10.2 42.5 20.3 -0.5 -20.0 2.1 -7.4 -6.7 Yes Yes Yes Yes

1590 TT Equity AIRTAC INTERNATIONAL GROUP 37.7 34.1 43.6 33.1 32.7 25.0 27.7 29.9 28.8 Yes Yes Yes Yes

6510 TT Equity Chunghwa Precision 25.4 21.8 19.2 -2.4 -38.4 -19.2 -11.0 3.4 11.7 Yes Yes Yes Yes Yes

2049 TT Equity HIWIN TECHNOLOGIES CORP 22.5 39.2 38.4 35.4 34.9 36.1 54.5 49.9 50.0 Yes Yes Yes Yes Yes

8215 TT Equity BENQ MATERIALS CORP -14.2 -14.2 -12.3 -19.3 -7.7 -28.1 -7.2 3.5 8.3 Yes Yes Yes Yes Yes

5536 TT Equity ACTER CO LTD -36.8 65.6 12.4 87.4 55.7 77.9 17.7 0.9 19.2 Yes

24.0 44.3 49.4 60.3 55.5 47.7 36.9 32.5 39.7 Yes Yes Yes Yes Yes

IC design 3034 TT Equity NOVATEK MICROELECTRONICS COR 3.60 0.64 5.19 10.37 12.14 -2.95 -4.71 -3.13 6.79 Yes Yes Yes Yes Yes

2379 TT Equity REALTEK SEMICONDUCTOR CORP 8.29 3.94 7.48 6.29 12.59 12.10 5.60 8.06 9.32 Yes Yes Yes Yes Yes

6462 TT Equity EGIS TECHNOLOGY INC 370.99 200.06 187.22 26.66 36.75 59.07 31.44 53.95 44.96 Yes Yes Yes

2454 TT Equity MEDIATEK INC -23.57 -13.04 -19.95 -11.74 -11.81 -12.65 -16.22 -3.40 7.14 Yes Yes Yes Yes

5274 TT Equity ASPEED TECHNOLOGY INC 37.45 33.05 22.95 17.05 23.53 62.48 10.33 36.53 24.92 Yes Yes Yes

2344 TT Equity WINBOND ELECTRONICS CORP 13.39 18.49 18.84 21.06 25.22 21.42 17.74 14.51 23.43 Yes Yes Yes Yes Yes Yes

2337 TT Equity MACRONIX INTERNATIONAL 34.09 62.78 46.52 67.68 49.60 49.04 38.33 34.91 41.67 Yes Yes Yes

6138 TT Equity ANPEC ELECTRONICS CORP 26.19 17.06 8.62 10.60 -0.65 1.78 18.16 25.96 18.66 Yes Yes Yes Yes Yes

6411 TT Equity AMAZING MICROELECTRONIC CORP 0.92 6.22 10.64 6.28 14.37 16.07 18.35 3.02 18.56 Yes Yes Yes Yes Yes Yes

3014 TT Equity ITE TECHNOLOGY INC 4.13 -5.31 1.62 8.31 4.69 10.96 10.94 2.72 6.51 Yes Yes Yes Yes Yes

4947 TT Equity ON-BRIGHT ELECTRONICS INC 17.30 20.77 27.14 32.17 11.94 50.62 50.52 52.82 41.80 Yes Yes Yes Yes Yes Yes

2436 TT Equity WELTREND SEMICONDUCTOR INC 9.70 16.97 24.22 11.74 23.52 27.64 27.96 6.32 28.74 Yes Yes Yes Yes Yes Yes

8261 TT Equity ADVANCED POWER ELECTRONICS 5.71 21.31 28.85 27.32 31.63 49.41 42.17 56.91 58.76 Yes Yes Yes Yes Yes Yes

8262 TT Equity NIKO SEMICONDUCTOR CO LTD 18.88 11.62 10.34 -2.84 3.55 -8.03 10.76 8.74 14.52 Yes Yes Yes Yes

6435 TT Equity SINOPOWER SEMICONDUCTOR 46.35 27.81 27.45 23.89 18.29 9.08 43.10 39.43 35.15 Yes Yes

4966 TT Equity PARADE TECHNOLOGIES LTD 84.46 22.65 7.00 15.19 7.83 2.85 -2.61 6.03 -31.52 Yes Yes Yes

5269 TT Equity ASMEDIA TECHNOLOGY INC 98.87 14.36 6.57 17.61 16.41 -20.15 -3.85 18.88 -21.04 Yes Yes Yes

3443 TT Equity GLOBAL UNICHIP CORP 92.32 23.38 31.08 76.33 29.46 7.72 4.14 35.90 37.52 Yes Yes Yes Yes Yes

6202 TT Equity HOLTEK SEMICONDUCTOR INC -2.73 13.97 3.76 15.30 19.64 9.91 5.77 -8.42 11.22 Yes Yes Yes Yes

44.54 26.14 23.98 19.96 17.30 18.23 16.21 20.51 19.85 Yes Yes

Wafer 3523 TT Equity EFUN TECHNOLOGY CO LTD -63.58 -76.42 -87.11 -90.70 -93.96 -85.71 -94.17 -87.85 -77.94 Yes Yes Yes

6488 TT Equity GLOBALWAFERS CO LTD 169.62 179.41 193.25 175.67 182.35 16.46 38.87 19.64 34.51 Yes Yes Yes Yes Yes

6182 TT Equity WAFER WORKS CORP 17.40 28.55 28.64 28.52 28.46 43.98 39.84 36.61 38.37 Yes Yes Yes Yes

41.15 43.84 44.93 37.83 38.95 -8.42 -5.15 -10.54 -1.69 Yes Yes Yes Yes Yes

Foundry 2330 TT Equity TAIWAN SEMICONDUCTOR MANUFAC -6.26 -2.54 -1.25 3.77 0.13 15.09 -2.47 20.75 43.95 Yes Yes Yes Yes Yes Yes

2303 TT Equity UNITED MICROELECTRONICS CORP 2.34 0.87 -6.83 7.60 -5.89 -15.05 1.70 -2.66 4.07 Yes Yes Yes Yes

5347 TT Equity VANGUARD INTERNATIONAL SEMI -11.02 -0.90 4.91 -7.32 -4.59 1.96 4.27 -0.14 24.18 Yes Yes Yes Yes Yes Yes

3105 TT Equity WIN SEMICONDUCTORS CORP 11.40 17.40 44.74 67.99 73.33 79.58 44.63 22.07 19.21 Yes Yes Yes Yes Yes Yes

-0.89 3.70 10.39 18.01 15.75 20.40 12.03 10.01 22.85 Yes Yes Yes Yes Yes

LED 2393 TT Equity EVERLIGHT ELECTRONICS CO LTD -2.72 -14.23 -8.33 -2.89 -15.49 -15.72 -0.46 -16.88 -13.94 Yes Yes Yes Yes

2448 TT Equity EPISTAR CORP 3.12 5.26 12.77 -2.92 -15.00 -0.68 -3.76 -20.39 -23.90 Yes Yes Yes

6271 TT Equity TONG HSING ELECTRONIC INDUST -3.57 0.46 7.76 6.64 -8.31 -1.84 -6.22 -0.95 5.97 Yes Yes Yes Yes Yes Yes

3603 TT Equity UPEC ELECTRONICS CORP -77.24 -69.11 -70.70 -71.54 -43.07 -66.85 199.93 193.85 161.46 Yes Yes Yes Yes

3698 TT Equity LEXTAR ELECTRONICS CORP 6.71 -9.95 -20.28 -17.58 -21.60 -17.89 -9.57 -25.17 -2.43 Yes Yes Yes Yes Yes

-14.74 -17.51 -15.76 -17.66 -20.69 -20.60 35.98 26.09 25.43 Yes Yes Yes Yes

Optical Communications 3081 TT Equity LAND MARK OPTOELECTRONICS -7.40 1.39 68.24 93.30 80.03 66.82 55.60 49.65 30.47 Yes Yes Yes Yes

3450 TT Equity ELITE ADVANCED LASER CORP 3.49 -7.94 4.22 -1.54 5.91 17.54 17.92 1.00 8.01 Yes Yes Yes Yes Yes

3234 TT Equity TRUELIGHT CORP -8.35 -7.94 4.84 2.31 2.37 -8.58 5.05 9.47 33.53 Yes Yes Yes Yes Yes Yes

4979 TT Equity LUXNET CORP 20.67 18.33 21.63 25.76 27.63 25.79 37.94 58.26 87.44 Yes Yes Yes Yes Yes Yes Yes


PCBs 2377 TT Equity MSI 12.43 -10.10 -4.14 3.04 19.29 12.00 27.21 33.49 54.33 Yes Yes Yes Yes Yes Yes

6269 TT Equity FLEXIUM INTERCONNECT INC 11.31 15.38 42.49 28.48 122.97 87.02 38.05 0.90 41.59 Yes Yes Yes Yes

4958 TT Equity ZHEN DING TECHNOLOGY HOLDING 37.93 46.91 44.61 19.30 55.50 85.58 40.27 5.15 26.95 Yes Yes Yes Yes Yes

3044 TT Equity TRIPOD TECHNOLOGY CORP 2.57 5.45 9.48 9.59 12.32 12.95 15.13 6.43 20.19 Yes Yes Yes Yes Yes Yes Yes

2376 TT Equity GIGABYTE TECHNOLOGY CO LTD 26.29 10.03 8.70 9.39 21.09 49.03 29.49 97.31 26.68 Yes Yes Yes Yes Yes

3189 TT Equity KINSUS INTERCONNECT TECH -12.36 -4.12 7.85 26.39 4.58 -0.25 5.93 5.15 9.52 Yes Yes Yes Yes Yes Yes

6510 TT Equity Chunghwa Precision 25.40 21.81 19.25 -2.39 -38.37 -19.19 -10.95 3.39 11.68 Yes Yes Yes Yes Yes

6415 TT Equity SILERGY CORP 21.52 25.47 17.29 11.96 9.98 4.64 17.10 22.70 17.70 Yes Yes Yes

3037 TT Equity UNIMICRON TECHNOLOGY CORP -4.04 6.62 17.37 15.67 13.42 14.82 14.23 10.46 23.78 Yes Yes Yes Yes

6153 TT Equity CAREER TECHNOLOGY CO LTD -5.24 -9.89 -1.87 -7.15 -11.39 -9.76 0.99 -9.90 3.89 Yes Yes Yes Yes Yes

6141 TT Equity PLOTECH CO LTD 24.51 36.66 26.99 20.29 18.35 21.23 12.40 8.84 4.39 Yes Yes Yes

12.76 13.11 17.09 12.23 20.70 23.46 17.26 16.72 21.88 Yes Yes Yes Yes Yes Yes

TFT-LCD 2409 TT Equity AUO 5.00 4.11 -3.82 -9.89 -9.43 -17.07 -14.98 -17.71 -11.88 Yes Yes Yes Yes

3481 TT Equity Innolux 11.05 8.66 1.24 -11.86 -6.23 -15.88 -19.18 -27.99 -30.59 Yes

6116 TT Equity Hannstar 16.18 6.16 -25.71 -24.70 -30.56 -46.49 -26.14 -33.56 -6.40 Yes Yes Yes Yes

8069 TT Equity E INK HOLDINGS INC 9.95 2.72 11.27 39.88 -5.70 -26.39 10.80 -34.21 -27.31 Yes Yes Yes Yes Yes

8105 TT Equity GIANTPLUS TECHNOLOGY CO LTD 24.34 12.73 11.04 5.14 1.05 -7.87 -15.33 -18.60 -19.78 Yes

3049 TT Equity HANNSTOUCH SOLUTION INCORPOR -18.34 -11.64 -29.63 -40.47 -73.19 -11.42 -9.76 -30.66 -24.83 Yes Yes Yes Yes

8.03 3.79 -5.94 -6.98 -20.68 -20.86 -12.43 -27.12 -20.13 Yes Yes

Packaging & Testing 6147 TT Equity CHIPBOND TECHNOLOGY CORP 8.73 8.45 4.53 4.08 0.86 -4.62 -8.86 -9.13 -8.73 Yes

2311 TT Equity ADVANCED SEMICONDUCTOR ENGR 2.99 2.24 -0.31 7.55 8.36 10.80 -2.71 -1.74 9.74 Yes Yes Yes Yes Yes

2325 TT Equity SILICONWARE PRECISION INDS -0.75 -0.76 1.54 -0.38 -1.84 -5.25 -6.04 2.09 10.72 Yes Yes Yes Yes

2449 TT Equity KING YUAN ELECTRONICS CO LTD -5.54 -5.45 -3.30 -5.51 -7.63 -11.74 -7.84 -2.26 2.46 Yes Yes Yes Yes Yes Yes

6239 TT Equity POWERTECH TECHNOLOGY INC 24.91 31.61 27.40 24.17 22.20 21.06 22.26 32.38 27.92 Yes Yes Yes

6.07 7.22 5.97 5.98 4.39 2.05 -0.64 4.27 8.42 Yes Yes Yes Yes

Casings 2474 TT Equity CATCHER TECHNOLOGY CO LTD 24.23 21.74 48.23 51.49 35.32 21.91 44.60 31.06 28.54 Yes Yes Yes

5264 TT Equity CASETEK HOLDINGS LTD 17.36 28.79 18.74 36.13 -1.30 -29.06 12.98 -11.20 6.25 Yes Yes Yes Yes

6235 TT Equity WAFFER TECHNOLOGY CO LTD 26.10 44.85 56.23 35.89 54.45 28.52 40.89 -4.76 37.59 Yes Yes Yes Yes Yes


LENs 3008 TT Equity LARGAN PRECISION CO LTD -3.27 3.95 9.87 10.66 7.84 -10.43 -21.08 -13.41 -6.05 Yes Yes Yes Yes Yes

3406 TT Equity GENIUS ELECTRONIC OPTICAL CO -10.02 20.37 24.88 12.59 29.36 40.54 22.77 14.55 -2.81 Yes Yes Yes Yes Yes

3019 TT Equity ASIA OPTICAL CO INC 0.78 -7.84 -1.59 2.12 8.89 6.76 8.02 8.25 -3.36 Yes Yes Yes Yes Yes

3630 TT Equity NEWMAX TECHNOLOGY CO LTD -14.31 -25.45 -27.26 -31.29 -40.27 -58.90 -34.53 -25.92 -2.32 Yes Yes Yes Yes

3441 TT Equity UNIQUE OPTICAL INDUSTRIAL CO 20.04 17.37 4.80 55.67 21.07 -34.54 -14.94 -25.73 -44.84 Yes Yes

6209 TT Equity KINKO OPTICAL CO LTD 2.39 -7.42 -24.52 -17.54 -11.41 -21.53 -15.77 -15.37 -14.34 Yes Yes Yes Yes Yes Yes

4976 TT Equity CALIN TECHNOLOGY CO LTD 3.49 -7.94 4.22 -1.54 5.91 17.54 17.92 1.00 8.01 Yes Yes Yes Yes Yes

-0.13 -0.99 -1.37 4.38 3.05 -8.65 -5.37 -8.09 -9.38 Yes Yes

DRAMs 2408 TT Equity NANYA TECHNOLOGY CORP 32.14 25.95 32.83 32.73 43.19 39.96 50.23 60.32 77.91 Yes Yes Yes Yes Yes

3006 TT Equity ELITE SEMICONDUCTOR MEMORY 1.90 -11.21 20.92 -6.33 10.11 -2.24 6.93 3.70 3.71 Yes Yes Yes Yes


Components 3152 TT Equity ADVANCED CERAMIC X CORP 0.48 -1.20 -4.22 -7.36 -7.86 -14.38 -24.31 -12.15 -9.66 Yes Yes

3673 TT Equity TPK HOLDING CO LTD 29.17 2.02 22.72 21.18 48.13 30.85 5.04 -17.31 2.29 Yes Yes Yes

6121 TT Equity SIMPLO TECHNOLOGY CO LTD 7.22 6.57 9.11 4.00 8.73 17.03 11.85 9.69 16.91 Yes Yes Yes Yes Yes

6456 TT Equity GENERAL INTERFACE SOLUTION 149.89 120.85 92.58 58.64 69.96 39.80 27.88 7.38 13.17 Yes Yes

2308 TT Equity DELTA ELECTRONICS INC 2.33 6.32 5.79 6.80 9.28 6.73 6.08 0.50 4.44 Yes Yes Yes Yes

2439 TT Equity MERRY ELECTRONICS CO LTD 6.25 42.24 44.19 73.75 68.43 69.65 12.49 -26.33 14.50 Yes Yes Yes Yes Yes

3026 TT Equity HOLY STONE ENTERPRISE CO LTD -8.35 -7.94 4.84 2.31 2.37 -8.58 5.05 9.47 33.53 Yes Yes Yes Yes Yes Yes

2492 TT Equity WALSIN TECHNOLOGY CORP 20.67 18.33 21.63 25.76 27.63 25.79 37.94 58.26 87.44 Yes Yes Yes Yes Yes Yes Yes

5317 TT Equity KAIMEI ELECTRONIC CORP -10.13 -9.54 -21.58 -13.76 -6.48 -4.09 -5.56 -20.32 -16.08 Yes Yes Yes Yes Yes

5328 TT Equity HUA JUNG COMPONENTS CO LTD 6.27 -17.05 -10.43 -10.17 0.56 -5.92 -7.30 -2.79 5.29 Yes Yes Yes Yes Yes Yes

2327 TT Equity YAGEO CORPORATION 9.62 10.32 15.99 26.39 30.01 47.10 40.70 67.72 85.83 Yes Yes Yes Yes Yes Yes Yes Yes

4943 TT Equity CONCRAFT HOLDING CO LTD 184.77 145.20 138.15 162.99 187.87 77.15 27.38 140.74 187.10 Yes Yes Yes Yes Yes

3665 TT Equity BIZLINK HOLDING INC 84.13 90.89 89.51 90.80 112.83 103.02 113.88 82.77 116.30 Yes Yes Yes Yes Yes Yes

1536 TT Equity HOTA INDUSTRIAL MFG CO LTD 20.64 22.73 27.93 12.02 10.81 4.27 4.28 3.56 6.83 Yes Yes Yes Yes Yes

2231 TT Equity CUB ELECPARTS INC 0.17 4.42 0.52 5.23 5.46 13.16 20.59 25.07 11.42 Yes Yes Yes Yes Yes Yes

33.54 28.94 29.12 30.57 37.85 26.77 18.40 21.75 37.29 Yes Yes Yes Yes Yes Yes

ODMs 2324 TT Equity COMPAL ELECTRONICS 23.86 21.58 8.10 12.10 32.60 4.34 8.70 -0.95 13.73 Yes Yes Yes Yes Yes

2382 TT Equity QUANTA COMPUTER INC 19.09 25.11 25.94 48.31 2.34 -17.37 -3.26 -2.65 0.08 Yes Yes Yes Yes Yes Yes

2356 TT Equity INVENTEC CORP 13.38 9.84 10.06 16.54 19.66 15.62 4.99 5.19 10.68 Yes Yes Yes Yes Yes Yes

2317 TT Equity HON HAI PRECISION INDUSTRY 7.53 1.31 -3.70 2.87 18.50 50.15 6.85 2.18 6.57 Yes Yes Yes Yes Yes

2354 TT Equity FOXCONN TECHNOLOGY CO LTD 66.35 94.19 165.19 176.91 140.96 250.36 90.13 66.20 88.00 Yes Yes Yes Yes Yes

3231 TT Equity WISTRON CORP 38.70 13.93 27.82 36.81 20.23 18.18 40.97 9.31 -2.66 Yes Yes Yes Yes

4938 TT Equity PEGATRON CORP 13.88 7.89 1.74 10.40 -3.19 5.95 20.39 11.71 27.24 Yes Yes Yes Yes Yes


OBMs 2451 TT Equity TRANSCEND INFORMATION INC 0.52 -4.33 5.61 -12.35 -11.73 -23.26 -17.19 -12.86 -12.77 Yes Yes Yes Yes Yes Yes

2353 TT Equity ACER INC 6.24 5.71 -0.77 11.74 3.89 11.63 -4.67 1.42 12.79 Yes Yes Yes Yes Yes

2357 TT Equity ASUSTEK COMPUTER INC -5.34 -5.14 1.11 -9.51 -13.54 -7.38 -7.80 -9.56 -15.55 Yes Yes Yes Yes

2489 TT Equity AMTRAN TECHNOLOGY CO LTD -41.48 -15.96 -50.33 -42.81 -47.94 -44.05 -23.44 -37.57 -28.74 Yes Yes Yes Yes Yes Yes

2498 TT Equity HTC CORP -1.97 -54.39 -30.24 -25.79 -26.16 -37.25 -35.54 -46.66 -55.47 Yes Yes Yes

-8.41 -14.82 -14.92 -15.75 -19.10 -20.06 -17.73 -21.05 -19.95 Yes Yes Yes

Distribution 3702 TT Equity WPG HOLDINGS LTD 4.73 5.38 0.57 2.80 3.90 -8.38 4.37 2.44 12.53 Yes Yes Yes Yes Yes Yes

2347 TT Equity SYNNEX TECHNOLOGY INTL CORP -0.24 14.14 15.97 19.10 25.83 9.93 17.32 16.66 17.30 Yes Yes Yes Yes Yes Yes

3036 TT Equity WT MICROELECTRONICS CO LTD 39.39 18.79 15.05 28.04 31.29 35.68 28.61 30.65 29.17 Yes Yes Yes Yes Yes


Terminals 8114 TT Equity POSIFLEX TECHNOLOGY INC 42.35 51.51 7.96 8.87 80.05 97.60 130.42 63.78 74.14 Yes Yes Yes Yes Yes Yes Yes

3545 TT Equity FOCALTECH SYSTEMS CO LTD -4.48 11.06 15.65 6.45 13.32 -10.16 17.85 24.91 11.34 Yes Yes Yes Yes Yes Yes

5388 TT Equity SERCOMM CORPORATION 5.02 10.28 17.41 13.56 17.70 11.54 2.89 -17.18 -23.40 Yes Yes Yes Yes

2387 TT Equity SUNREX TECHNOLOGY CORP -24.72 -28.75 -18.52 -17.47 -8.24 -17.53 -20.33 -19.28 -27.53 Yes Yes Yes Yes

6285 TT Equity WISTRON NEWEB CORP -0.56 7.69 6.43 25.44 24.16 1.74 -5.63 -7.66 -6.03 Yes Yes Yes

2397 TT Equity DFI INC -11.58 4.24 25.75 3.61 2.33 -33.48 30.42 18.54 31.58 Yes Yes Yes Yes

1.01 9.34 9.11 6.75 21.55 8.29 25.94 10.52 10.02 Yes Yes Yes

4


Sources: Bloomberg , CGIS Research

Figure 2: Peer comparison Ticker Company

Price Market Cap 2018F 2019F 2020F 2018F 2019F 2020 2017 2018F 2017 2018F 2017 2018F 2017 2018F 1M 3M 6M 12M YTD 1D

Lcy US$m x x x x x x x x % % % % % % % % % % % %

HK listed names 9.1

2878 HK Solomon Systech (Intl) Ltd 0.35 109 n.a. n.a. n.a. n.a. n.a. n.a. 1.2 n.a. -10.7 n.a. -8.8 n.a. 0.0 n.a. 9.5 1.5 -23.3 -5.5 -13.8 0.0

1385 HK Shanghai Fudan Microelect-H 7.41 622 n.a. n.a. n.a. n.a. n.a. n.a. 1.5 n.a. 14.9 n.a. 10.6 n.a. 0.0 n.a. 6.5 19.3 2.9 27.5 7.4 -0.5

85 HK China Electronics Huada Tech 1.24 321 n.a. n.a. n.a. n.a. n.a. n.a. 1.2 n.a. 11.9 n.a. 3.9 n.a. 2.4 n.a. 9.7 6.0 -21.5 -15.1 -9.5 0.0

1679 HK Risecomm Group Holdings Ltd 2.54 262 n.a. n.a. n.a. n.a. n.a. n.a. 4.3 n.a. 4.1 n.a. 3.0 n.a. 0.0 n.a. -27.2 -31.4 -33.2 n.a. -31.4 -3.8

981 HK Semiconductor Manufacturing 10.66 6,697 71.5 54.3 41.2 9.7 8.5 7.6 1.3 1.3 3.8 1.8 1.2 0.5 0.0 0.0 6.7 13.9 -8.9 26.8 -21.2 -1.1

3355 HK Advanced Semiconductor Man-H 0.86 168 n.a. n.a. n.a. n.a. n.a. n.a. 1.0 n.a. 5.7 n.a. 4.6 n.a. 0.0 n.a. 7.5 6.2 -26.5 8.9 -9.5 -1.1

1347 HK Hua Hong Semiconductor Ltd 19.04 2,522 16.7 15.2 13.2 8.1 6.9 5.0 1.5 1.3 9.1 8.5 7.3 7.1 0.0 1.7 24.4 32.2 29.7 67.3 14.8 2.1

522 HK Asm Pacific Technology 105.70 5,452 14.8 13.6 12.6 10.3 9.5 8.9 3.8 3.4 27.6 24.5 16.4 16.0 2.4 2.8 -0.8 -2.4 -15.7 -12.6 -2.9 -0.8

2018 HK Aac Technologies Holdings In 110.10 17,139 16.4 13.2 11.3 12.0 9.8 8.5 6.2 4.9 33.6 32.3 19.4 20.0 1.9 2.3 -23.3 -28.0 -35.2 20.0 -21.0 -4.9

2382 HK Sunny Optical Tech 149.60 20,906 32.3 23.6 18.5 24.9 18.4 14.2 17.7 12.2 46.9 44.6 21.2 22.8 0.5 0.8 -4.1 16.9 6.8 132.7 49.7 -2.5

1415 HK Cowell E Holdings Inc 1.93 204 6.3 5.5 5.5 2.6 2.6 3.1 0.6 0.6 8.8 7.7 5.2 5.3 3.6 3.3 -4.9 -21.2 -43.9 -18.6 -26.9 -0.5

1478 HK Q Technology Group Co Ltd 7.01 1,011 16.7 12.5 10.6 9.5 7.5 6.3 3.0 2.5 23.5 16.6 8.2 6.4 0.6 1.0 -39.6 -35.9 -57.8 7.2 -36.3 5.9

732 HK Truly International Holdings 1.86 739 7.2 5.1 4.2 4.4 3.6 3.4 0.7 0.7 0.9 10.2 0.3 3.4 0.5 3.8 -6.5 -22.8 -46.9 -33.3 -45.0 0.5

710 HK Boe Varitronix Ltd 3.83 359 n.a. n.a. n.a. n.a. n.a. n.a. 1.0 n.a. 0.8 n.a. 0.7 n.a. 0.3 n.a. -4.3 1.9 -41.1 -9.0 -25.6 -0.5

334 HK China Display Optoelectronic 0.67 178 7.4 5.7 5.2 4.7 3.8 3.3 2.3 1.9 26.7 25.9 5.1 6.2 2.9 3.4 -16.3 -24.7 -39.1 -40.2 -39.6 0.0

877 HK O-Net Technologies Group Ltd 5.16 527 13.4 10.5 7.0 n.a. n.a. n.a. 2.0 1.7 12.1 13.9 7.5 9.9 0.0 1.8 3.2 3.4 -1.3 5.5 3.2 0.6

259 HK Yeebo International Hldgs 2.34 298 n.a. n.a. n.a. n.a. n.a. n.a. 1.4 n.a. 30.7 n.a. 7.2 n.a. 2.6 n.a. -0.8 -4.5 -39.8 -37.6 -38.3 0.0

1979 HK Ten Pao Group Holdings Ltd 0.95 121 4.9 3.9 3.6 2.9 2.4 2.2 1.6 1.2 30.1 29.7 9.2 11.1 5.3 6.0 -17.4 -22.8 -45.7 -49.7 -45.7 -2.1

3336 HK Ju Teng International Hldgs 1.51 221 5.6 7.4 7.4 3.7 3.9 5.6 0.3 0.3 1.2 4.1 0.5 2.1 5.3 3.8 -20.5 -29.8 -40.1 -48.8 -40.8 0.0

285 HK Byd Electronic Intl Co Ltd 13.42 3,852 8.9 7.6 6.4 4.5 4.0 3.6 1.7 1.4 19.9 17.2 10.5 10.3 2.1 1.8 0.8 -26.4 -36.4 -1.2 -21.2 1.5

698 HK Tongda Group Holdings Ltd 1.80 1,388 8.6 7.0 5.9 6.7 5.6 4.7 1.9 1.7 19.2 20.5 8.3 9.7 3.0 3.7 12.5 -1.1 -16.3 -32.6 -10.0 -1.1

6088 HK Fit Hon Teng Ltd 3.38 2,899 12.3 10.8 10.8 5.2 3.8 3.0 1.5 1.3 11.4 12.0 6.2 6.9 10.9 2.1 5.3 -21.8 -44.7 n.a. -36.1 4.6

1665 HK Pentamaster International Lt 1.15 234 14.5 11.1 8.3 11.5 8.6 7.6 n.a. 3.2 37.7 27.2 18.9 17.6 0.0 0.0 -0.9 10.6 n.a. n.a. n.a. -1.7

Average 16.1 12.9 10.7 8.1 6.6 5.8 2.6 2.5 16.1 18.5 7.2 9.7 1.9 2.4 -3.5 -7.0 -26.3 -0.4 -18.2 -0.2

A share listed names

300433 CH Lens Technology Co Ltd-A 22.28 9,213 19.7 14.8 12.1 11.8 9.6 7.0 3.5 3.1 13.3 17.0 6.2 8.4 n.a. 1.1 -0.6 -12.2 -36.2 -20.0 -25.4 -2.0

300136 CH Shenzhen Sunway Communicat-A 36.97 5,715 25.7 18.8 15.6 22.9 16.4 13.0 12.0 8.8 38.0 35.5 19.9 22.9 n.a. 0.5 -0.4 6.7 -32.8 1.4 -27.1 -0.8

300408 CH Chaozhou Three-Circle Grou-A 24.82 6,797 27.5 20.5 15.7 19.1 13.4 10.1 7.0 6.0 19.7 22.3 15.8 20.8 n.a. 1.0 3.0 13.7 7.5 13.4 23.1 -0.7

300115 CH Shenzhen Everwin Precision-A 16.50 2,344 14.9 14.3 9.5 10.8 8.5 6.3 3.4 2.9 13.6 18.0 6.3 9.1 n.a. 1.0 -6.3 -2.3 -42.8 -39.2 -17.8 -0.5

002456 CH Shenzhen O-Film Tech Co-A 19.76 8,437 25.7 19.3 15.1 17.7 14.2 10.7 5.7 4.9 11.8 19.4 3.9 6.1 n.a. 0.5 -3.3 -0.7 -19.2 23.2 -4.0 0.1

002241 CH Goertek Inc -A 11.78 6,013 15.1 12.7 12.2 9.2 8.0 7.1 2.5 2.2 16.6 16.7 8.4 9.8 n.a. 0.9 -14.3 -10.4 -46.5 -34.6 -32.1 0.3

002273 CH Zhejiang Crystal-Optech -A 20.03 2,092 26.1 19.2 14.4 15.9 10.8 7.8 3.7 3.4 11.2 13.2 8.2 8.9 n.a. n.a. 2.2 6.1 -33.0 -6.8 -15.1 -1.9

300083 CH Guangdong Janus Intellig-A 5.60 1,261 9.5 7.7 n.a. n.a. n.a. n.a. 1.4 n.a. n.a. n.a. 4.5 n.a. n.a. n.a. -7.1 -19.5 -34.5 -33.9 -26.2 4.7

002475 CH Luxshare Precision Industr-A 23.90 11,928 30.2 22.5 17.6 18.9 14.3 11.5 5.6 4.9 14.0 17.7 7.4 9.3 n.a. 0.5 0.7 -1.0 -4.2 23.6 2.0 -0.8

300207 CH Sunwoda Electronic Co Ltd-A 11.65 2,838 19.6 15.5 13.2 19.0 15.3 13.3 5.7 4.3 n.a. 22.9 5.3 6.2 n.a. 1.9 3.1 28.7 -5.4 -8.7 19.4 -0.3

000725 CH Boe Technology Group Co Lt-A 4.45 24,162 17.0 13.4 10.1 7.1 5.6 4.5 1.8 1.7 9.3 10.5 3.0 4.0 n.a. 1.2 -15.2 -19.5 -28.5 14.7 -23.1 -0.7

300207 CH Sunwoda Electronic Co Ltd-A 11.65 2,838 19.6 15.5 13.2 19.0 15.3 13.3 5.7 4.3 n.a. 22.9 5.3 6.2 n.a. 1.9 3.1 28.7 -5.4 -8.7 19.4 -0.3

603160 CH Shenzhen Huiding Technolog-A 74.11 5,294 35.1 31.2 27.2 32.5 28.1 24.9 9.5 7.8 28.5 25.8 23.2 33.3 0.8 0.9 -18.0 -2.9 -30.8 -20.8 -23.6 1.8

002008 CH Han'S Laser Technology In-A 52.79 8,860 26.7 20.9 16.7 23.3 18.4 14.5 7.2 6.7 27.1 25.8 13.7 13.9 n.a. 0.9 -4.1 4.7 -4.3 63.7 6.9 0.2

002185 CH Tianshui Huatian Technolog-A 6.89 2,310 21.1 16.5 13.6 10.2 8.5 7.1 2.7 2.5 9.7 12.1 5.2 7.8 n.a. 0.7 -7.0 -3.2 -20.6 8.5 -19.1 1.5

603690 CH Pnc Process Systems Co Ltd-A n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14.1 18.8 6.1 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

300162 CH Ledman Optoelectronic Co-A 8.38 461 n.a. n.a. n.a. n.a. n.a. n.a. 2.7 n.a. 1.8 n.a. 0.9 n.a. n.a. n.a. 4.9 28.9 -4.9 -24.5 8.7 1.0

600584 CH Jiangsu Changjiang Electro-A 20.16 4,312 38.5 25.5 15.8 9.2 8.2 n.a. 3.0 3.0 4.9 8.9 1.0 2.7 n.a. 0.3 -7.0 15.1 -12.0 17.6 -5.5 2.2

002808 CH Suzhou Goldengreen Technol-A 13.42 405 n.a. n.a. n.a. n.a. n.a. n.a. 4.8 n.a. 5.7 n.a. 5.1 n.a. 0.4 n.a. 6.3 33.9 -13.4 -35.7 11.9 -0.1

300604 CH Hangzhou Chang Chuan Techn-A 68.64 842 66.3 47.3 31.2 55.6 38.1 27.3 17.5 10.9 n.a. 17.5 16.7 12.3 0.3 n.a. 12.9 69.8 4.5 31.5 10.7 4.2

300493 CH Shanghai Fortune Techgroup-A 14.42 680 n.a. n.a. n.a. n.a. n.a. n.a. 8.7 n.a. 11.2 n.a. 5.2 n.a. 0.0 n.a. 6.6 29.8 -12.6 6.3 2.4 0.6

603986 CH Gigadevice Semiconductor B-A 163.89 5,225 40.3 28.3 24.4 43.6 28.6 22.6 25.6 14.3 n.a. 30.1 13.7 19.3 0.0 0.5 -12.3 0.5 0.5 73.4 0.5 1.3

300346 CH Jiangsu Nata Opto-Electron-A 16.30 701 116.4 101.9 56.2 n.a. n.a. n.a. 3.6 n.a. 2.8 n.a. 3.2 n.a. n.a. n.a. 2.4 21.0 -7.3 2.3 6.0 1.1

002371 CH Naura Technology Group Co-A 47.85 3,447 87.5 61.7 44.8 41.9 31.1 22.7 6.6 6.2 3.9 7.5 1.8 3.7 n.a. 0.2 8.0 70.3 6.1 104.4 15.5 2.8

300672 CH Goke Microelectronics Co-A 62.60 1,100 48.2 39.1 n.a. n.a. n.a. n.a. 7.2 n.a. 6.3 n.a. 5.4 n.a. n.a. n.a. -7.2 65.4 -5.8 n.a. -3.5 1.3

002049 CH Unigroup Guoxin Co Ltd-A 51.90 4,954 76.9 63.1 50.9 64.2 55.7 35.5 8.9 8.3 8.4 10.6 5.6 4.9 n.a. 0.1 11.1 49.1 35.3 68.1 8.1 2.3

300458 CH All Winner Technology Co L-A 22.11 1,153 48.6 34.3 25.7 28.2 21.7 18.1 3.6 n.a. 0.9 5.3 0.5 n.a. n.a. n.a. -15.6 20.6 -21.5 -15.8 -22.3 1.6

300233 CH Shandong Jincheng Pharmace-A 20.10 1,243 21.4 17.5 14.8 12.9 10.9 9.5 2.0 1.9 10.8 8.7 8.0 n.a. n.a. n.a. -1.3 19.1 6.9 -12.5 7.9 1.0

300623 CH Jiangsu Jiejie Microelectr-A 71.11 1,058 39.4 30.0 25.6 n.a. n.a. n.a. 5.5 4.7 16.8 13.2 14.9 12.3 0.7 0.3 -0.5 37.0 -14.5 -4.3 -1.2 2.0

300613 CH Shanghai Fullhan Microelec-A 157.80 1,125 33.9 25.5 n.a. n.a. n.a. n.a. 19.3 5.6 n.a. 17.9 41.4 16.4 n.a. n.a. -2.5 14.7 -33.1 -6.6 -24.8 2.1

Average 36.6 28.3 21.6 23.5 18.1 14.3 6.8 5.4 12.5 17.4 8.9 11.4 0.4 0.8 -2.0 17.0 -14.1 6.4 -4.4 0.8

Taiwan listed names

2330 TT Taiwan Semiconductor Manufac 230.50 200,106 16.4 14.6 12.8 7.9 7.1 6.4 3.7 3.5 23.6 22.6 17.3 17.4 n.a. 3.6 -5.7 -2.5 -2.9 11.9 0.4 -1.1

2303 TT United Microelectronics Corp 16.45 6,953 22.5 19.4 17.9 3.8 3.7 3.8 0.9 0.9 4.5 4.2 2.8 2.2 n.a. 3.9 6.8 18.8 5.4 34.3 15.8 0.3

3034 TT Novatek Microelectronics Cor 137.00 2,791 15.1 13.7 12.3 9.2 8.5 8.0 2.8 2.8 17.8 19.0 12.4 13.2 n.a. 5.5 6.2 13.2 17.6 14.2 20.7 0.0

5347 TT Vanguard International Semi 62.40 3,424 19.2 16.4 15.2 10.1 9.0 8.4 3.5 3.5 15.9 18.9 12.6 15.8 n.a. 4.9 -1.6 -0.8 5.4 12.6 -5.5 -1.1

2311 TT Advanced Semiconductor Engr n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13.2 12.3 6.4 6.4 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

2379 TT Realtek Semiconductor Corp 117.00 1,990 15.9 14.0 11.9 9.0 7.8 6.3 2.7 2.5 15.2 16.0 6.3 6.5 n.a. 5.2 -11.0 5.4 3.1 15.7 7.3 1.3

6462 TT Egis Technology Inc 138.50 329 8.8 6.8 10.0 5.2 4.5 7.2 4.3 3.2 31.0 41.6 19.4 25.0 n.a. 5.4 1.8 -14.0 -38.2 -18.8 -38.9 0.7

3105 TT Win Semiconductors Corp 269.00 3,807 24.6 18.7 16.0 12.6 9.7 8.3 4.4 4.2 17.4 17.6 11.9 12.1 n.a. 2.5 -15.5 10.7 1.5 106.9 -4.9 -6.1

3152 TT Advanced Ceramic X Corp 252.00 582 19.2 14.9 n.a. 11.8 8.5 n.a. 5.0 5.4 25.6 26.4 20.2 22.1 n.a. 4.6 -9.4 -26.6 -28.7 -16.0 -36.8 -1.0

5264 TT Casetek Holdings Ltd 66.30 935 28.2 10.0 9.1 3.3 1.8 1.6 0.8 0.8 5.8 3.6 1.6 1.9 n.a. 2.6 -18.5 -26.3 -42.7 -21.6 -35.0 -0.6

2474 TT Catcher Technology Co Ltd 346.50 8,937 10.0 8.4 7.6 4.1 3.7 3.3 1.9 1.8 17.1 18.9 11.9 11.8 n.a. 3.7 -4.4 6.8 4.8 4.8 5.6 -2.4

3008 TT Largan Precision Co Ltd 4090.00 18,368 21.6 17.2 15.3 14.0 11.5 10.3 5.7 5.0 30.7 25.6 22.7 21.0 n.a. 1.9 18.2 11.1 -27.4 -16.5 1.7 -2.7

3673 TT Tpk Holding Co Ltd 63.10 859 12.0 9.9 13.3 2.2 2.0 2.0 0.7 0.7 7.3 5.8 2.4 2.6 n.a. 3.9 -18.6 -8.4 -27.9 -41.3 -24.5 -1.1

2360 TT Chroma Ate Inc 165.00 2,275 22.8 19.1 16.6 16.6 14.3 13.5 5.1 4.9 21.5 22.1 12.6 13.3 n.a. 3.1 -5.4 14.6 7.1 73.7 1.9 -2.9

2317 TT Hon Hai Precision Industry 86.00 49,894 10.4 9.5 8.3 6.7 6.1 5.4 1.4 1.2 12.8 12.1 4.6 4.7 n.a. 4.0 -1.1 -1.8 -16.5 -17.3 -9.7 -3.4

2454 TT Mediatek Inc 319.00 16,890 20.2 15.6 13.5 14.3 10.0 8.7 1.8 1.9 9.6 9.6 5.0 6.1 n.a. 3.2 -5.1 11.9 -0.9 49.6 8.5 -0.3

Average 17.8 13.9 12.8 8.7 7.2 6.7 3.0 2.8 16.8 17.3 10.6 11.4 n.a. 3.9 -4.2 0.8 -9.3 12.8 -6.2 -1.4

-3.0

Korean listed names

066570 KS Lg Electronics Inc 96600.00 14,710 8.4 7.5 6.6 4.3 4.1 3.8 1.1 1.1 12.5 14.0 4.2 5.2 n.a. 0.5 -9.3 -0.6 5.8 19.3 -8.9 -0.9

011070 KS Lg Innotek Co Ltd 129000.00 2,841 18.5 10.4 8.7 5.5 4.3 4.0 1.6 1.4 9.4 8.3 3.4 3.1 n.a. 0.2 4.9 2.8 -21.6 -3.0 -10.4 -2.6

009150 KS Samsung Electro-Mechanics Co 125500.00 8,723 19.3 15.4 13.3 7.5 6.4 5.9 2.1 2.0 3.7 11.1 3.4 6.9 n.a. 0.6 5.9 29.0 24.9 64.3 25.5 0.4

005930 KS Samsung Electronics Co Ltd 49200.00 293,894 6.7 6.5 6.4 2.7 2.7 2.6 1.4 1.4 18.5 21.7 14.7 15.6 1.7 2.9 -1.2 0.4 -11.1 6.7 -3.5 -1.8

000660 KS Sk Hynix Inc 84600.00 57,311 4.1 4.3 4.4 2.2 2.2 2.2 1.8 1.3 36.8 36.7 27.4 29.4 n.a. 1.7 0.5 9.0 3.2 52.2 10.6 -0.9

091700 KS Partron Co Ltd 7840.00 395 13.4 10.3 11.0 6.0 5.2 4.0 1.3 1.2 0.4 9.3 0.2 6.1 n.a. 2.5 -5.5 -24.6 -17.3 -23.5 -16.9 -1.5

Average 11.7 9.1 8.4 4.7 4.2 3.8 1.6 1.4 13.5 16.8 8.9 11.0 1.7 1.4 -0.8 2.7 -2.7 19.3 -0.6 -1.2

US & Europe listed names

LITE US Lumentum Holdings Inc 64.50 4,038 18.3 14.3 13.7 12.1 9.6 8.5 4.6 4.2 -18.5 29.7 11.6 16.2 0.0 n.a. 0.3 10.4 14.3 18.2 31.9 2.2

OLED US Universal Display Corp 99.35 4,678 51.9 28.9 19.6 35.6 20.2 15.3 7.3 6.4 17.5 12.4 13.7 10.4 0.2 0.2 0.0 -38.7 -42.5 -15.0 -42.5 1.3

FNSR US Finisar Corporation 16.68 1,913 17.8 17.9 12.2 6.8 6.4 5.2 1.2 1.1 18.3 6.7 4.0 n.a. 0.0 n.a. 2.5 -8.4 -9.9 -32.7 -18.0 1.0

STM FP Stmicroelectronics Nv 20.81 22,601 19.2 16.9 16.1 10.1 9.1 8.6 4.1 3.5 16.1 19.5 8.5 11.6 3.1 1.1 14.0 15.2 3.4 35.9 14.3 2.2

SOI FP S.O.I.T.E.C. 79.40 2,994 47.0 33.4 25.7 27.9 20.4 16.5 11.5 11.0 n.a. 24.6 7.7 15.6 n.a. 0.0 27.8 29.1 24.6 78.3 33.6 0.9

VIAV US Viavi Solutions Inc 9.92 2,245 23.0 16.9 15.3 14.9 10.9 9.6 3.0 3.7 22.6 12.7 -0.2 4.8 0.0 n.a. -4.2 2.3 14.4 -14.4 13.5 1.1

AMS SW Ams Ag 94.54 7,977 26.0 14.1 10.8 16.9 9.7 7.9 5.5 5.9 11.9 24.1 5.9 n.a. n.a. 0.6 -9.3 -17.1 0.6 46.2 6.9 -0.6

ASML NA Asml Holding Nv 169.95 87,406 29.9 24.4 19.0 22.2 19.4 16.1 6.8 6.1 20.7 21.6 12.0 n.a. n.a. 0.9 1.5 10.1 12.5 37.1 17.1 0.4

ASM NA Asm International Nv 52.34 3,887 14.3 12.4 10.7 13.3 12.1 10.7 1.5 1.7 22.5 10.1 19.6 n.a. n.a. 1.6 -12.6 -7.1 -11.8 -7.5 -7.1 0.3

KLAC US Kla-Tencor Corp 112.73 17,571 14.2 12.9 12.4 10.7 9.6 9.2 12.8 11.3 91.9 70.2 13.0 n.a. 2.0 2.2 4.8 3.5 9.5 11.3 7.3 2.2

INTC US Intel Corp 54.90 255,834 14.3 13.5 12.7 9.2 8.6 8.3 3.6 3.4 14.0 16.6 9.1 3.2 2.6 2.0 5.9 19.6 20.8 54.1 18.9 0.4

NXPI US Nxp Semiconductors Nv 110.74 38,094 15.9 14.1 12.5 12.1 10.7 9.4 2.8 2.6 18.1 9.8 4.1 2.5 0.0 0.0 -2.4 -5.3 -3.7 3.5 -5.4 11.8

COHR US Coherent Inc 174.90 4,350 12.2 10.6 n.a. 7.6 6.8 n.a. 3.4 n.a. 20.0 n.a. 10.7 n.a. 0.0 n.a. -0.9 -20.3 -42.2 -31.0 -38.0 0.3

TXN US Texas Instruments Inc 110.64 108,308 20.2 18.4 17.4 14.3 13.7 12.6 10.2 10.1 35.1 50.5 24.2 30.8 2.0 2.3 8.3 5.8 14.3 35.7 5.9 1.3

Average 23.2 17.8 15.2 15.3 11.9 10.6 5.6 5.5 22.3 23.7 10.3 11.9 1.0 1.1 2.5 -0.1 0.3 15.7 2.7 1.8

HSI Index Hang Seng Index 1.1 0.1 8.0 22.8 4.1 -1.2

HSCEI Index Hang Seng China Ent Indx 1.5 -0.8 9.0 19.0 6.2 -0.8

SHCOMP Index Shanghai Se Composite 1.0 -0.2 -6.2 3.3 -3.5 0.6

Share Price PerformancePE EV/EBITDA P/B ROE ROA Div yield

5

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BUY share price will increase by >20% within 12 months in absolute terms :

SELL share price will decrease by >20% within 12 months in absolute terms :

HOLD no clear catalyst, and downgraded from BUY pending clearer signal to reinstate BUY or further downgrade to outright SELL :

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