According to a research report from CMB International, on August 28th, Tongda Group (00698) will announce its 1H24 performance. The bank estimates that the revenue/net income for 1H24 will be HKD 2.6 billion/35 million (a YoY change of -10%/+82%), mainly driven by the recovery of Android smartphones, overseas home and sporting goods customers replenishing their inventory, the rebound in demand for network communication routers due to WiFi-7 upgrades, and the stable gross profit margin of each segment business sector.
Looking to 2H24/FY25E, the bank is bullish on the recovery of smartphone business with stable ASP, and the winning of home and sporting goods orders. The bank also holds an optimistic view of the expansion of the company's Malaysia factory to meet the needs of non-smartphone customers.
The bank lowered the EPS for FY24-25E by 23-32% to reflect the disposal of the Apple business and competition in the Android smartphone market. The bank maintains a "buy" rating and sets a new target price of HKD 0.13 (previously HKD 0.14), based on a rolling FY25E PE multiple of 6.0x.