Credit Suisse maintained the rating of Precision Electronics (0710.HK) outperforming the market. The target price remained unchanged at HK$3.75.

Precision's net profit surged 3.4 times to HK$70 million in the first half of the year. Credit Suisse said its performance was in line with the bank's forecast; Credit Suisse said that, benefiting from the recovery of the European and American markets from ultra-low levels, automotive display revenue increased 47% over the same period last year.

Credit Suisse added that orders from the Chinese and Korean automobile markets continued to rise in the first half of 2010; in the second half of the year, it is expected that the net profit of Precision Electric will increase 34% over the first half of the year to HK$94 million, and profit margins will rise further in the second half of the year.

According to Credit Suisse, the valuation of this recovery concept stock is attractive, equivalent to the predicted price-earnings ratio of 5.3 times in 2010, a dividend rate of 5.8%, and 0.7 times the stock price/book value. 38% of the company's market value is net cash and cash equivalents.

Precision declined 1.11% yesterday to close at HK$2.67.