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东江集团(2283.HK):模具业务如期恢复 组件业务表现良好

國元(香港) ·  Dec 14, 2015 00:00  · Researches

The mold business is centrally delivered in the second half of the year, and gross margin is expected to pick up: the company's mold business has sufficient on-hand orders, with revenue of HK$240 million in the first half of the year, a slight increase of 6.1% over the previous year; gross margin was 28.3%, down 5 percentage points from the previous year. Due to the decline in demand from the overseas household appliance mold business and the company's acquisition of mold production bases at home and overseas respectively last year, production capacity increased, while delivery of molds produced in the first half of the year was delayed, resulting in a capacity utilization rate of only 82.2% in the first half of the year, down from 91.0% in the same period last year. In the second half of the year, the business resumed as scheduled, and the capacity utilization rate rebounded, and the capacity utilization rate is expected to reach 85% throughout the year. The increase in deliveries led to an increase in mold business revenue in the second half of the year, while gross margin recovered somewhat. We forecast that revenue from the mold business is expected to grow 50% month-on-month in the second half of the year, and forecast that it is expected to reach HK$600 million in revenue for the whole year. The injection molding business grew rapidly, and production capacity utilization helped increase gross margin: The injection molding business developed optimally in the first half of the year, with revenue reaching HK$490 million, an increase of 64.0% over the previous year. Orders from original customers were stable, and orders from some customers increased dramatically due to popular product sales. The share of orders from one smart product manufacturer in the company climbed from a low level last year to the fourth largest customer. Order growth from famous mobile phone manufacturers has been steady. Although orders for new products have contributed less, it has been very effective in increasing gross margin. In the second half of the year, the positive trend in the injection molding business continued, with production capacity utilization close to 70%, up from 67.2% last year. Since the company's capacity utilization algorithm is calculated 22 hours a day and 26 days a month, 70% of capacity utilization is close to saturation. Increased capacity utilization also helps increase business gross margin. We expect the company's injection molding business to achieve revenue of HK$1 billion in 2015, an increase of 25% over the previous year. Develop new customers smoothly, improve management efficiency and reduce costs: Due to the rapid development of the global Internet, the company has also developed some new customers, including internationally renowned wearable device suppliers. Furthermore, due to the high wages of workers in the Shenzhen area, the company is also considering relocating and optimizing part of the production base to optimize management costs and R&D capabilities. Maintaining the recommended rating, with a target price of HK$2.5: We predict that the company's 2015-2017 EPS will be HK$0.22, HK$0.25, and HK$0.30 respectively, giving 10 times PE in 2016, equivalent to the target price of HK$2.5, which is 17.9% higher than the current price, maintaining the recommended rating.

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