Summary of the report
Company overview
The company was established in 2010 in Changshu, China, renting a Changshu factory to operate. The company is an one-stop supplier of manufacturing solutions for laptops, tablet casings and other accessories. In August 2017, laptop casings accounted for 96.1% of revenue, tablet casings accounted for 1.9%, and other products accounted for 2%.
The company's customers are mainly original equipment manufacturers of leading local and international brand owners, and the company's products are mainly concentrated in China, accounting for 99.3% of revenue in August before 2017.
As of 2014-2016, the company's revenue and net profit CAGR were 11% and-4%, respectively.
In the first eight months of 2017, the company's revenue was 350 million Hong Kong dollars, an increase of 36 percent over the same period last year, and its net profit turned from a loss to a profit of 13.01 million Hong Kong dollars.
Industry status and prospects
According to the Yuan Zhe report, global laptop sales fell from 173m in 2014 to 1.49 million in 2016, with a negative CAGR of 7.2 per cent, and is expected to continue to decline from 2017 to 2019, with a negative CAGR of 2.4 per cent. The decrease in the number of laptops is mainly due to changes in customers' online habits, and consumers are gradually choosing smartphones to surf the Internet.
According to the Yuan Zhe report, global tablet sales fell from 251m in 2014 to 1.83 million in 2016, with a negative CAGR of 14.6 per cent, and is expected to continue to decline from 2017 to 2019, with a negative CAGR of 10 per cent. The decline in tablets is mainly due to smartphones taking away the market for standard tablets.
Advantages and opportunities
Attract and retain customer weaknesses and risks through the company's popularity, technical expertise and product quality
The company relies on a small number of major customers, with the top five accounting for 94% of revenue in August 2017.
Foreign exchange risk and translation risk, most of the company's income is calculated in US dollars.
Valuation
The company expects a net profit of no less than HK $22.8 million in 2017 and a price-to-earnings ratio of 19 times earnings, an overvaluation compared to Juteng International's 5 times earnings. We give IPO a dedicated rating of "4".