Morgan Stanley

Morgan Stanley published a report stating that it reiterated the “increase” investment rating for Fuzhikang (02038.HK) and raised the target price from 5 yuan to 5.7 yuan. This is equivalent to predicting next year's market account rate 1.1 times and price-earnings ratio 13 times. Although demand for mobile phone terminals is slowing down, it is expected that the company can increase its value through a better combination of metal cases, diversified customer base, and cost control.

The bank raised Fuzhikang's earnings forecasts of 9%, 11% and 14% per share from 2015 to 2017, respectively, to 3.72, 5.52 and 6.5 US cents, respectively, which indicates that the earnings growth forecasts per share for this year and next two years are 66% and 48% respectively. It also indicates that the current price of the stock is only 16.4 times and 10.6 times the price-earnings ratio for this year and next two years, which is equivalent to the dynamic price-earnings ratio of 0.2 times next year, which is attractive to the valuation.

According to Daimo, Huawei is Fuzhikang's main mobile electronics manufacturing service (EMS) partner and can benefit from Huawei's increased share of the smartphone market. The bank estimates that Huawei will account for 16% and 20% of Fuzhikang's sales revenue this year and next two years, respectively. According to the bank, global smartphone shipments have increased 16% this year, and it is expected that Fuzhikang will benefit from the growth of Huawei, Xiaomi, etc.