Weishijiajie's 2019 results were in line with expectations, due to improved cost control despite lower revenue growth than expected.

Although the impact of COVID-19 on the company in the short term is limited, we think the company's business in Southeast Asia may be affected.

In the medium term, companies will benefit from the widespread adoption of cloud services and big data, particularly as this will generate demand for network products and servers.

We lowered our earnings forecast because we expect the company's revenue growth to slow and profits will have a chance to withstand pressure. After an earlier stock price adjustment, the company's current valuation is not expensive. We maintained our “Overweight” rating and lowered our target price to HK$4.08 (based on 9x 2020 price-earnings ratio).