According to the Daiwa Report, VTech's (00303.HK) rating was upgraded from “holding” to “outperforming the market”. Assuming an increase in operating profit, the 2017 earnings test per share was raised by 8%, but the 2018 earnings test per share was slightly lowered by 2%, and the target price was lowered from 93 yuan to 90 yuan.

According to the report, VTech's full-year performance beat expectations. Although the company reduced its dividend ratio to 58% due to the acquisition of the American toy brand LeapFrog, the bank estimates that it will rise to 98% in 2018. Although LeapFrog will drag down profits in fiscal year 2017, the market is only temporarily under pressure. It is expected that 2018 will make a positive contribution. It is expected that 2018 dividend yields will be attracted, reaching the level of 7.9%. It is believed that the current stock is oversold.

According to the bank, the customer data leak on the Learning Lodge website had no significant negative impact on e-learning product (ELP) sales; its sales fell only 2%. It is worth noting that the ELP business performed strongly in the Asia Pacific region, with revenue increasing 58% year-on-year. In addition, after the acquisition of LeapFrog, ELP revenue growth is expected to continue, and it is hoped that natural revenue growth will reach the number of units in 2019.