BYD Electronic | 285.HK

Rating BUY Upgrade On the right way to diversify business Target Price HKD 4 1.20 From: HK$22.90 Current price HKD 33.55 Upside: 22.8% % mix 1H20 result beat thanks to share gain in both assembly and Result Takeaway component business, face masks production also a bonus

BYDE has handed in a strong set of 1H20 result, with revenue and 2 September 2020 net profit up 34.8%/329% to RMB31,386Mn and RMB2,472mn respectively, thanks to GM surprise on the upside (+6.4ppt to 13.1%, Hayman Chiu vs. 12.4%/6.7% in 1Q20/1H19). The upbeat was due to i) continue ramp up in assembly business, ii) share gain in both assembly [email protected] and component business (incl. flagship smartphone casings) (852) 2235 7677 and iii) a bonus contribution from face mask business.

Trading data Continue to benefit from increasing glass/ceramics covers adoption by Chinese flagship smartphones; 52-Week Range (HK$) 34.05/9.21 3 Mth Avg Daily Vol (m) 17.4 In 1H20, components and parts revenue grew ~7% to RMB8,615mn, No of Shares (m) 2,253.2 in which glass/ceramics revenue doubled Yoy, with GM reaching 20% Market Cap (HK$m) 75,594.9 mark. With increasing adoption in full-screen OLED and wireless Major Shareholders (%) BYD (65.6%) charging technology, as well as less signal interference (vs. metal Auditors Ernst & Young casing), we are seeing increasing penetration in glass/ceramics Result Due FY20E: Mar 2021 covers by smartphone players.

According to Counterpoint Research, glass covers penetration rate Company description would increase from 7% to 60% in 2020E, BYDE would be well- Established in 2002, BYDE is a leading exposed to this blue ocean as they have already penetrated into core manufacturer of handset components and clients in Android camp and became their major casing supplier. modules, such as plastic casing, metal casings, Recent projects that BYDE took part include Samsung Galaxy S20, and keypads. It also provides assembly services for P40, Mi K30, vivo x50 series and Reno 4 series. We expect BYDE’s glass cover shipment would grow ~38.4% handsets. Its parent company, BYD (1211.HK) CAGR from ~50mn pieces in FY18 to 160mn pieces in FY21E. We keeps some of handset components and modules, expect ASP would be slightly lowered, as we see mid-high end such as LCD displays, FPCs, and camera modules. smartphones would also adopt glass covers, hence implying a shift of Its customers include Samsung (005930 KS), product mix and lower ASP for BYDE. (NOK.US), Huawei, BBK, OPPO, Toshiba (6502.JP), Asus (2357.TT), HTC (2498.TT) and HP Non-Huawei Android camp would make up part of potential (HPQ.US). Huawei share loss ; Gaining share in Apple supply chain pave way for long term growth Price chart

HK$ Assembly business revenue slipped 16.5% Yoy to 40.0 RMB9,909mn ,which only reached ~30% of our FY20E forecast. 35.0 30.0

Market are concerned about the negative impact on the supply chain 25.0 (both parts and assembly) if Huawei eventually exit smartphone 20.0 market due to US ban. Since BYDE is market leader in metal mid- 15.0 st 10.0 frame and 1 tier supplier to major players in Android camp, we expect 5.0 the potential share loss of Huawei , would be partially took up and 0.0

shared between these players including Xiaomi, Samsung .

1/9/2017 1/3/2018 1/9/2018 1/3/2019 1/6/2019 1/3/2020 1/6/2018 1/9/2019 1/6/2020

1/12/2017 1/12/2019 1/12/2018 After having penetrated into Apple’s supply chain, BYDE targets to Sources: Bloomberg, CIRL become the core/ major supplier for iPad in 2-3 years’ time, BYDE also set the following market share targets: i) Increase iPad assembly allocation from 10% to 30-40% in FY21E/22E,ii) Expand iPad metal casing supply allocation to 10% in FY21E, iii) Increase Apple Watch’s

back cover share allocation from 30% to 40-50% and achieve 30% allocation in front cover glass for the next generation of Apple Watch which would be unveiled in 2021E.

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Masks demand remain resilient in 2H20E; Medical equipment products would be another mid-term driver

Face mask revenue came in at >RMB8n in 1H20, and After the COVID-19 outbreak in , BYDE began production of face masks with current capacity has already reached >65mn pc/day (in which 2/3 are surgical masks, remaining 1/3 are KN 95). BYDE has become the largest mask factory globally.

Face masks margin is guided to be comparable to components (~20%), we attribute the main driver to come from overseas, as we still see a rebound in newly confirmed cases in western countries and North Asia after they loosened anti-pandemic measures (e.g. US, Europe, Korea and Japan). BYDE has entered into new connected transaction agreement with BYD and have revised up the proposed annual cap for the masks transaction with BYD from RMB ~12.8bn to RMB22.8bn. As Northern hemisphere still possess faces the risk of new round of COVID-19 outbreak in 2H20 when winter approaches, we expect face mask demand would remain resilient 2H20, with disposable medical masks’ ASP faces downside pressure, while that of KN95 would be stable. We now model BYDE’s face mask revenue would arrive at ~RMB21.0bn and would account for 27% of BYDE sales.

During 1H20 result, BYDE announced that they would enter medical equipment industry, focusing on both dental and orthopedic equipment. This reflects BYDE’s capability in technology, though it would take time for BYDE’s new product to be verified by customers, it would further enhance BYDE’s product portfolio and less susceptible to consumer electronics order visibility.

Exhibit 1:BYDE face mask assumption Exhibit 1: 2Q20 3Q20 4Q20 FY20E FY21E FY22E Capacity (mn/day) 50 65 65 65 65 65 PorkBYD employees (incl. BYDE, '000) 250 250 250 250 250 250 Internal usage (2 masks provided/day/employee, k) 500 500 500 500 500 500 productsExternal Sales (mn/day) 49.5 64.5 64.5 64.5 64.5 64.5 soldNo. of daysin in the quarter 91 91 92 366 365 365 Total external shipment (mn pc) 4,505 5,283 5,341 15,267 7,063 3,531 supermarkFace mask ASP (RMB/pc) 1.5 1.4 1.4 1.4 1.4 1.4 et counters Face mask revenue (RMB mn) 6,757 7,396 7,477 21,741 9,888 4,944 GM assumption 20% 20% 20% 20% 15% 15%

Gross profit 1,351 1,479 1,495 4,348 1,483 742 Net profit 1,091 1,194 1,208 3,511 1,198 599

Source: Company data, CIRL estimates

IoT growth momentum maintained in 1H20; Automotive intelligent segment outlook positive despite near term weakness;

After revenue having grown >80%/36% Yoy in FY18-FY19, BYDE’s IoT and automotive intelligent segment revenue grew another 28.1% Yoy to RMB4,304mn, which was mainly driven by IoT thanks to increased demand for smart home and gaming software after COVID-19 broke out. In 1H20, intelligent product revenue was up 39.5% and took up 11.5% of total reven ue.

Meanwhile, for automotive intelligent segment, though revenue dropped 10.7% to RMB680mn (2.1% of total revenue) due to decrease in sales volume of automoiles, business still outperformed the market thanks to electification and intelligenece of automobiles remains unchanged. BYDE’s infotainment systems currently support all BYD models, they also have established in-depth collaboration with 3rd party vehicle manufacturers, which we believe BYDE will ride on this foundation and continue to ramp up through taking part in clients’ projects.

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Exhibit 2:BYDE’s revenue assumption ExhibitYear to Dec 1: (RMB mn) FY18A FY19A FY20E FY21E FY22E

PorkAssembly service income 17,505 26,847 24,725 28,136 35,170 productsComponents 16,395 18,562 21,672 25,175 22,792 Intelligent product & Automotive intelligent system 5,598 7,619 11,048 15,527 22,169 soldMasks in 0 0 21,741 9,888 4,944 supermarketGroup 39,498 53,028 79,185 78,727 85,075 counters Segment Revenue Growth Assembly service income -4.1% 53.4% -7.9% 13.8% 25.0% Components -4.8% 13.2% 16.8% 16.2% -9.5% Intelligent product & Automotive intelligent system 83.6% 36.1% 45.0% 40.5% 42.8% Masks - - - -54.5% -50.0% Group 5.9% 29.2% 49.3% -0.6% 8.1%

Blended GM 10.2% 7.5% 14.0% 13.5% 12.2%

Source: Company data, CIRL estimates

Trading at 13.2x FY21E PE with 32.7% EPS CAGR in FY18-21E; Maintain BUY on diversifying business mix

With sales expected to grow 24.2% CAGR in FY18-21E, we expect EPS growth to accelerate 32.7%, thanks to face mask contribution, further ramp up/ allocation gain in assembly service, and increased shipment of glass/ceramic casings which would help margin and earnings. The gradual ramp up of IoT and auto intelligent segment as well as further exploring medical equipment business would drive medium term sales and earnings growth. As BYDE continue to diversify away from smartphones related business, we believe this would be BYDE’s re-rating story in the long run.

BYDE is trading at FY21E 13.0x PE (30% discount to HK, China and Taiwan listed peers’ average), we maintain BYDE’s rating at BUY with new TP at HK$41.20, which implies 16.0x FY21E PE (15% discount to HK, China and Taiwan listed peers’ average).

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Exhibit 3: BYDE’s revenue (top) and GP mix (bottom)

Source: Company data, CIRL estimates

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Exhibit 4: Financial statement

Income statement Cash flow Year to Dec (RMB mn) FY17A FY18A FY19A FY20E FY21E Year to Dec (RMB mn) FY17A FY18A FY19A FY20E FY21E Revenue 38,775 41,047 53,028 78,455 80,015 Pre-tax profit 2,992 2,536 1,694 6,495 5,970 Gross profit (reported) 4,264 4,172 3,957 10,653 10,701 Taxes paid (247) (433) (30) (99) (844) EBITDA 4,623 4,496 3,617 8,373 7,887 Depreciation 1,587 1,918 1,894 1,842 1,880 Depreciation (1,587) (1,918) (1,894) (1,842) (1,880) Associates 0 0 0 0 0 EBIT 3,036 2,579 1,724 6,531 6,007 CFO bef. WC change 4,332 4,020 3,558 8,239 7,005 Net interest income (exp.) (44) (43) (29) (36) (38) Change in working cap (1,894) 588 1,186 (1,742) 584 Associates 0 0 0 0 0 Cashflow from operation 2,437 4,608 4,744 6,497 7,589 Exceptionals/others 0 0 0 0 0 CAPEX (2,621) (2,120) (2,000) (2,000) (2,000) Profit before tax 2,992 2,536 1,694 6,495 5,970 Free cash flow (184) 2,488 2,744 4,497 5,589 Tax expenses (407) (347) (99) (844) (776) Dividends 518 439 160 566 521 Minority interest 0 0 0 0 0 Balance sheet adj. (60) (14) 0 0 0 Net profit 2,585 2,189 1,596 5,651 5,194 Sharse issued 0 0 0 0 0 Others (666) (994) (279) 406 (46) Balance sheet Net cash flow (391) 1,919 2,625 5,470 6,063 Year to Dec (RMB mn) FY17A FY18A FY19A FY20E FY21E Net cash (debt) start 3,213 2,822 4,741 7,366 12,836 Cash & equiv 2,822 4,741 7,366 12,836 18,899 Net cash (debt) at year-end 2,822 4,741 7,366 12,836 18,899 Trade receivables 8,556 7,209 13,956 20,847 21,466 Other receivables 0 0 0 0 0 Ratios Inventories 4,608 4,768 4,745 6,651 6,837 Year to Dec FY17A FY18A FY19A FY20E FY21E Other current assets 655 371 371 371 371 Growth rate (%) Fixed assets 7,431 7,634 7,740 7,898 8,018 Revenue 18.2 5.9 29.2 47.9 2.0 Intangible assets 14 14 14 14 14 EBITDA 45.1 (2.7) (19.5) 131.5 (5.8) Investment, associates etc 1,300 1,314 1,314 1,314 1,314 EBIT 108.0 (15.1) (33.2) 278.9 (8.0) Total assets 25,386 26,051 35,506 49,930 56,919 Net profit 109.6 (15.3) (27.1) 254.1 (8.1) EPS 109.6 (15.3) (27.1) 254.1 (8.1) Account payables 8,983 7,892 15,802 22,857 24,246 Margins (%) Other payables 0 0 0 0 0 Gross margin 11.0 10.2 7.5 13.6 13.4 Short-term debt 0 0 0 0 0 EBITDA 11.9 11.0 6.8 10.7 9.9 Other current liabs 2,105 2,170 2,238 2,984 2,915 EBIT 7.8 6.3 3.3 8.3 7.5 Long-term debts 0 0 0 0 0 Net margin 6.7 5.3 3.0 7.2 6.5 Deferred tax and others 107 164 164 164 164 Other ratios Other long-term liabs 0 0 0 0 0 ROE (%) 18.2 13.8 9.2 23.6 17.5 Total liabilities 11,195 10,226 18,204 26,005 27,326 ROA (%) 10.2 8.4 4.5 11.3 9.1 Net gearing (%) (19.9) (30.0) (42.6) (53.6) (63.9) Share capital 0 0 0 0 0 Interest coverage (x) 68.9 60.2 59.0 182.7 158.3 Reserves 14,191 15,825 17,302 23,925 29,594 Receivables days 80.5 64.1 96.1 97.0 97.9 Shareholders' equity 14,191 15,825 17,302 23,925 29,594 Payables days 95.0 78.1 117.5 123.0 127.7 Minorities 0 0 0 0 0 Inventory days 48.7 47.2 35.3 35.8 36.0 Total equity 14,191 15,825 17,302 23,925 29,594 Effective tax rate (%) 13.6 13.7 5.8 13.7 13.7 Net cash (debt) 2,822 4,741 7,366 12,836 18,899 Source: Company data, CIRL estimates

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Exhibit 5: Peer valuation comparison

bloomberg Mkt Cap Price Share Price Movement (%) PER (x) P/B (x) Yield (%) code (HKD mn) (HKD) 1M 3M YTD FY17 FY18 FY19 FY20E FY21E FY17 FY18 FY19 FY20E FY21E FY17 FY18 FY19 FY20E FY21E

HK Listed Peers GROUP 992 HK 62,237 5.18 10.9 23.0 (1.0) 11.9 11.9 11.9 12.7 10.3 2.3 2.3 2.3 1.9 1.8 5.1% 5.1% 5.4% 4.6% 4.7% AAC TECHNOLOGIES 2018 HK 59,096 48.90 (20.7) 22.9 (28.1) 9.7 13.3 23.4 27.8 18.9 2.8 2.8 2.7 2.6 2.3 4.0% 3.0% 0.9% 1.2% 1.7% FIH MOBILE LTD 2038 HK 7,301 0.89 3.5 (2.2) (41.1) -1.7 -1.1 -75.7 -11.0 13.5 0.3 0.4 0.4 0.5 0.5 0.0% 0.0% 0.0% 0.0% 0.0% FIT HON TENG LTD 6088 HK 21,068 3.06 (18.2) 50.7 16.8 13.3 11.2 10.9 16.7 12.2 1.4 1.4 1.3 1.2 1.1 1.5% 2.3% 0.0% 1.7% 1.9% SKY LIGHT HOLDIN 3882 HK 221 0.23 (9.0) (1.7) (30.7) -0.4 -0.8 -2.6 2.1 - 0.3 0.6 0.8 - - 0.0% 0.0% 0.0% 0.0% 0.0% SUNNY OPTICAL 2382 HK 126,028 114.90 (21.2) 12.2 (14.8) 37.3 42.5 27.8 25.6 19.7 14.0 12.0 9.0 6.9 5.4 0.7% 0.6% 0.7% 0.8% 1.0% TRULY INTL HLDGS 732 HK 3,191 0.97 5.4 34.7 (15.7) 45.5 41.1 5.7 - - 0.4 0.4 0.4 - - 1.0% 0.0% 0.0% 0.0% 0.0% CHINA DISPLAY OP 334 HK 920 0.44 (2.2) 16.0 (28.7) 6.6 9.3 15.3 39.5 10.6 1.5 1.5 1.3 1.3 1.1 4.4% 4.5% 0.0% 0.0% 0.0% 2369 HK 1,134 0.19 3.3 26.2 (34.0) -0.4 -2.3 8.5 - - 1.1 2.3 1.3 - - 0.0% 0.0% 0.0% 0.0% 0.0% TONGDA GROUP HLD 698 HK 2,948 0.46 1.1 7.1 (53.1) 2.7 5.2 7.3 8.6 5.8 0.5 0.5 0.5 0.5 0.5 11.9% 6.2% 2.3% 2.4% 2.6% JU TENG INTL HDG 3336 HK 2,776 2.38 (12.8) 4.4 19.6 34.0 16.9 15.0 7.6 8.4 0.4 0.5 0.5 0.4 0.4 3.4% 4.2% 4.2% 4.2% 4.2% Q TECHNOLOGY GRO 1478 HK 11,406 9.73 (7.9) (0.2) (24.6) 21.2 631.2 18.0 13.7 11.1 4.2 4.6 3.5 2.9 2.4 0.4% 1.0% 1.0% 1.5% 1.9% VITAL INNOVATION 6133 HK 251 0.30 (22.4) (9.2) (16.9) -2.0 12.4 -39.4 - - 0.3 0.3 0.3 - - 0.0% 0.0% 34.6% 0.0% 0.0% SKY LIGHT HOLDIN 3882 HK 221 0.23 (9.0) (1.7) (30.7) -0.4 -0.8 -2.6 2.1 - 0.3 0.6 0.8 - - 0.0% 0.0% 0.0% 0.0% 0.0% COWELL 1415 HK 2,586 3.11 (7.4) 98.1 84.6 12.1 23.3 11.3 6.8 5.7 1.0 1.0 1.0 1.0 0.9 2.2% 28.2% 61.1% 7.2% 8.6% WAI CHI HOLD 1305 HK 91 0.42 25.4 (8.7) (42.5) 4.2 2.0 2.5 - - 0.1 0.1 0.1 - - 0.0% 0.0% 0.0% 0.0% 0.0% TK GROUP HOLDING 2283 HK 2,158 2.59 23.9 12.6 (33.6) 7.2 6.2 7.2 11.1 7.7 2.4 2.0 1.8 1.6 1.4 6.6% 7.7% 5.4% 3.3% 5.2% KA SHUI INTL HLD 822 HK 420 0.47 9.3 54.1 23.7 12.4 3.7 4.7 - - 0.5 0.4 0.4 - - 0.0% 0.0% 0.0% 0.0% 0.0% SAS DRAGON HLDG 1184 HK 1,502 2.40 1.7 1.7 (9.1) 4.9 4.8 6.4 - - 1.1 1.0 0.9 - - 8.3% 8.3% 1.7% 0.0% 0.0% PANASIALUM HOLDI 2078 HK 522 0.44 89.1 92.5 8.7 -3.3 -2.2 -1.1 - - 0.5 0.7 2.1 - - 0.0% 0.0% 0.0% 0.0% 0.0% SCUD GROUP LTD 1399 HK 294 0.27 23.3 16.9 (14.3) 12.1 2.7 4.9 - - 0.3 0.3 0.2 - - 0.0% 0.0% 0.0% 0.0% 0.0% SIM TECH GROUP 2000 HK 993 0.42 47.4 69.4 61.5 9.6 4.5 -13.5 - - 0.5 0.5 0.5 - - 3.8% 3.8% 2.4% 0.0% 0.0% WILLAS-ARRAY ELE 854 HK 183 2.15 (2.3) 26.5 (17.3) 4.8 1.6 -9.6 - - 0.3 0.2 0.3 - - 13.1% 17.8% 19.5% 0.0% 0.0% Average 13,372 4.8 23.7 (9.6) 14.7 46.9 11.3 14.5 11.3 1.6 1.6 1.4 1.9 1.6 4.7% 7.1% 11.6% 3.0% 3.5%

BYD ELECTRONIC 285 HK 74,018 32.85 21.0 121.4 119.3 26.1 30.9 42.3 12.0 13.0 4.8 4.3 3.9 2.8 2.3 0.8% 0.7% 0.2% 0.8% 0.8%

Casing peers

FOXCONN TECH 2354 TT 19,461 13.76 (3.7) (3.2) (21.1) 7.6 8.2 9.6 10.4 9.6 0.5 0.8 0.7 0.6 0.6 6.7% 6.1% 0.0% 4.9% 5.0% CATCHER TECH 2474 TT 40,247 52.84 (7.2) (8.0) (11.7) 7.3 5.6 12.5 9.3 10.1 1.2 1.1 1.1 1.0 0.9 5.8% 5.9% 0.0% 5.4% 5.2% CASETEK HOLDINGS 5264 TT 9,442 22.46 22.6 89.3 79.9 18.0 -20.9 -89.8 415.8 27.3 1.0 1.1 1.2 1.2 1.1 2.9% 1.2% 0.0% 0.9% 1.8% COXON PRECISE 3607 TT 415 3.41 6.1 7.5 (23.4) -4.1 -1.9 - - - 0.3 0.4 0.5 - - 6.0% 3.8% 0.0% 0.0% 0.0% COMPAL ELEC 2324 TT 21,489 4.88 (0.8) (2.1) (0.8) 14.4 9.1 11.8 11.2 10.0 0.8 0.8 0.8 0.8 0.7 6.3% 6.4% 5.2% 6.3% 6.6% QUANTA COMPUTER 2382 TT 78,390 20.29 (5.9) 10.0 19.8 21.2 19.9 19.1 13.4 12.5 2.2 2.3 2.2 2.1 2.0 4.3% 4.6% 4.6% 6.3% 6.7% WISTRON CORP 3231 TT 23,896 8.41 (7.5) 11.5 12.5 22.8 18.4 15.5 12.1 11.1 1.3 1.3 1.2 1.2 1.1 3.6% 4.6% 6.0% 6.7% 7.5% PEGATRON 4938 TT 43,006 16.47 1.3 (3.1) (8.6) 11.4 14.9 10.2 9.7 9.8 1.1 1.1 1.0 1.0 1.0 6.2% 5.5% 0.0% 7.2% 7.0% INVENTEC 2356 TT 21,511 6.00 (9.0) (6.8) (0.4) 12.4 12.7 14.7 10.4 12.0 1.5 1.5 1.5 1.4 1.5 7.1% 6.5% 5.5% 7.4% 7.2% EVERW-A 300115 CH 24,998 27.47 2.5 37.1 36.4 37.7 547.7 134.7 41.8 29.7 4.7 5.0 5.2 4.6 4.1 0.4% 0.4% 0.4% 0.2% 0.4% CREA-A 300083 CH 18,266 12.79 12.8 127.6 183.0 34.6 -5.4 1,162.3 41.8 26.5 2.7 5.9 5.9 5.2 4.3 0.0% 0.0% 0.0% 0.0% 0.0% LUXSHARE PRECI-A 002475 CH 435,005 62.29 (6.1) 60.7 95.9 163.1 115.5 84.1 54.6 39.0 27.8 24.5 19.1 13.6 10.3 0.1% 0.1% 0.2% 0.2% 0.4% TONGDA GROUP HLD 698 HK 2,948 0.46 1.1 7.1 (53.1) 2.7 5.2 4.6 8.6 5.8 0.5 0.5 0.5 0.5 0.5 11.9% 6.2% 2.3% 2.4% 2.6% JU TENG INTL HDG 3336 HK 2,776 2.38 (12.8) 4.4 19.6 34.0 16.9 12.7 7.6 8.4 0.4 0.5 0.5 0.4 0.4 3.4% 4.2% 4.2% 4.2% 4.2% Average 55,568 (0.2) 25.8 26.8 29.8 70.4 124.3 49.7 16.3 3.5 3.5 3.1 2.7 2.3 4.8% 4.1% 3.6% 4.3% 4.5%

BYD ELECTRONIC 285 HK 74,018 32.85 21.0 121.4 119.3 26.1 30.9 42.3 12.0 13.0 4.8 4.3 3.9 2.8 2.3 0.8% 0.7% 0.2% 0.8% 0.8%

Source: Bloomberg, CIRL

Exhibit 10: BYDE 12 month forward P/E Ratio Exhibit 1: 25 12 mths Forward P/E Ratio Pork avg. products 20 sold in supermark 15 +1std. et counters a

10 -

-1std.

5

0 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20

Source: Bloomberg, CIRL Page 6 of 7

Risk Factors

Downside risks include: 1) Escalating Sino-US trade tensions, 2) Further slowdown in smartphone shipment; 3) increased competition; 4) glass/ceramic casings adoption ramp up slower than expected; 5) pricing pressure arising from overseas players and domestic peers

Rating Policy

Rating Definition Buy Outperform HSI by 15% Stock Rating Neutral Between -15% ~ 15% of the HSI Sell Underperform HSI by -15% Accumulate Outperform HSI by 10% Sector Rating Neutral Between -10% ~ 10% of the HSI Reduce Underperform HSI by -10%

Analysts List

Hayman Chiu Research Director (852) 2235 7677 [email protected] Lewis Pang Associate Director (852) 2235 7847 [email protected]

Kenny Man Senior Research Analyst (852)2235 7719 [email protected] Farica Li Research Analyst (852) 2235 7617 [email protected]

Chloe Chan Research Analyst (852) 2235 7170 [email protected] Edith Li Research Analyst (852) 2235 7515 [email protected]

Analyst Certification

I, Hayman Chiu, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was / were, is / are or will be directly or indirectly, related to the specific recommendations or views expressed in this report / note.

Disclaimer

This report has been prepared by the Cinda International Research Limited. Although the information and opinions contained in this report have been compiled or arrived at from sources believed to be reliable, Cinda International Research Limited cannot and does not warrant the accuracy or completeness of any such information and analysis. The report should not be regarded by recipients as a substitute for the exercise of their own judgment. Recipients should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision. The report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so may contain uncertainty. Any opinions expressed in this report are subject to change without notice. The report is published solely for information purposes, and it does not constitute any advertisement and should not be construed as an offer to buy or sell securities. Cinda International Research Limited will not accept any liability whatsoever for any direct or consequential loss arising from any use of the materials contained in this report. The whole or a part of this report should not be reproduced to others. .

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