not vested
This Apple Supplier Has Returned 73% This Year
By Shuli Ren
AAC Technologies (2018.Hong Kong), which manufactures metal casing and haptics for Apple (AAPL), just keeps on giving.
AAC soared 6.7% this morning to 87.45 Hong Kong dollars after reporting strong second-quarter earnings and providing sunny forward guidance.
In the second quarter, operating profit at AAC rose 23% from a year ago to 825 million yuan, while its sales jumped 26% to 3 billion yuan.
Metal casing was a key growth driver, with sales soaring 290% year-on-year, or 800% quarter-on-quarter, thanks to strong orders from Chinese clients from Xiaomi and Le phone.
At the end of the day, Apple is the trend setter. If the iPhone adopts metal casing, Chinese manufacturers will follow suit with their high-end phones to differentiate among themselves. AAC, as a key supplier of Apple, will therefore get new businesses too.
AAC gives a rosy outlook too, saying “as the Company enter the second half of the year, its order book is solid and the pipeline of ne wRF Mechanical business remains strong.”
And there is more upside for AAC, because it is not that expensive yet.
Deutsche Bank this morning raised its target from HK$70 to HK$90, saying it expects AAC to report 23% sales and earnings per share growth every year all the way to 2018! Analyst Birdy Lu wrote:
We revise up our 2016-18 EPS forecasts by 4%-16% to reflect metal casing share gains and acoustic ASP upside. We raise our TP from HKD70 (16x PER, mid-cycle average) to HKD90 (18x PER, up-cycle average).
We expect a rerating to take place, given an improving growth outlook and OPM/ROE expansion in 2016-18. Also, the stock’s recent inclusion as a Hang Seng index 50 component is a plus for the valuation.
Daiwa Securities’s Kylie Huang raised her price target all the way to HK$94.50:
We raise our 2016-18E earnings by 2-6% to factor in our higher revenue assumptions. We reaffirm our Buy (1) and raise our 12- month TP to HKD94.5 (from HKD78), now based on 20x PER (from 18x PER), at the high end of the stock’s past-3-year trading range of 10-20x, applied to our 1-year-forward EPS.
Source: Barron's Asia
http://blogs.barrons.com/asiastocks/201 ... this-year/