Not vested
Risks
Up risks
1. Market share continues to rise.
2. Smart grid business beats the expectation.
Down risks
1. Industry boom is lower than expected.
2. Cost control is lower than expected.
Enjoying the fast growth of market cake, and initiate Buy rating
Since the financial crisis in 2008, domestic RRT investment scale had begun to speed, with 50 cities applying to subway construction. Even in the subway already operating area, such as Beijing, Shanghai, Guangzhou, Shenzhen and Tianjin, demand of adding new lines and new vehicles are strong.
Furthermore, with the building technology close to the international level, Chinese track traffic with its high cost-effective has propelled vehicle export ratio to leap yearly.
The Global Link will directly enjoy the growth of market cake to be the biggest winner in the vehicle information systems market. In general, we forecast its net profit will be HK$32million, HK$43million in FY2010 and FY2011, suggesting EPS of 4.22 HK cents and 5.67 HK cents respectively.
Meanwhile, we initiate Buy rating to Global Link, with 12-month TP of HK$0.70, suggesting 12.3x leading PE on FY2011 EPS