Current metal casing orders remains stable; Maintained FY17Eguidance
　　After Tongda’s stock price plunged 17% in the morning trading session onMay 23, Management held a call and gave us an update. Regardingmarket rumours of share loss in Huawei and Oppo, We noticed fromTongda’s announcement in end-April that ,they gained more orders fromhigh-end Huawei models （P/Mate series）， though losing some on OPPOflagships （Tongda did not supply metal casing to R11）， they also wonprojects in mid-end series （A series）。
　　In 1Q17, Tongda’s revenue growth was on track （+30.5% Yoy toRMB1,785mn） and accounted for ~18.6% of our FY17E estimates （vs.
　　~17.5%）， driven by 41% yoy growth in smartphone segment. Managementmaintained FY17E guidance unchanged with ~80mn units of metal casingshipment. We expect GM to rebound in FY17E on the grounds ofincreasing metal casing adoption and contribution from waterproofcomponents, while stabilizing RMB would also help on the raw materialcosts.
　　Management also confirmed in the call that no substantial shareholdershave pledged shares, they also announced they would consider on-marketshare repurchase
　　Expect US client’s ramp up in waterproof components; 3Dglass+metal frame to start ship in 2H17
　　With ~15% allocation initially, we believe Tongda would be capable toobtain >20% share allocation in FY17E driven by current product ramp upas well as potential launch of new flagship model in 2H17 （in Sep），whichwould increase in dollar content / iPhone （US$3-4 vs US$1.3-1.4 in 2H16）。
　　At the back of the envelope calculation, we expect waterproof componentto contribute mid-single digit of FY17E sales.
　　For 3D glass+metal frame, there has been widely spread news coveragethat the new iPhone, to be unveiled in 3Q17, would adopt this new feature,hence we believe it would also be gradually adopted by Android camps’
　　flagships. We expect Tongda expects to ship 3D glass+ metal frame（ASP1-1.5x higher than metal casing with GM ~28-30%） from 2H17onwards, and the shipment would be minimal in FY17E, we currently donot factor in our FY17E forecast. We believe confirmed orders fromHuawei and LG would be a catalyst for Tongda.