Tongda is expected to kick off its margin expansion trend given (1) ramp up ofwaterproof component business from FY18E onwards and (2) spinning-off itslow margin notebook business.
We revise down our FY17/18E earnings estimate by 9.2%/3.2% toHK$1.0bn/HK$1.4bn to reflect latest business update.
Reiterate BUY with TP adjusted to HK$3.40 from HK$3.52 based on 15x FY18EPE.