We raise Q-Tech’s 12-month TP to HK$9.25 based on higher 17.7x FY25E P/E (vs 13x prior) following upbeat FY25E guidance, improving product mix with spec upgrade (OIS/periscope/ultrasonic), FPM turnaround (GPM at 9.3% in 2H) and rapid non-mobile expansion (auto/IoT). Q-Tech’s FY24 earnings (+241% YoY) was largely in-line with prior positive profit alert, driven by CCM/FPM share gain, spec upgrade, and auto/IoT CCM ramp-up. Looking into 2025, mgmt. remains positive on high-end CCM demand (OIS/periscope), auto/IoT CCM client/order wins and ultrasonic FPM upgrade cycle. We slightly adjust our estimates to reflect FY24 results and better business outlook, and our FY25/26E EPS forecasts are 24%/27% above consensus. Trading at 14.6x/11.6x FY25/26E P/E, we think the stock is attractive, compared to 102%/26% EPS growth in FY25/26E. Upcoming catalysts include AI smartphone/glasses launch and auto/IoT CCM order wins.
　　Strong FY24 largely in-line with prior profit alert. Q-Tech’s FY24 revenue/net profit growth of 29%/241% YoY was largely in-line, driven by CCM sales growth of 28% YoY on strong shipment and better 32MP+ mix (50.1%) and FPM sales growth of 51% YoY on share gains. GPM came in at 6.1%, up 2ppts YoY thanks to better FPM GPM, CCM spec upgrade, better UTR and higher mix of auto/IoT CCM. In addition, Q-Tech’s subsidiary, Newmax, reported narrowing loss of RMB36.5mn (vs RMB50mn in 2024).
　　2025 Outlook: focus on product mix, OIS/periscope CCM, auto/IoT robust growth. Looking into 2025, mgmt. guided: 1) 32MP+ CCM mix of 55%+, with periscope CCM growth of 100%+ YoY; 2) Auto/IoT CCM shipment growth of 40%+ YoY; 3) FPM shipment growth of 20%+ YoY backed by ultrasonic FPM and overseas expansion. In the long term, mgmt. is positive on non-mobile CCM opportunities (auto/IoT/XR/robotics). Q-Tech has established partnership with seven leading smart driving solution providers and 34 global leading auto brands, and also becomes the core CCM supplier for global leading drone and action camera brands.
　　Our FY25/26E EPS estimates are 24%/27% above consensus; Lift TP to HK$9.25. Overall, we are positive on Q-Tech’s strategy to focus on product mix improvement and non-mobile CCM expansion. We slightly adjust our estimates to reflect FY24 results and better business outlook. Our new TP of HK$9.25 is based on higher 17.7x FY25E P/E, in-line with 10- year avg. forward P/E, given improving profitability, high-end CCM share gains, and rapid non-mobile expansion. Reiterate BUY.