2H15 Outlook: Automobile (BMW/Mercedes Benz) /Wearables(Fitbit/ GoPro/ Jabra/ Apple) /Medical Devices (Philips/Coloplast) togrow at 31%/51%/50%YoY
21% FY15-17E sales CAGR with potential upside from newproduct launch (Smart Home/Drones) and more automobilecustomer wins
Maintain BUY with TP of HK$3.26, based on 10.5x FY16E P/E
FY15-17E: Eyes on Automobile/Wearables/Medical Devices
Mgmt expects automobile/wearables/medical devices to be key growthdrivers in FY15-17E, thanks to new product launch, increasing shareallocation and more customer wins. For automobiles, we expect FY15Erevenue to rise 35%YoY with ultra-large molding shipment to BMW/Mercedez-Benz to be made in 4Q15. For wearables, revenue is expectedto grow at 53%YoY in FY15E, ride on its strong client portfolio (GoPro/Fitbit/Jabra/Apple) growth. For medical devices, we believe revenuegrowth will remain strong in 2H15 (+80%YoY vs. 143%YoY in 1H15),further lowering seasonality impact with longer product life cycle.
Sustainable LT growth with new customer/ product launch
Growing fast with big names, mgmt expects to see 20%+YoY revenuegrowth during FY15-17E vs. CMS est. revenue CAGR at 21%. Givenbooming demand for wearables/smart home appliances/drones, TKexpects to see more opportunities to fuel FY15-17E growth, leveragingon its leading position in plastic molding and injection. Further upsidecomes from busienss expansion to plastic packaging and automobileclient win with the two subsidiaries (Nypro Tool Shenzhen and S&BCompany Germany) acquired in FY14.
Valuation/ Key risks
Our FY15E-17E NP is 4-7% above consensus but we have not factoredin the potential upside from new product launch (Drones/ Smart Home),automobile client win and possible acquisition in US targeting automobilebusiness. We maintain BUY with TP of HK$3.26 (37% upside) based on10.5x FY16E P/E (15% discount to peers’ 12.4x P/E). Key risks includelosing major customers, capacity constraint and orders delay.