Waison's order from SGCC's first 2015 tender declined 30% YoYand its market share dropped 1.2%. We are concerned about itspotential margin squeeze due to increasing competition
Earnings visibility remained low with no sign of SGCC orderrecovery. We believe it lacks re-rating catalysts and thusmaintain NEUTRAL with TP HK$4.25 （8x FY16E P/E）
1st SGCC tender results indicated market share loss
Wasion announced the bidding results of the first centralized tender ofState Grid Corporation （SGCC） on smart meters and AMI. Wasion woncontract value of RMB279mn for smart meters; and value of RMB61mnfor data collection terminals and concentrators （AMI）。 The overall contractvalue that Wasion won was up 3% QoQ compared to RMB331mn in thelast tender in 2015, or down 30% YoY compared to the first tender in2015. The volume of smart meter and AMI that Wasion secured rose32% QoQ and declined 49% QoQ, respectively. According to the tenderresults, Wasion's market share dropped 1.2ppt to 4.1% due to increasingcompetition. Total value of first tender was down by 12.6% YoY toRMB8.2bn, implying shrinking demand for SGCC this year.
　　Earnings forecast maintained. Fairly priced for now
We maintain our FY16E revenue and profit growth of 10.6% and 13.9%YoY with GPM at 30.1%. We remain concerned on margin erosion fromsmart meters amidst increasing competition.
　　With 41% expected dividend payout ratio, the expected dividend yield is5.4% in FY16E. Wasion repurchased 10mn shares since the beginning ofFebruary at an average price of HK$3.72 per share. Moreover, on 3 May,Wasion also announced the adoption of share award scheme for theeligible employees as an incentive. We believe this could provide shorttermsupport to its share price.
　　Due to lower earnings visibility, we continue to value Wasion at HK$4.25,implying 8x FY16E P/E （unchanged）， 25% discount to its trading averageof 10.5x.