20080828-Sun Hung Kai-Ju Teng (3336.HK)

Solid 1H Results, Positive Outlook
Ju Teng’s 1H08 sales grew 59% yoy to HK$3.4bn on strong shipments, higher ASPs
(up 8% yoy in 1H08) and market-share expansion (from 28% in 2007 to 30% in
1H08). The net profit was up 79% yoy to HK$284m as the sales mix shifted toward
high-margin products (IMD casings made up 30% of 2007 sales vs. 40% in 1H08)
helping to widen the gross margin by 0.8 ppt to 15.6%, in line with our estimate.
The stock has rallied 24% since our Buy rating last month (see Strength Meets
Opportunity, published on 28 July) and now trades at 6.6X FY08F and 5.1X FY09F
earnings, on our new forecast of a 40% EPS CAGR over FY07-09. We maintain our
Buy call and have raised our target price from HK$5.00 to HK$5.20.
For further information, also see Angel Tsao’s computer and peripherals sector report
last week comparing Ju Teng and Lenovo (992.HK), From Makers to Casers,
published on 15 Aug