|
3Q Result Review LEGEND HOLDINGS (0992.HK) BUY HK$21.40 (HSI 15,427) Manufactures PCs and related products, motherboards, distributes PCs products and provides systems integration services. 12mth High/Low HK$23.40/ HK$2.65 Daily T/O (3mth) HK$70.5m Issued Shares 1789m Market Cap. HK$38,295m Free Float Est. 39% Major Shareholder New Tech 61% Book NAV Mar/99 HK$1.83 ROAE 99 16% Price to Book 11.7x ROCE 99 11% Gearing Ratio 6.30% 5 Yr.Av.PER 28.7x SC Risk Reward Ratio 9.5%/9.3% Rel. to HSI 1mth: 13.6% 3mth: 180.8% 12mth: 623.1% (Analysis ¡V Full Cover) Summary of Forecast Year Ended 31 Mar 98A 99A 00F 01F Turnover (HK$m) 7,995 11,633 16,502 22,256 Net Profit (HK$m) 205 275 430 587 Cons. EPS (HK$) 0.216 0.278 EPS (HK$) 0.124 0.159 0.247 0.337 EPS (ƒ´%) NA 28 55 36 PER (x) 173 135 87 64 DPS (HK$) 0.015 0.03 0.06 0.08 Yield (%) 0.1 0.1 0.3 0.4 Analyst Revisions 4/0 5/1 3rd Quarter Results 3 Months Ended 31 Dec 3Q99A 3Q00A ƒ´% Turnover (HK$m) 3,478 5,091 46 Operating Profit (HK$m) 94 151 61 Net Profit (HK$m) 93 147 59 EPS (HK$) 0.052 0.081 56 DPS (HK$) 0 0 0 Previous Forecast Year Ended 31 Mar 00F 01F Turnover (HK$m) 15,547 21,825 Net Profit (HK$m) 384 523 EPS (HK$) 0.22 0.296 Difference (ƒ´%) 12.3 13.9 ¡@ Price Chart Impact ¡V 3Q results beating expectations Price Target ¡X HK$24.70(3mth) HK$30.00(12mth) Legend Holdings released its 3rd quarter result, with net profit up 59% to HK$147m. We are pleased with the results and revise up our FY00 and FY01 earnings forecast by 12.3% and 13.9%, respectively. We, therefore, revised up our target prices accordingly. The tremendous rise in 3Q earnings was mainly attributed to stronger sales and lower interest expense. Net margin improved to 2.88% in 3Q00 from 2.67% in the same period last year (1H00: 2.36%). Legend PC accounted for 53% of total turnover, rising from 49% in 1H00. This was attributed to a 60% growth in commercial PCs and 90% growth in home PCs. Legend sold 430,000 PCs in 3Q00. In addition to the sales of 610,000 PCs in 1H00, Legend sold 1.04m PCs for the first nine months ended 31st December 1999. Hence, we further raise our full year sales projection from the original 1.3m PCs to 1.4m PCs (we had raised from 1.2m PCs to 1.3m in the interim results note). However, the gross margin dropped from 13.0% to 12.5% in the period under review (1H00: 13.1%). Regarding the new internet PC, Legend sold 14,000 Conet PCs in December 1999. Gross margin of Conet PC is around 20%, which is higher than that of the ordinary PCs. The management expects that sales of Conet PC will account for 15% of the total PCs in FY01. The management is also satisfactory with the sales performance of the newly-launched set-top box. The current market share of Legend PCs is above 25%, up from 22.9% unveiled in the interim results. Despite the surge in component cost due to the shortage of supply, Legend kept the selling prices of current models unchanged. Distribution recorded a 59% growth in turnover, accounting for 33% of total turnover. Gross margin stayed unchanged at 8.5% compared to 3Q99 (1H00: 8.9%). Notebook marked the strongest growth of 222%. Systems Integration accounted for 6% of turnover. Turnover in SI dropped slightly compared to the same period last year due to some adjustments made on the business and personnel management. Gross margin stayed at 19.0% (1H00: 19.5%). Motherboard accounted for 5% of turnover and gross margin improved to 22.0% (1H00: 17.0%), due to the reduction in headcount and inventory days from 60 to 45 days. We expect the division to break even in FY00. Net interest bearing borrowing was reduced to HK$208m compared to HK$514m in the same period of the previous year. Inventory days shortened to 23.5 days from 36.9 days following the application of e-commerce on inventory control and Legend continued to enjoy tax privileges on some products. Currently, the gearing ratio is 6.3% and interest coverage is 16.6x. Conclusion Following the earnings upgrade, we reiterate our optimistic expectation on the future PC sales. Additionally, the counter should be granted a premium for its ISP and ICP potentials. Given a 2-year CAGR of 45% for FY00-01, our targeted valuations of 90x FY01 PER and 2.0x PER/growth ratio are still justified for such a high growth company. We maintain our BUY recommendation, with a 12-month price target of 30.00 (90x FY01 PER). Research Department +852 2820 6407 Email kenneth.lau@south-china.com IMPORTANT : This report and the information and opinions provided or expressed herein have been prepared by South China Research Limited for itself, its parent, holding, subsidiary or other associated companies for the information of its or their respective clients only, and has been compiled with reasonable care using data, information or sources believed to be true, reliable and accurate at the time of publication. No representation or warranty whatsoever, whether express or implied, is or are made as to the accuracy or completeness or otherwise of this report or any of the contents thereof. South China Research Limited, its parent, holding, subsidiary or other associated companies and its or their directors, officers, associates, representatives or employees accordingly do not accept any responsibility or liability whatsoever for any direct or consequential loss or damage of whatsoever nature arising from or as a result of the use, publication or distribution in whole or in part of this report or any of its contents. The information and opinions contained in this report are or may be subject to change or revision without any or any prior notice. South China Research Limited, its parent, holding, subsidiary or other associated companies or its or their respective directors, officers, associates, representatives or employees may have positions or otherwise be directly or indirectly interested in the shares, stocks or other securities mentioned in this report or may buy, sell or deal or offer to buy, sell or deal in or with such shares, stocks or other securities from time to time, whether as principal for its or their own account or as agent or in any other capacity for or on behalf of another person. This report is not and is not intended to be nor constitutes any offer or solicitation for the purchase or sale or other dealing in the shares, stocks or other securities mentioned herein. |
|
| aus der Diskussion: | 894983 tolle Zahlen |
| Autor (Datum des Eintrages): | LIXI (27.01.00 18:42:11) |
| Beitrag: | 1 von 2 (ID:395657) |
| Alle Angaben ohne Gewähr © wallstreetONLINE | |