2021.09.01
■ We updated our earnings forecast and target price (TP) for Estun Automation (Estun) after its post-results analysts briefing on 31 Aug.
■ Its 1H21 results were below market expectations. Revenue grew 33.2% yoy, while net profit rose only 2% yoy in 1H21.
■ The Company had some breakthroughs in major customer expansion in 1H21. Rising domestic component supplies and an improved product mix should help the Company’s gross margin recovery. But we expect continued margin pressure owing to its low-price strategy for customer expansion.
■ We cut our TP from Rmb37.40 to Rmb34.20 to reflect our lower earnings forecast. Our TP is based on 110x P/E, unchanged. We maintain our ADD rating as we think the market is paying more attention to its revenue growth and market share expansion at the current stage. We expect the breakthroughs in major customers to help the Company’s market expansion going forward.
