Credit Suisse lowered its target price for TCL Communication Technology (02618) to HK$11.5 from HK$12.5, and maintained an "outperform" rating.
TCLC reported 3Q14 net profit of HK$294 mn, better than Credit Suisse's estimate of HK$273 mn and in line with consensus estimate of HK$293 mn. TCLC said it will continue to ramp 4G smartphones for developed markets in the next few quarters. It expects 4G to account for 16-17% of shipments in 4Q14 (vs 15% in 3Q14) and will increase to 20-25% in 2015, which the house believes should support its GM in 2015.
The house cuts its 2014-16 EPS by 3-8% to reflect higher share count and
slightly lower GM on mix shift. It believes TCLC's strong branding, competitive cost structure, ability to meet customer's quality and time-to-market requests would continue to help the company to gain more market share. It views TCLC is well positioned to capture the export market growth.
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