TCL Communication (2618 HK)

Initiation
Hong Kong: Handsets
14 November, 2014
Action
What’s new?
Our view
BUY (Initiation)
► We initiate coverage of TCL-C
► TCL-C is one of the best
TP upside (downside) 30.9%
late-smartphone/post-iPhone 6
HK$10.5.
cycle plays, benefiting from the
► Driven by strong scale
Close Nov 13, 2014
Price
12M Target
Previous Target
Hang Seng Index
with a BUY rating and TP of
expansion and operating
HK$8.02
HK$10.50
N.A.
24,019.9
leverage, we forecast EPS to
grow by 32%/16% YoY in
2015/16F respectively.
industry shift to low-price,
non-China emerging markets,
and low-cost 4G.
► Concerns about competition
from Samsung appear overdone.
Company profile: TCL designs and manufactures mobile devices that are marketed under the TCL brand in China and
Alcatel brand overseas. The company also provides handset ODM services.
Share price performance relative to Hang Seng
Index
TCL Communication (2618 HK)
A solid player in the post-iPhone 6 era
Initiate coverage with a BUY: We view TCL-C as one of the best
late-smartphone/post-iPhone 6 cycle plays, benefiting from the industry
shift to low-price, non-China emerging markets, and low-cost 4G. We
expect TCL-C to deliver strong earnings in coming quarters and forecast
its EPS will grow by 32%/16% YoY in 2015/16F respectively. Our TP of
HK$10.5 is based on 9x 2015F EPS, or 2.5x 2015 BVPS on 31% ROE.
Market cap
6M avg. daily turnover
Outstanding shares
Free float
US$1,261.3 mn
US$5.3 mn
1,219.6 mn
39.5%
TCL Corporation,
54.2%
59.6%
HK$3.19
2.5x
Major shareholders
Net debt/equity
BVPS (2014F)
P/B (2014F)
Financial outlook (HK$ mn)
Year to Dec
2013A
Sales
2014F
A beneficiary of the late-smartphone conversion cycle: TCL-C is one of
the few brands that still has room for feature phone-smartphone
conversion, which will be driven by non-China emerging markets. We
also expect TCL-C to gain market share not only in non-China emerging
markets but also in North America, backed by its strong cooperation
with carriers/distributors, solid brand image (Alcatel), high flexibility,
cost efficiency and the addition of new carriers (North America).
Second wave of 4G/LTE replacement: Due to lower subsidy from carriers
2015F
2016F
and rising 4G adoption in certain emerging countries, we expect demand
19,362
29,223
37,043
45,992
50
819
1,312
1,552
Net profit *
313
1,077
1,423
1,648
EPS (HK$)
0.28
0.88
1.17
1.35
in 1H15. We note TCL-C’s 4G smartphone GM is 1-2 ppt higher than 3G.
(248.8)
221.0
32.1
15.8
Concerns on Samsung are overdone: We believe the market is overly
DPS (HK$)
0.10
0.32
0.40
0.41
concerned about competition from Samsung, as there is limited room
P/E (X)
29.2
9.1
6.9
5.9
for Samsung to cut prices for its low-end products, considering
1.2
4.0
5.0
5.1
Samsung’s 1) inferior cost structure; 2) lack of flexibility; and 3)
12.0
31.6
32.1
28.6
shrinking high-end business, which subsidizes its mid/low-end
Op. profit
EPS growth
(%)
Div. yield (%)
ROE (%)
* Net profit attributable to the parent
for low-cost 4G phones to rise. This will benefit TCL-C given its solid
carrier network, strong R&D, and alpha partner status with MTK, helping
TCL-C provide faster time-to-market with MTK’s more competitive SoCs
business. Instead, we believe TCL-C is targeting Samsung’s share by
offering similar spec but at more competitive prices and faster time to
market. Among Chinese brands, we believe TCL-C leads in carrier
relationship and brand awareness overseas.
Primary Analyst:
Jeff Pu CFA
+886 2 3518 7913
jeff.pu@yuanta.com
With significant contribution from:
Shelly Chou
+886 2 3518 7915
shelly.chou@yuanta.com
http://research.yuanta.com
Bloomberg code: YUTA
ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ARE
LOCATED IN APPENDIX A.
Yuanta does and seeks to do business with companies covered in its
research reports. As a result, investors should be aware that the firm
may have a conflict of interest that could affect the objectivity of this
report. Investors should consider this report as only a single factor in
making their investment decision.
Investment summary
We initiate coverage of TCL Communication (TCL-C) with a BUY rating and a target
price of HK$10.5, derived from 9x 2015F EPS or 2.5x 2015 BVPS vs. ROE of 31%. We
We initiate coverage of TLC-C
with a BUY rating and a TP of
HK$10.5
view TCL-C as one of the best late-smartphone/post-iPhone 6 cycle plays, benefiting
from the industry structure shift to low-price, non-China emerging markets, and
low-cost 4G. We expect TCL-C to gain market share not only in non-China emerging
markets but also in North America, backed by its strong cooperation with carriers/
distributors, solid brand image (Alcatel), high flexibility, cost efficiency and the
addition of new carriers (North America).
After a recent share price correction (see Figure 1) on concerns over competition
from Samsung, we see TCL-C’s valuation as attractive, trading at only 7x 2015F EPS,
We forecast its EPS in 2015F to
rise to HK$1.17 from HK$0.88
in 2014F
below its historical average of around 9x. We expect TCL-C to post 27%/32% revenue
and earnings growth in 2015 and forecast its quarterly earnings to reach a
record-high in 4Q14, which we believe is an important near-term share price catalyst.
We forecast TCL-C’s top-line will grow 27% YoY and 24% YoY in 2015F and 2016F
respectively. Driven by OPM improvement, we forecast its EPS in 2015F to rise to
HK$1.17 from HK$0.88 in 2014F, followed by HK$1.35 in 2016F.
Key downside risks include higher than expected ASP/margin erosion due to
intensifying competition among brand makers (especially Samsung) and risks of
component supply tightness.
Figure 1: TCL-C’s share price history
Source: TEJ, Yuanta Investment Consulting
Hong Kong: Handsets
14 Nov, 2014
Page 2 of 22
Valuation
We initiate coverage on TCL-C with a BUY rating and assign a target price of HK$10.5,
derived from 9x 2015F EPS, or 2.5x 2015F BVPS with 31% ROE. Our target P/E of 9x is
in line with its average P/E since 2Q13, and is roughly in line with tier-2 smartphone
Our TP of HK$10.5 is derived
from 9x 2015F EPS or 2.5x
2015F BVPS with 31% ROE
makers’ P/E multiples (Coolpad, LGE). We use a P/E-based valuation methodology, as
we believe the market will be primarily focused on the company’s earnings outlook as
the dynamics of the smartphone industry favor the company (low-price trend,
non-China emerging markets, 3G-to-4G, etc). We generally adopt P/E methodology
in our valuations of most downstream makers.
We believe that the current P/E of 7x 2015F EPS, with earnings growth of 32%/16%
YoY in 2015/16F, appears attractive. TCL-C is also relatively undervalued in terms of
P/B vs. ROE on our estimates, compared to its domestic and global handset peers.
Figure 2: 12-month forward looking P/E band chart
Source: Company data, Yuanta Investment Consulting
Hong Kong: Handsets
14 Nov, 2014
Page 3 of 22
Figure 3: 12-month forward looking P/B band chart
Source: Company data, Yuanta Investment Consulting
Figure 4: Peer valuation comparison table
Company
TCL Com.
Ticker
2618 HK
Rating
EPS
Mkt Cap
(US$ mn)
Price
BUY
HK$7.98
1,255
2013
0.28
PER (x)
EPS growth (%)
2014F
0.88
2015F
1.17
2013
29.0
2014F
9.0
2015F
6.8
2013
N.A.
2014F
221%
2015F
32%
Lenovo
992 HK
HOLD
HK$10.86
15,559
0.1
0.1
0.1
16.1
14.0
17.7
20%
33%
-13%
Coolpad
2369 HK
Not rated
HK$1.62
897
0.1
0.2
0.2
15.3
9.7
8.9
0%
113%
18%
ZTE
763 HK
Not rated
HK$18.34
8,305
0.4
0.8
0.9
30.8
18.3
15.3
-147%
103%
19%
AAPL US
Not rated
US $108.83
638,270
5.7
6.5
7.7
12.1
15.6
14.1
-10%
13%
19%
Samsung
005930 KS
Not rated
KRW 1231000
165,541
6.9
8.8
9.5
-8%
0%
-7%
LGE
066570 KS
Not rated
KRW 65300
9,757
977
5,338
7,543
69.7
12.2
8.6
92%
446%
41%
HTC
2498 TT
SELL
NT $138.5
3,805
-1.57
1.45
-1.12
NA
NA
NA
NA
NA
NA
25.2
13.1
12.4
-9%
118%
13%
2013
3.1
PBR (x)
2014F
2.5
2015F
2.0
Apple
202,454 141,784 132,234
Average
Source: Company data, Yuanta Investment Consulting, Bloomberg
Notes: EPS figures are denominated in local currency, Prices as of 11/11/2014
Figure 5: Peer valuation comparison table (continued)
Company
TCL Com.
Ticker
2618 HK
Rating
Mkt Cap
(US$ mn)
Price
BUY
HK$7.98
1,255
2013
12.0
ROE (%)
2014F
31.6
2015F
32.1
2013
48.5
EV/EBITDA
2014F
2015F
30.7
24.3
Lenovo
992 HK
HOLD
HK$10.86
15,559
28.8
24.3
25.3
7.3
6.1
8.9
3.9
3.8
3.9
Coolpad
2369 HK
Not rated
HK$1.62
897
13.5
23.1
20.9
18.1
9.5
8.6
1.9
2.1
1.8
ZTE
763 HK
Not rated
HK$18.34
8,305
6.2
11.3
12.6
10.7
13.8
12.0
1.8
2.0
1.8
AAPL US
Not rated
US $108.83
638,270
30.6
36.3
35.8
5.5
7.8
7.5
3.5
5.3
4.9
Samsung
005930 KS
Not rated
KRW 1231000
165,541
19.8
14.4
12.0
2.7
3.2
3.1
1.2
1.2
1.1
LGE
066570 KS
Not rated
KRW 65300
9,757
1.4
7.6
9.9
5.8
4.9
4.6
1.0
0.9
0.8
HTC
2498 TT
SELL
NT $138.5
3,805
-1.7
1.5
-1.2
-14.2
-1.3
-1.4
1.5
1.4
1.4
14.1
16.9
16.5
5.1
6.3
6.2
2.1
2.4
2.2
Apple
Average
Source: Company data, Yuanta Investment Consulting, Bloomberg
Hong Kong: Handsets
14 Nov, 2014
Page 4 of 22
Investment thesis
A beneficiary of late feature phone to smartphone conversion cycle
There are signals of
smartphone stagnation in
developed markets as well as
China, and non-China
emerging markets appear to be
the last leg for growth
After years of very high growth, we expect smartphone growth to slow moving
forward. We forecast global smartphone shipments to grow by only 13% YoY in 2015F.
This is significantly slower than the approximate 26% YoY growth in 2014F.
Segment-wise, we continue to see the divergence in the smartphone shipment
growth in the developed and emerging markets (except China), a sign of a
late-smartphone conversion cycle.
Figure 6: Smartphone YoY growth in key countries/regions
Source: IDC; Gartner, Yuanta Investment Consulting
We see TCL-C as one of the few brands that still has room for the conversion, from
feature phone to smartphone. It is set to benefit from this non-China emerging
markets-driven smartphone migration cycle in the next 1-2 years, thanks to its
strong position in overseas smartphone markets (90-93% of its smartphone
shipments are in overseas markets). We also expect TCL-C to gain share globally,
backed by its: 1) strong cooperation with carriers/distributors globally (70% of
TCL-C’s volume is driven by carriers), 2) solid brand image (Alcatel), 3) high flexibility
(3-4 month design lead team vs global brands’ 7-9 months), and 4) cost efficiency vs
global brands. In addition, TCL-C is likely to gain share in North America due to the
addition of new carriers (details in next page).
Hong Kong: Handsets
14 Nov, 2014
Page 5 of 22
Figure 7: Smartphones as a % of total shipments of each brand in 2Q14
TCL-C still has room for further
smartphone mix increase, led
mainly by the non-China
emerging markets-driven
conversion cycle and its
market share expansion
Source: IDC; Yuanta Investment Consulting
By geography: America is the No.1 driver in 2015
In 3Q14, 52% of TCL-C’s sales came from the Americas, and EMEA accounted for 36%.
The US and Latin America accounted for 40:60 of its total revenue from Americas,
according to the management. In EMEA, EU and MEA each accounted for half of total
EMEA sales.
Figure 8: TCL-C’s revenue breakdown by region
Source: IDC; Yuanta Investment Consulting
For the Americas, we expect growth to be driven by Latin America, thanks to
Both North America and Latin
America are important growth
drivers for TCL-C in 2015
continuing replacement of feature phones by low-end smartphones and the growing
smartphone penetration rate. Due to structure changes in carriers’ subsidies seen in
T-Mobile/Sprint on subsidy pressure, we believe the <US$200 segment will emerge
(IDC data says the sub-US$200 segment grew 130-140% YoY in the US in 2Q14).
Hong Kong: Handsets
14 Nov, 2014
Page 6 of 22
We believe America will remain TCL-C’s largest revenue market. In North America,
TCL-C ranked #9 in smartphone shipments in 2Q14, according to Gartner. TCL-C has
been cooperating with T-Mobile and AT&T, and will add Sprint in 4Q14. The company
expects Verizon will be another potential new partner but likely in 2H15, due to a
TCL-C will add Sprint in 4Q14,
and potentially Verizon in 2H15.
It will also start to sell tablets in
North America in 2015
different communication platform. With more carrier channels’ partnership, we
believe TCL-C will be able to grow its market share in the next 6-12 months. In
addition to smartphones, it will start to sell tablets through these carriers. Mgmt said
it plans to ship 5-6 mn tablets globally in 2015 vs. 2 mn units in 2014.
Figure 9: Smartphone ranking in North America (shipment in mn)
Shipments (mn)
Vendor
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
No.1
Samsung
12.4
15.3
15.5
16.5
13.0
15.2
No.2
Apple
11.7
11.4
10.6
17.2
12.7
12.4
No.3
LG
5.0
4.9
5.0
4.6
3.7
5.3
No.4
ZTE
1.5
1.6
2.0
2.2
3.1
3.0
No.5
Motorola
1.4
1.2
1.1
1.2
1.4
1.6
No.9
TCL
0.2
0.6
2.1
2.1
1.7
1.0
Market %
Vendor
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
No.1
Samsung
31%
36%
35%
32%
31%
34%
No.2
Apple
30%
27%
24%
34%
31%
28%
No.3
LG
13%
12%
11%
9%
9%
12%
No.4
No.5
ZTE
4%
4%
4%
4%
8%
7%
Motorola
4%
3%
2%
2%
3%
4%
No.9
TCL
1%
2%
5%
4%
4%
2%
Source: Gartner; Company; Yuanta Investment Consulting
We expect Latin America it to be another important region for TCL-C in 2015,
Backed by ODM partnership
with local makers in Brazil, we
expect TCL-C to expand its
market share in Latin America
especially Brazil. TCL-C had no presence in Brazil before 3Q13, and only shipped
100-200 k units/quarter after 3Q13. Helped by ODM partnerships with local makers
in Brazil, we expect TCL-C to further expand its market share in Latin America, at the
expense of Samsung and Nokia. Given TCL-C’s fairly low base in the region, we
believe there is plenty of room to grow its market share.
Figure 10: Smartphone ranking in Latin America (shipment in mn)
Shipments (mn)
Vendor
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
No.1
Samsung
11.5
14.3
15.7
17.2
12.2
12.6
No.2
Nokia
7.9
8.3
7.6
8.3
6.5
7.5
No.3
TCL
3.7
4.4
4.8
6.9
5.1
6.3
No.4
LG
4.1
6.0
6.5
6.5
5.0
6.2
No.5
Motorola
3.2
3.0
3.1
3.2
2.2
2.5
Market %
Vendor
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
No.1
Samsung
28%
30%
33%
31%
30%
28%
No.2
Nokia
19%
17%
16%
15%
16%
17%
No.3
TCL
9%
9%
10%
12%
13%
14%
No.4
LG
10%
13%
13%
12%
12%
14%
No.5
Motorola
8%
6%
6%
6%
6%
6%
Source: Gartner; Company; Yuanta Investment Consulting
Eastern Europe and MEA to be driven by smartphone migration
TCL’s entry-level smartphones
(US$60-80) will help it capture
the smartphone migration
cycle in the region
Eastern Europe and MEA, especially Russia, is likely to be a major driver for TCL-C in
the next 1-2 years thanks to low smartphone penetration. In the region, sub-US$200
phones are taking share from high-end phones, and we believe TCL-C’s high value
products (TCL-C’s entry level smartphones are at US$60-80) will help the company
capture smartphone migration opportunities.
Hong Kong: Handsets
14 Nov, 2014
Page 7 of 22
Figure 11: Smartphone penetration in Eastern EU, Middle East, and Africa
Source: Gartner; Company; Yuanta Investment Consulting
Figure 12: Smartphone ranking by brands in Eastern Europe (shipment in mn)
Shipments (mn)
No.1
Vendor
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
Samsung
9.3
8.3
9.4
10.2
8.6
7.7
No.2
Nokia
6.5
6.2
7.2
7.5
5.4
4.7
No.3
TCL
0.7
0.7
0.9
1.5
1.0
1.3
No.4
No.5
Fly Mobile
0.8
0.9
0.9
1.0
1.0
1.3
Huawei
0.2
0.3
0.4
0.8
0.6
0.9
Market %
Vendor
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
No.1
Samsung
38%
33%
35%
33%
35%
29%
No.2
Nokia
27%
25%
26%
24%
22%
18%
No.3
TCL
3%
3%
3%
5%
4%
5%
No.4
Fly Mobile
3%
4%
3%
3%
4%
5%
No.5
Huawei
1%
1%
1%
3%
2%
4%
Source: Gartner; Company; Yuanta Investment Consulting
Figure 13: Smartphone ranking by brands in MEA (shipment in mn)
Shipments (mn)
Vendor
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
No.1
Samsung
11.0
12.2
14.4
14.2
14.6
14.2
No.2
Nokia
16.0
17.1
14.8
15.8
12.6
10.6
No.3
Huawei
0.7
0.8
0.5
1.9
1.5
2.5
No.4
TCL
1.9
1.9
2.7
3.9
1.5
2.0
No.5
LG
1.2
0.8
1.2
1.7
1.5
1.6
Market %
Vendor
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
No.1
Samsung
25%
26%
30%
26%
31%
28%
No.2
Nokia
36%
37%
31%
29%
27%
21%
No.3
Huawei
2%
2%
1%
4%
3%
5%
No.4
TCL
4%
4%
6%
7%
3%
4%
No.5
LG
3%
2%
3%
3%
3%
3%
Source: Gartner; Company; Yuanta Investment Consulting
Hong Kong: Handsets
14 Nov, 2014
Page 8 of 22
APAC – China is a tough market; opportunities in Southeast Asia
Due to limited carrier cooperation and severe competition, we do not expect TCL-C
to be aggressive in this market. Financially, management indicated the margins of
Alcatel’s branding is strong in
Southeast Asia
selling phones to China are lower than to other regions. Within APAC, we believe
TCL-C will look for regions without strong local players (China and India) so that it
can leverage its solid relationship with carriers and its Alcatel branding to sell its high
value products in the market. TCL-C is also likely to launch Android One
smartphones in the coming months, which will help TCL-C to improve its brand
awareness in the region in which brands are fragmented.
The second wave of 4G/LTE replacement
In addition to the feature phone-smartphone conversion cycle, the growing
The GM of 4G smartphones is
1-2ppt higher than that of 3G,
says the management
popularity of low-priced 4G phones (sub-US$300) will serve as an important driver
for TCL-C, in our view. According to management, 4G smartphone GM is 1-2 ppt
higher than that of 3G models due to a more complicated communication platform.
In leading developed countries (i.e., US, Japan, South Korea) where the initial 4G
The demand for low-cost 4G
phones is expected to increase
thanks to shrinking carriers’
subsidies and improving
quality of these 4G devices
smartphone migration was/is driven by high-end phones (iPhone, Galaxy series, etc),
we expect the demand for low-cost 4G models to increase due to shrinking carrier
subsidies and improving quality of low-cost 4G phones on the back of the ramp up of
new 4G SoCs. For emerging countries (excluding China), according our forecast, the
4G smartphone penetration rate will remain low (9-35%) in 2014.
Figure 14: 4G smartphone penetration rate by region
Source: IDC; Gartner, Yuanta Investment Consulting
Better availability of low-cost SoCs
After a 4G SoC supply shortage in 1H14, the availability of low-cost 4G SoC solutions
Current 4G SoC prices have
fallen to a very low level –
MSM8916 at US$12-13,
PXA1088 at US$7-9, MT82+90’s
US$11-14, etc
(from Qualcomm, MediaTek, Marvell, etc.) is improving rapidly, helping the demand
for low-priced 4G phones in 2H14/2015. From a cost perspective, the current
mainstream 4G SoC prices have fallen to a very low level – MSM8916 at US$12-13,
PXA1088 at US$7-9, MT82+90’s US$11-14, etc., The upcoming Snapdragon 210
(MSM8909) will be priced below US$10, according to our checks. On the other hand,
growing 4G demand also helps brand makers’ margin profiles given a more complex
communication platform.
Hong Kong: Handsets
14 Nov, 2014
Page 9 of 22
Figure 15: TCL-C’s smartphone shipments by interface
Source: Yuanta Investment Consulting
TCL-C is moving from a 2-chip solution to a more efficient single-chip SoC
In terms of product offerings, we note that TCL-C focused more on two-chip
solutions in 1Q-3Q14. Two-chip solutions are usually more power consuming, R&D
TCL-C will move to 4G SoC
platform in 4Q14/2015, and it
will be the first to leverage
MTK’s improved 4G SoC
(MT6735) in 1H15
consuming, etc.
TCL-C started to adopt one-chip SoC in late-3Q14 and we expect it to move all of its
products to SoC in 2015. This should improve its user experience, battery life, and
industrial design, in our view. We also expect TCL-C to lead in MTK’s platform next
year, due to its alpha partner status, to leverage MTK’s improved 4G SoC lineup in
2015. We believe TCL-C will adopt MT6732M (64-bit but likely US$8-10) to enhance
its low-end product line-up
Figure 16: Our forecasts for TCL-C’s 4G smartphone platforms
1H14
2H14
1H15
1H15
1H15
Family
Snapdragon
400
1H14
MT6592
Snapdragon
410
MT6735
Snapdragon
210
Snapdragon
615
Company
Qualcomm
MediaTek
Qualcomm
MediaTek
Qualcomm
Qualcomm
Product
MSM8926
MT6592m
MSM8916
MT6735
MSM8909
MSM8936
Core no.
Quad
Octa
Quad
Quad
Quad
Octa
A53
A7
A53
A53
A7
A53
ARM Cortex
32/64 bits
32
32
64
64
32
64
Power
consumption
Low
Mid-high
Low
Low
Low
Mid/low
Frequency
1.2G
1.4G
1.4G
1.3-1.5G
1.5G
1.8G
Tech node
28 nm LP
28nm
28 nm LP
28nm
28nm LP
28nm LP
DSC pixels
13MP
13MP
13.5MP
13MP
13MP
21MP
GPU
Adreno 305
Mali 450 MP4
@750MHz
Adreno 306
Mali-T760 MP2
@ 500Mhz
Adreno 304
Adreno 405
Video
1080p
720P
1080p
1080p
qHD
1080p
1920*1080
1280*720
1920*1080
1280*760
1920*1080
1920*1080
Yes
No
Yes
Yes
Yes
Yes
Resolution
SoC
Source: Yuanta Investment Consulting
Hong Kong: Handsets
14 Nov, 2014
Page 10 of 22
We believe worries on competition from Samsung are overdone
Due to worries over competition from Samsung, TCL-C’s share price has been weak
in the past month (see Figure 1). Indeed, Samsung is the largest player in almost all
regions and may turn aggressive in mid/low-end segments to help its smartphone
volume. However, we believe the market is overly concerned due to the following
reasons:
1.
We doubt how much Samsung is willing to cut prices for its low-end models,
given its already thin margins at the mid-low end. Compared to Chinese brands,
we believe Samsung’s cost structure is not competitive, due to higher costs for
Samsung’s inferior cost
structure makes it difficult to
cut prices
marketing, channel, royalty fee, after-service, etc, Indeed, according to our
survey (see Figures 17-20 below), Samsung’s low-priced models appear to be
uncompetitive, compared to Chinese or local brands. Given less branding impact
in the low-end segment (consumers in this space usually rate spec/price as top
priority), the price difference between Samsung’s products and Chinese brands’
is not enough to attract consumers, in our view.
Samsung is not flexible enough
to compete with Chinese OEMs
in low-end market
2.
will need to constantly push new models to sustain volume. This approach is
difficult for global OEMs to implement due to a lack of flexibility.
3.
Shrinking high-end scale also
hurts its mid/low end
expansion
Given the shortening product lifecycles, especially for low-end models, brands
We note that Samsung’s smartphone profit is largely dependent on its high-end
products (Galaxy S, Note), and Samsung in turn uses the profit from high-end to
support expansion of low-end. Given our expectations of saturating high-end
smartphone demand (Apple is gaining shares), we believe Samsung’s power to
cut price low-end prices is weakening.
On the other hand, Samsung’s weakness is an important opportunity for TCL-C, in
our view. We believe TCL-C’s strategy is targeting Samsung for market share gains by
offering similar hardware spec but at more competitive prices and faster time to
market.
In addition to Samsung, TCL-C is also competing against other Chinese brands, and
we believe TCL-C has an advantage in the export market given its solid relationships
Compared to other Chinese
brands, TCL-C has stronger
relationship with carrier in
Eastern Europe, MEA, Latin
America, and North America.
Alcatel’s brand awareness is
also good in those regions
with global/local carriers/channels, better brand awareness (Alcatel, acquired in
2004), and experience in overseas supply chain and logistics management. In most
emerging markets (Eastern Europe, MEA, Latin America) and North America, TCL-C
ranks either no.1 or 2 among Chinese brands in those regions. However, even with it
ranking no.1 or 2 among Chinese brands in those regions, the gap vs. leading global
brands remains large. That is to say, the room for future growth will still be from the
market share of leading global brands.
Hong Kong: Handsets
14 Nov, 2014
Page 11 of 22
Figure 17: Spec and price comparison between Samsung and Chinese brands in
Philippines
Philippines
Samsung is inferior in
providing attractive pricing
with comparable prices in
low-end market, in which
branding is less important
Samsung
Huawei
TCL
Galaxy Star S5282
Ascend Y220
Alcatel One Touch Pixi
Display
3.0" 240x320
3.5" 320x480
3.5"320 x 480
CPU
Cortex-A5
Single core 1Ghz
MTK MT 6572
Dual-core 1GHz
Snapdragon
Single-Core 1GHz
Pricing
₱ 3,990.00 (88 USD)
₱ 2,890 (64 USD)
₱ 2,999 (67 USD)
Weight
220 g
130 g
118g
Thickness
11.9 mm
12.3mm
12.2 mm
Storage
4GB
512MB
512MB
RAM
512 MB
256 MB
256 MB
Camera
2 MP (back)
VGA (back)
2 MP (back)
Battery life
1200 mAh
1350 mAh
1300mAh
Source: Yuanta Investment Consulting
Figure 18: Spec and price comparison between Samsung and Chinese brands in
Russia
Russia
Samsung
Huawei
TCL
Galaxy Star Duos GT-S5282
Ascend Y530
Alcatel OT-5036D POP C5
Display
3.0" 240x320
4.5" 480x854
4.5"480x854
CPU
Cortex-A5
Single core 1Ghz
Adreno 302
Dual-core 1.2GHz
Snapdragon
Dual-core 1.3GHz
Pricing
RUB 3 090 (65 USD)
RUB 4,990 (105 USD)
RUB 3 990 (84 USD)
Weight
100 g
145 g
157g
Thickness
11.9 mm
9.7mm
11.5 mm
Storage
4GB
4GB
2GB
RAM
512 MB
512 MB
512 MB
Camera
2 MP (back)
5 MP(back)/ VGA(front)
5 MP (back) VGA(front)
Battery life
1200 mAh
1750 mAh
1800 mAh
Source: Yuanta Investment Consulting
Hong Kong: Handsets
14 Nov, 2014
Page 12 of 22
Figure 19: Spec and price comparison between Samsung and Chinese brands in India
India
Samsung
Huawei
TCL
Samsung Galaxy Star Pro
Ascend Y 320
Alcatel One Touch Pixi 4007D
Display
4.0" 240x320
4.0" 480 x 800
3.5"320 x 480
CPU
Cortex-A5
Single core 1Ghz
Cortex-A5
Dual-core 1GHz
Snapdragon
Dual-core 1GHz
Pricing
Rs 5500 (90 USD)
Rs. 4,999 (81USD)
Rs 3000 (50 USD)
Weight
121g
121g
118 g
Thickness
10.6 mm
10.6 mm
12.2 mm
Storage
4GB
4GB
2GB
RAM
512 MB
512 MB
256 MB
Camera
2 MP (back)
2 MP (back)
2 MP (back)
Battery life
1500 mAh
1500 mAh
1300 mAh
Source: Yuanta Investment Consulting
Figure 20: Spec and price comparison between Samsung and Chinese brands in Brazil
Brazil
Samsung
TCL
G110 Galaxy Pocket 2 Duos
Cellular Alcatel One Touch M Pop 5020
Display
3.14" 240x320
4.0'' 480 x 800
CPU
Cortex-A5
Single core 1Ghz
Snapdragon
Dual-core 1GHz
Pricing
R$ 308 (120 USD)
R$ 280 (110 USD)
Weight
98g
136.5g
Thickness
12 mm
11.8 mm
Storage
4GB
2GB
RAM
512 MB
512 MB
Camera
2 MP (back)
5 MP(back) / VGA(front)
Battery life
1500 mAh
1400 mAh
Source: Yuanta Investment Consulting
Hong Kong: Handsets
14 Nov, 2014
Page 13 of 22
Earnings outlook
Multi-quarter upward ASP trend & stable OPM
We expect TCL-C to increase its ASP sequentially until 2016, driven by: 1) increasing
smartphone mix; 2) higher contribution from 4G smartphones; and 3) the ramp up of
its tablet business.
Margin-wise, although we expect limited room for its GM to expand, we expect its
OPM to steadily trend up, thanks to increasing scale benefits.
Figure 21: ASP and OPM trend
Source: Company, Yuanta Investment Consulting
2015 earnings outlook
We estimate TCL-C’s EPS to
grow by 32%/16% in
2015/2016F respectively
Driven by an increasing shipment scale and ASP expansion, we expect TCL-C’s
top-line growth to be 27% YoY in 2015, followed by 24% YoY in 2016. Together with
the operating leverage effect, we forecast its EPS will grow by 32%/16% in
2015/2016F, respectively, to HK$1.17/HK$1.35.
Hong Kong: Handsets
14 Nov, 2014
Page 14 of 22
Figure 22: TCL-C’s EPS vs. ROE, 2009-15F
Source: TEJ, Yuanta Investment Consulting
Figure 23: Quarterly highlights (consolidated basis)
(HK$ mn)
Sales
COGS
Gross profit
Opex
Operating profit
Non-operating profit
Pre-tax profit
Minority interest
Income tax
Net income attributable to the parent
FD WA EPS ( )
Wtd. avg. no. of shares
Margin analysis
Gross margin
Operating margin
Pre-tax margin
Effective tax rate
Growth (% QoQ)
Sales
Operating profit
Net income
EPS
1Q2014A
5,541
(4,454)
1,087
(956)
131
57
188
4
(7)
177
0.15
1,220
2Q2014A
6,677
(5,383)
1,294
(1,122)
172
101
273
6
(13)
254
0.21
1,220
3Q2014A
7,779
(6,297)
1,481
(1,275)
206
102
308
7
(7)
295
0.25
1,220
4Q2014F
9,227
(7,457)
1,770
(1,460)
310
75
385
3
(31)
351
0.29
1,220
FY2014F
29,223
(23,591)
5,632
(4,813)
819
335
1,154
19
(58)
1,077
0.88
1,220
1Q2015F
6,912
(5,588)
1,324
(1,140)
184
54
238
3
(19)
216
0.18
1,220
2Q2015F
8,535
(6,886)
1,649
(1,330)
319
64
383
3
(31)
350
0.29
1,220
3Q2015F
9,386
(7,598)
1,788
(1,450)
338
64
403
3
(32)
368
0.30
1,220
4Q2015A
12,210
(9,889)
2,321
(1,850)
471
64
535
3
(43)
489
0.40
1,220
FY2015F
37,043
(29,961)
7,082
(5,770)
1,312
248
1,560
12
(125)
1,423
1.17
1,220
19.6%
2.4%
3.4%
4.0%
19.4%
2.6%
4.1%
4.7%
19.0%
2.7%
4.0%
2.2%
19.2%
3.4%
4.2%
8.0%
19.3%
2.8%
3.9%
5.0%
19.2%
2.7%
3.4%
8.0%
19.3%
3.7%
4.5%
8.0%
19.1%
3.6%
4.3%
8.0%
19.0%
3.9%
4.4%
8.0%
19.1%
3.5%
4.2%
8.0%
(26.1%)
(46.9%)
(39.9%)
(40.19%)
20.5%
31.3%
43.5%
44.11%
16.5%
19.9%
16.1%
15.86%
18.6%
50.2%
19.2%
17.58%
50.9%
1,523.6%
243.6%
221.04%
(25.1%)
(40.6%)
(38.4%)
(38.12%)
23.5%
73.5%
61.7%
60.90%
10.0%
6.1%
5.1%
5.06%
30.1%
39.1%
33.1%
32.84%
26.8%
60.2%
32.1%
32.14%
Source: Company data, Yuanta Investment Consulting estimates
Note: A * represents historical data reconciled by Yuanta
Hong Kong: Handsets
14 Nov, 2014
Page 15 of 22
Company overview
Overview
TCL Communications was founded in 2004, and currently designs, manufactures and
markets an expanding portfolio of mobile and internet products worldwide under two
key brands – ALCATEL ONETOUCH and TCL. TCL Communication’s portfolio of
products is currently sold in China and over 160 countries throughout the Americas,
Europe, the Middle East, Africa and Asia Pacific. Headquartered in Shenzhen, China,
TCL Communication operates its highly efficient manufacturing plant and R&D
centers in various provinces of China. It currently employs over 12,000 people in
China, Hong Kong and overseas. The company went public in 2004 and has been
listed on the Main Board of the Hong Kong Stock Exchange since then. Over the years
TCL Communication has gained wide recognition as one of the largest consumer
electronics companies in the world. Current revenue growth mainly comes from its
advanced smartphone business and tablet business which accounts for roughly 30%
and 8% of its total revenue respectively.
Figure 24: TCL Communication’s shareholder structure
Shareholder
Direct Holding
Total management & BoD
60.49%
TCL Corporation
54.21%
Chairman, Li Dongsheng
4.28%
CEO, Guo Aiping
0.91%
COO, Wang Jiyang
0.66%
Other Directors
0.43%
Public
39.51%
Source: TEJ, Company data
Figure 25: TCL Communicatiuon’s management profile
Position
Chairman
CEO and Executive
Director
COO and Executive
Director
CFO and SVP, Business
Strategy
Name
Li Dongsheng
Background and major experience
Mr. Li Dongsheng, the founder of the company and TCL Corp has
about 30 years of experience in various aspects of the electronics
industry. Mr. Li was awarded “Business Leader of the Decade” by
CCTV Economy Channel in 2009. He graduated from South China
University of Technology.
Guo Aiping
Mr. Guo Aiping has extensive experience in overall management of
multinational company, strategic planning and development, and
merger and acquisition in the worldwide wireless industry. Prior to
joining TCL Corp., Mr. Guo held positions as Manager in SB Global,
etc. He graduated from Stanford University with a Doctor's degree in
Management Science.
Wang Jiyang
Mr. Wang Jiyang, is an Executive Director, the COO and President of
Sales & Marketing China of the Company, and Vice President of TCL
Corp. Mr. Wang has over 20 years' experience in research,
development and management in electronics industry. He graduated
from University of Electronic Science and Technology of China with a
PhD in Electrocircuit & System.
Liu Yuk Tung
Mr. Liu Yuk Tung is the CFO and SVP, Business Strategy of the
Company. Mr. Liu has about 28 years of experience in fields of audit,
international finance and technology business. Prior to joining the
Company, he was the Asia Pacific Regional Financial Controller of
Stratus Corporation in US. He is also a CPA of HKICPA and fellow
member of ACCA. He holds an MBA from the University of New South
Wales, Australia.
Source: Company data
Hong Kong: Handsets
14 Nov, 2014
Page 16 of 22
Figure 26: TCL’s Product overview –Hero Series
Hero 2
Hero 8 (Tablet )
Launch
Sep-14
Sep-14
Display
6.0" 1080 x 1920
8.0" 1200 x 1920
CPU
Mediatek MT8392
Octa-core 2.0 GHz
Mediatek MT8392
Octa-core 2.0 GHz
Pricing
USD 450
USD 390
Weight
175 g
310 g
Thickness
7.9 mm
7.3 mm
Storage
16 GB
8/16/32 GB
RAM
2 GB
2 GB
Camera
13.1 MP OIS (back) /
5MP (front)
5 MP (back) /
2 MP (front)
Battery life
3100 mAh
4060 mAh
Source: Yuanta Investment Consulting
Figure 27: TCL’s Product overview –idol Series
idol 2
idol 2S
idol 2 mini
idol 2 mini S
Launch
Feb-14
Feb-14
Feb-14
Feb-14
Display
5" 540x960
5" 720x1280
4.5" 540x960
4.5" 540x960
CPU
MTK MT6582
Quad-core 1.3 GHz
Pricing
USD 275
USD 340
USD 230
USD 290
Weight
128 g
126 g
110 g
116 g
Thickness
7.3 mm
7.5 mm
7.9 mm
8.5 mm
Storage
8GB
8GB
4GB
4/8GB
RAM
1 GB
1 GB
1 GB
1 GB
Camera
8 MP (back) / 2MP
(front)
8 MP (back) / 1.3MP
(front)
8 MP (back) / 2MP
(front)
8 MP (back) / 2MP (front)
Battery life
2000 mAh
2150 mAh
1700 mAh
2000 mAh
Snapdragon MSM 8926 Snapdragon MSM 8212
Quad-core 1.2 GHz
Quad-core 1.2 GHz
Quad-core 1.2 GHz
Source: Yuanta Investment Consulting
Hong Kong: Handsets
14 Nov, 2014
Page 17 of 22
Figure 28: TCL’s Product overview –Pop Series
Pop D3
Pop D5
Pop S7
Pop S9
Launch
Sep-14
Sep-14
Feb-14
Feb-14
Display
4.0" 480 x 800
4.5" 480 x 854
5" 960x540
5.9" 720 x 1280
CPU
MTK MT6572
Dual Core 1.3 GHz
MTK MT6582
Quad-core 1.3 GHz
MTK MT6290
Quad-core 1.3 GHz
Snapdragon 400
MSM8926
Quad-core 1.2 GHz
Pricing
NA
NA
$260
$300
Weight
114 g
150 g
162 g
182 g
Thickness
12.05mm
10mm
9.4 mm
8.6 mm
Storage
4GB
4GB
4GB
8GB
RAM
512 MB
512 MB
1 GB
1 GB
Camera
5 MP (back) / VGA
(front)
5 MP (back) / VGA
(front)
5 MP (back) / VGA
(front)
8 MP (back) / 2 MP
(front)
Battery life
1400 mAh
1800 mAh
3000 mAh
3400 mAh
Source: Yuanta Investment Consulting
Figure 29: TCL Communication’s revenue breakdown
Source: Company data, Yuanta Investment Consulting
Hong Kong: Handsets
14 Nov, 2014
Page 18 of 22
Balance Sheet
Year as of Dec
(HK$ mn)
Profit and Loss
2012A
2013A
2014F
2015F
Year as of Dec
(HK$ mn)
2016F
Cash & ST investment
1,116
235
1,149
1,040
1,172
Inventories
1,263
2,649
3,932
4,994
6,218
Accounts receivable
3,344
6,118
7,206
9,134
11,341
Others
5,490
2,863
4,321
5,478
6,801
Current assets
Sales
Cost of goods sold
Gross profit
Operating expenses
2012A
2013A
2014F
12,031
19,362
(9,935)
(15,690)
2015F
29,223
2016F
37,043
45,992
(23,591) (29,961)
(37,311)
2,097
3,672
5,632
7,082
8,682
(2,551)
(3,622)
(4,813)
(5,770)
(7,130)
1,552
11,212
11,866
16,608
20,645
25,532
Operating profit
(454)
50
819
1,312
LT investments
30
82
82
82
82
Interest income
213
113
5
5
6
Net fixed assets
597
941
1,067
1,121
1,150
(166)
(105)
(71)
(68)
(63)
47
8
(67)
(62)
(57)
4
0
0
0
0
214
240
402
310
310
Interest expense
Others
1,482
1,534
1,534
1,534
1,534
Net interest
Other assets
2,109
2,557
2,683
2,737
2,767
Net Invst.Inc/(loss)
Total assets
13,321
14,423
19,291
23,382
28,299
Net oth non-op.Inc/(loss)
Accounts payable
2,541
4,208
6,463
8,209
10,222
Net extraordinaries
ST borrowings
6,159
3,453
3,295
3,131
2,809
Pretax income
Income taxes
Others
Current liabilities
1,905
3,560
5,373
6,811
8,456
10,606
11,221
15,131
18,150
21,487
310
196
173
165
148
83
93
93
93
93
Long-term debts
Others
Long-term liabilities
Total liabilities
393
289
266
258
241
10,998
11,510
15,397
18,408
21,728
1,260
1,316
1,316
1,316
1,316
Capital surplus
348
567
570
570
570
Retained earnings
713
1,026
2,007
3,088
4,684
Capital adjustment
0
0
0
0
0
Shareholders' equity
2,321
2,909
3,893
4,975
6,570
2
4
0
0
0
2,323
2,913
3,893
4,975
6,570
Paid-in capital
Minority Interest
Total Equity
Net profit
Minority interest
0
0
0
0
0
(188)
298
1,154
1,560
1,805
(32)
18
(58)
(125)
(144)
(220)
316
1,096
1,435
1,660
(12)
3
19
12
12
Net profit attributable
to the parent
EBITDA
(208)
313
1,077
1,423
1,648
338
1,189
1,984
2,498
2,763
EPS (HK$)
(0.18)
0.28
0.88
1.17
1.35
EPS (HK$) Bonus Adj.
(0.18)
0.28
0.88
1.17
1.35
Source: Company data, Yuanta Investment Consulting
Key Ratios
Source: Company data, Yuanta Investment Consulting
Year
to Dec
2012A
2013A
2014F
2015F
2016F
Growth (% YoY)
12.9
60.9
50.9
26.8
24.2
Op profit
(202.2)
(111.1)
1,523.6
60.2
18.3
EBITDA
(53.1)
251.3
66.9
26.0
10.6
Net profit
(126.0)
(250.8)
243.6
32.1
15.8
(125.38)
(248.76)
221.04
32.14
15.84
Gross margin
17.4
19.0
19.3
19.1
18.9
Operating margin
(3.8)
0.3
2.8
3.5
3.4
2.8
6.1
6.8
6.7
6.0
Net profit margin
(1.7)
1.6
3.7
3.8
3.6
0
ROA
(1.6)
2.2
6.5
6.7
6.4
ROE
(8.3)
12.0
31.6
32.1
28.6
Sales
Cash Flow
Year as of Dec
(HK$ mn)
2012A
2013A
2014F
2015F
2016F
EPS
(220)
316
1,096
1,435
1,660
793
1,138
1,165
1,187
1,212
Change in working
cap.
Others
1,486
1,787
240
(963)
(1,096)
Operating cash flow
2,055
3,241
2,502
1,658
1,776
(221)
(491)
(300)
(250)
(250)
Net profit
Depr & amortization
(4)
Capex
Change in LT inv.
Change in other
assets
Investment cash flow
Change in share
capital
Net change in debt
3
(52)
0
0
0
0
0
(907)
(1,043)
(991)
(991)
(991)
(1,124)
(1,586)
(1,291)
(1,241)
(1,241)
(143)
277
(97)
(342)
(53)
(1,020)
(2,809)
(181)
(173)
(338)
0
0
0
0
0
(1,162)
(2,532)
(278)
(514)
(391)
Other adjustments
Financing cash flow
0
Impact from changes in
FX rate
N.A.
N.A.
N.A.
N.A.
N.A.
Net cash flow
(232)
(878)
933
(97)
144
Free cash flow
1,572
2,502
1,866
1,160
1,273
Source: Company data, Yuanta Investment Consulting
Profitability (%)
EBITDA margin
Stability
278.5
125.3
89.1
66.2
45.0
Net cash (debt)/equity (%) (230.5)
(117.2)
(59.6)
(45.3)
(27.2)
29.9
Gross debt/equity (%)
Int. coverage (X)
N.A.
3.8
17.2
24.1
Int. & ST debt cover (X)
N.A.
0.1
0.4
0.5
0.7
Cash flow int. cover (X)
12.4
30.9
35.1
24.5
28.4
0.9
0.7
0.5
0.6
1.2
Cash flow/int. &
ST debt (X)
0.3
Current ratio (X)
1.1
1.1
1.1
1.1
Quick ratio (X)
0.9
0.8
0.8
0.9
0.9
5,353
3,414
2,319
2,255
1,785
2.06
2.55
3.19
4.08
5.39
Net debt (HK$ mn)
BVPS (HK$)
Valuation Metrics (x)
(43.4)
29.2
9.1
6.9
5.9
P/FCF
5.7
3.7
5.2
8.4
7.7
P/B
3.9
3.1
2.5
2.0
1.5
26.6
7.7
4.9
3.9
3.5
0.7
0.5
0.3
0.3
0.2
P/E
P/EBITDA
P/S
Source: Company data, Yuanta Investment Consulting
Hong Kong: Handsets
14 Nov, 2014
Page 19 of 22
Appendix A: Important Disclosures
Analyst Certification
Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to
each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal
views about those securities or issuers; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to
the specific recommendations or views expressed by that research analyst in the research report.
TCL Communication (2618 HK) – Three-year recommendation and target price history
#
Date
Closing Price (A)
Target Price (B)
1
2
3
28 Feb 12
26 Apr 12
04 Sep 12
4.36
3.26
1.77
5.10
3.40
3.40
Adjusted Target Price
(C)
5.10
3.40
3.40
Rating
Analyst
BUY
HOLD
HOLD-UPF
Bonnie Chang
Bonnie Chang
Bonnie Chang
Source: Bloomberg, Yuanta Investment Consulting
Notes: A = price adjusted for stock & cash dividends; B = unadjusted target price; C = target price adjusted for stock & cash dividends.
Employee bonus dilution is not reflected in A, B or C.
Current distribution of Yuanta ratings
Rating
# of stocks
%
Buy
176
45%
HOLD-OPF
101
26%
HOLD-UPF
50
13%
Sell
7
2%
Under Review
50
13%
Restricted
4
1%
388
100%
Total:
Source: Yuanta Investment Consulting August 18, 2014
Ratings Definitions
BUY: We have a positive outlook on the stock based on our expected absolute or relative return over the investment period. Our
thesis is based on our analysis of the company’s outlook, financial performance, catalysts, valuation and risk profile. We
recommend investors add to their position.
HOLD-Outperform: In our view, the stock’s fundamentals are relatively more attractive than peers at the current price. Our thesis is
based on our analysis of the company’s outlook, financial performance, catalysts, valuation and risk profile.
HOLD-Underperform: In our view, the stock’s fundamentals are relatively less attractive than peers at the current price. Our thesis is
based on our analysis of the company’s outlook, financial performance, catalysts, valuation and risk profile.
SELL: We have a negative outlook on the stock based on our expected absolute or relative return over the investment period. Our
thesis is based on our analysis of the company’s outlook, financial performance, catalysts, valuation and risk profile. We
recommend investors reduce their position.
Under Review: We actively follow the company, although our estimates, rating and target price are under review.
Restricted: The rating and target price have been suspended temporarily to comply with applicable regulations and/or Yuanta
policies.
Hong Kong: Handsets
14 Nov, 2014
Bloomberg code: YUTA
Page 20 of 22
Note: Yuanta research coverage with a Target Price is based on an investment period of 12 months. Greater China Discovery Series
coverage does not have a formal 12 month Target Price and the recommendation is based on an investment period specified by the
analyst in the report.
Global Disclaimer
© 2014 Yuanta. All rights reserved. The information in this report has been compiled from sources we believe to be reliable, but we
do not hold ourselves responsible for its completeness or accuracy. It is not an offer to sell or solicitation of an offer to buy any
securities. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change
without notice.
This report provides general information only. Neither the information nor any opinion expressed herein constitutes an offer or
invitation to make an offer to buy or sell securities or other investments. This material is prepared for general circulation to clients
and is not intended to provide tailored investment advice and does not take into account the individual financial situation and
objectives of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of
investing in any securities, investments or investment strategies discussed or recommended in this report. The information
contained in this report has been compiled from sources believed to be reliable but no representation or warranty, express or implied,
is made as to its accuracy, completeness or correctness. This report is not (and should not be construed as) a solicitation to act as
securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on such business in that
jurisdiction.
Yuanta research is distributed in the United States only to Major U.S. Institutional Investors (as defined in Rule 15a-6 under the
Securities Exchange Act of 1934, as amended and SEC staff interpretations thereof). All transactions by a US person in the securities
mentioned in this report must be effected through a registered broker-dealer under Section 15 of the Securities Exchange Act of
1934, as amended. Yuanta research is distributed in Taiwan by Yuanta Securities Investment Consulting. Yuanta research is
distributed in Hong Kong by Yuanta Securities (Hong Kong) Co. Limited, which is licensed in Hong Kong by the Securities and Futures
Commission for regulated activities, including Type 4 regulated activity (advising on securities). In Hong Kong, this research report
may not be redistributed, retransmitted or disclosed, in whole or in part or and any form or manner, without the express written
consent of Yuanta Securities (Hong Kong) Co. Limited.
Taiwan persons wishing to obtain further information on any of the securities mentioned in this publication should contact:
Attn: Research
Yuanta Securities Investment Consulting
4F, 225,
Section 3 Nanking East Road, Taipei 104
Taiwan
Hong Kong persons wishing to obtain further information on any of the securities mentioned in this publication should contact:
Attn: Research
Yuanta Securities (Hong Kong) Co. Ltd
23/F, Tower 1, Admiralty Centre
18 Harcourt Road,
Hong Kong
Hong Kong: Handsets
14 Nov, 2014
Bloomberg code: YUTA
Page 21 of 22
Yuanta Greater China Equities
Research - Taiwan
Vincent Chen
Head of Taiwan Research
+886 2 3518 7903
vincent.chen@yuanta.com
George Chang, CFA
Co-Head of Tech
+886 2 3518 7907
george.chang@yuanta.com
DC Wang
Co-Head of Tech
+886 2 3518 7962
dc.wang@yuanta.com
Aidan Wang
Head of Macroeconomics
+886 2 3518 7992
aidanwang@yuanta.com
Andrew C Chen
IC Backend, IC Substrate, PCB
and LED
+886 2 3518 7940
andrew.chen@yuanta.com
Steve Huang, CFA
Semiconductors & Display
+886 2 3518 7905
steve.huang@yuanta.com
Jeff Pu, CFA
Handsets
+886 2 3518 7913
jeff.pu@yuanta.com
Calvin Wei
PC/NB, Passive
Components, IPC
+886 2 3518 7971
calvin.wei@yuanta.com
Chuanchuan Chen
IC Design
+886 2 3518 7970
chuanchuan.chen@yuanta.com
Yvonne Tsai
Petrochem/Textile/Medical
Devices/Shipping
+886 2 3518 7942
yvonne.tsai@yuanta.com
Peggy Shih
Taiwan Financials,
Environmental Eng
+886 2 3518 7901
peggy.shih@yuanta.com
Claire Su
China A-shares
+886 2 3518 7963
claire.su@yuanta.com
Peggy Lee
Pharmaceuticals
+886 2 3518 7984
peggy.lee@yuanta.com
Yen-liang Chen
Asset Plays, Non-tech
+886 2 3518 7967
yl.chen@yuanta.com
Robbie Tseng
Petrochemicals & Chemicals
+886 2 3518 7945
robbie.tseng@yuanta.com
Livia Wu
Telecoms, Internet,
Transportation
+886 2 3518 7920
livia.wu@yuanta.com
April Chang
Hannah Cheng
RA - Strategy, Downstream TechRA - Upstream Tech
+886 2 3518 7977
+886 2 3518 7930
april.chang@yuanta.com
hannah.cheng@yuanta.com
Maggie Chi
RA - Upstream Tech
+886 2 3518 7969
maggie.chi@yuanta.com
Shelly Chou
RA – Downstream Tech
+886 2 3518 7915
shelly.chou@yuanta.com
Caitlin Huang
RA – Downstream Tech
+886 2 3518 7911
caitlin.huang@yuanta.com
Leo Lee
RA – Non-tech
+886 2 3518 7983
leo.kc.lee@yuanta.com
Jessie Lo
RA – Non-tech
+886 2 3518 7949
jessie.lo@yuanta.com
Roger Lo
RA – Upstream Tech
+886 2 3518 7939
roger.c.lo@yuanta.com
Rainy Wang
RA – Upstream Tech
+886 2 3518 7916
rainy.wang@yuanta.com
Ellie Wang
RA – Upstream Tech
+886 2 3518 7956
ellie.wang@yuanta.com
Sandy Weng
RA – Downstream Tech
+886 2 3518 7926
sandy.weng@yuanta.com
Wayne Wang
RA – Non-tech
+886 2 3518 7909
wayne.wang@yuanta.com
Jessie Wu
RA – Downstream Tech
+886 2 3518 7961
jessie.y.wu@yuanta.com
Cyrus Ng
Healthcare/Autos
+852 3969 9527
cyrus.wt.ng@yuanta.com
Nice Wang
China Strategy
+86 21 6187 3821
nice.wang521@yuanta.com
Research - Hong Kong/Shanghai
Peter Chu, CFA
Head of HK Research
Consumer Research
+852 3969 9521
peter.kk.chu@yuanta.com
Kelvin Ng
Renewable Energy
+852 3969 9518
kelvin.kc.ng@yuanta.com
Benson Wan
Oil & Gas/Industrial
+852 3969 9529
benson.cf.wan@yuanta.com
Sales and Trading
Juan Tseng
Head of Taiwan Sales
+886 2 2175 8962
juan.tseng@yuanta.com
Duncan Wun
Head of HK Cash Equities
+852 3969 9869
duncan.wun@yuanta.com
Jason Wang – Head of Taiwan
Sales Trading
+886 2 2175 8888
jason.wang@yuanta.com
Kerry Chen - Sales
+886 2 2175 8922
kerrychen@yuanta.com
Philip Kong – Sales
+852 3969 9879
philip.kong@yuanta.com
Kate Jackson – Sales Trading Jason Lin - Sales
+852 3969 9767
+886 2 2175-8998
kate.jackson@yuanta.com
jason.lin@yuanta.com
Terence Lok – Sales Trading
+852 3969 9728
terence.lok@yuanta.com
Carlos Ng – Sales Trading
+852 3969 9712
Carlos.ng@yuanta.com
Joyce Wan – Sales
+852 3969 9876
joyce.wan@yuanta.com
Sales of Non-Taiwan Equities
Franker Lin
Head of Foreign Equity
Department
+886 2 2175 8720
laiochenlin@yuanta.com
Lunghui Chen
Co-Head of Sales, Foreign
Equity Department
+886 2 2175 8730
lunghuichen@yuanta.com
Oscar Yang
Co-Head of Sales, Foreign
Equity Department
+886 2 2175 8733
oscaryang@yuanta.com
Jenny Lo
Head of HK Sales Trading
+852 3969 9769
jenny.lo@yuanta.com
Michael Lin - Sales
+886 2 2175 8977
michael.lin@yuanta.com