I have been holding onto CE Huada Technology (85.HK) for more than five years. In 2022, its earnings became remarkably solid, and the first half of 2023 saw even more impressive growth in its earnings.
CE Huada Tech announced that it expected the comprehensive net profit attributable to shareholders to be approximately HKD 610 million to HKD 650 million for the six-month period ending on June 30, 2023. Take the mid-point of the estimation at HKD 630 million, this is an increase of 210.3 per cent compared to the profit of HKD 203 million for the same period last year.
The main reasons for this expected increase in profit are:(i) the group has seized industry opportunities and dynamically adjusted its production and sales strategies, coupled with strong performance in the eSIM chip and high-end SIM chip business; and
(ii) the impact of the continued shortage of integrated circuit production capacity in 2022, resulting in an imbalance between supply and demand for smart card chip products, with the selling prices of some key products remaining high in the first quarter of 2023.
The price experienced a remarkable surge of 49 HK cents on the first day following the profit alert, 19 Jun 2023, reaching HKD 1.60, which represents a staggering increase of 44.14% within a single day when HSI dropped 0.64% on the same day.Take a look at the EPS of CE Huada Tech in HKD:
1H2023 0.31066
2H2022 0.1617
1H2022 0.1001
2H2021 0.0326
1H2021 0.0292
If its 1H2023 EPS can be sustained in 2H2023, the P/E for 2023 would only be 2.58x. Based on a conservative multiple of six times earnings, the target price would be $3.72.
Superphang
http://superphang.blogspot.sg
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