External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>We spoke to FIT’s mgmt. following its announcement that its wholly-owned subsidiary FIT Singapore will fully acquire Germany-based automotive component company, Prettl SWH Group (“Prettl”), for EUR186.6mn (6.0 times of FY22E EBITDA).</li><li>The deal is targeted to close by 2Q23E, and the deal value accounts for 23% of FIT’s 1H22 cash.</li><li>We estimate the acquisition is likely to increase FIT’s topline by 7-8% and EPS by 3-4% in FY24E. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We spoke to FIT’s mgmt. following its announcement that its wholly-owned subsidiary FIT Singapore will fully acquire Germany-based automotive component company, Prettl SWH Group (“Prettl”), for EUR186.6mn (6.0 times of FY22E EBITDA).The deal is targeted to close by 2Q23E, and the deal value accounts for 23% of FIT’s 1H22 cash.We estimate the acquisition is likely to increase FIT’s topline by 7-8% and EPS by 3-4% in FY24E. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

FIT Hon Teng (6088 HK) – Positive on the Acquisition of Germany Auto Part Supplier

<ul><li>We spoke to FIT mgmt. last week and remain positive on its solid roadmap of “3+3 Strategy” in FY23/24E.</li><li>We raised FY22-24E EPS by 8-15% and lifted TP to HK$1.84 based on rollovered 8x FY23E P/E (1-sd below hist. avg).</li><li>FIT’s 3Q22 net profit of US$ 50mn (+35% YoY) and revenue of US$ 1.28bn (+11% YoY) beat market expectations, driven by stronger lightening products, EV mobility and Belkin/TWS.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We spoke to FIT mgmt. last week and remain positive on its solid roadmap of “3+3 Strategy” in FY23/24E.We raised FY22-24E EPS by 8-15% and lifted TP to HK$1.84 based on rollovered 8x FY23E P/E (1-sd below hist. avg).FIT’s 3Q22 net profit of US$ 50mn (+35% YoY) and revenue of US$ 1.28bn (+11% YoY) beat market expectations, driven by stronger lightening products, EV mobility and Belkin/TWS.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

FIT Hon Teng (6088 HK) – 3Q22 Beat on Solid Execution of “3+3 Strategy”; Raise TP to HK$1.84

Thematic (Sector/Industry)

<div><div><div><div><ul><li>Media stated that Apple will move part of its AirPods/Beats headphone production to India for the first time, as India continued to push for local manufacturing.</li><li>We believe this move is not surprising as Apple’s iPhone supplier, Wistron, started to assemble iPhones in India since 2017.</li><li>In addition, we expect Apple will start to build iPad/Watch in Vietnam as it continues to diversify its production bases. </li></ul></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Media stated that Apple will move part of its AirPods/Beats headphone production to India for the first time, as India continued to push for local manufacturing.We believe this move is not surprising as Apple’s iPhone supplier, Wistron, started to assemble iPhones in India since 2017.In addition, we expect Apple will start to build iPad/Watch in Vietnam as it continues to diversify its production bases. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology - Implications of AirPods/Beats Production Base Relocation to India

<div><div><div><div><ul><li>We see emerging opportunities for high-quality companies after recent sector pull-back (30-40% in past three months), as most stocks under our coverage are trading below 1-SD of its 5-year average.</li><li>We believe near-term concerns over weak macro, inflation, geopolitical risks, RMB depreciation are largely priced in.</li><li>We suggest to accumulate quality names with higher exposure to structural growth drivers, including AR/VR, auto-related and Apple share gain. </li></ul></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We see emerging opportunities for high-quality companies after recent sector pull-back (30-40% in past three months), as most stocks under our coverage are trading below 1-SD of its 5-year average.We believe near-term concerns over weak macro, inflation, geopolitical risks, RMB depreciation are largely priced in.We suggest to accumulate quality names with higher exposure to structural growth drivers, including AR/VR, auto-related and Apple share gain. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology - Emerging Opportunities to Accumulate Quality Names in AR/VR

<div><div><div><div><ul><li>We expect global smartphone market to remain sluggish into 4Q22E, given weak consumer demand, macro uncertainties and lack of major spec upgrade.</li><li>We estimate global/China smartphone market to decline 9%/15% YoY in FY22E. Recent reported data revealed that China smartphone sell-in/sell- through declined 31%/10% YoY in Jul (vs +9%/-8% in Jun), and global smartphone sell-through dropped 16.5% YoY in Jul (vs -16.1% in Jun).</li><li>For 4Q22E, we believe the only bright spot is iPhone supply chain restocking, and we prefer related names such as Luxshare for iPhone/Watch/AirPods OEM, Goertek for share gain in Watch/ AirPods, and FIT Hon Teng/Tongda for iPhone shipment upside. </li></ul></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We expect global smartphone market to remain sluggish into 4Q22E, given weak consumer demand, macro uncertainties and lack of major spec upgrade.We estimate global/China smartphone market to decline 9%/15% YoY in FY22E. Recent reported data revealed that China smartphone sell-in/sell- through declined 31%/10% YoY in Jul (vs +9%/-8% in Jun), and global smartphone sell-through dropped 16.5% YoY in Jul (vs -16.1% in Jun).For 4Q22E, we believe the only bright spot is iPhone supply chain restocking, and we prefer related names such as Luxshare for iPhone/Watch/AirPods OEM, Goertek for share gain in Watch/ AirPods, and FIT Hon Teng/Tongda for iPhone shipment upside. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology - China Smartphone: No Signs of Recovery in 4Q22E

Taiwan

FIT Hon Teng Limited manufactures and distributes electrical components. The Company produces backplane connectors, memory cards, sockets, terminal blocks, and other products. FIT Hon Teng markets its products throughout Taiwan.

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FIT Hon Teng (6088 HK)