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<ul><li>Good price momentum, high level of cash sales, and high earnings quality relative to its sector</li><li>Q Tech should see a solid increase in revenue after starting to supply camera modules to Huawei in 2H17</li><li>Capacity expansion of 50% at its Kunshan plant to meet strong demand, completion this year; shipments in camera modules up by 25% YoY and fingerprint 168% in 1H17</li><li>Trades above Asian Info Tech at 17CE* 36.6x PE but offers much better earnings growth and a position</li><li>Risks: Weakening RMB againet-cashnst US$ could increase costs of raw materials, hence hurt margins</li></ul>* Consensus Estimates

Good price momentum, high level of cash sales, and high earnings quality relative to its sectorQ Tech should see a solid increase in revenue after starting to supply camera modules to Huawei in 2H17Capacity expansion of 50% at its Kunshan plant to meet strong demand, completion this year; shipments in camera modules up by 25% YoY and fingerprint 168% in 1H17Trades above Asian Info Tech at 17CE* 36.6x PE but offers much better earnings growth and a positionRisks: Weakening RMB againet-cashnst US$ could increase costs of raw materials, hence hurt margins* Consensus Estimates

Q Tech (1478 HK): Supplying China's Smartphone Players

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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Q Technology Group / Equity Capital Markets

We would take the deal. The IPO offers a good discount to listed peers, while demonstrating faster growth than peers. In addition, past listing in the sector have performed well. The main concern would be the short operating history of the company, combined with its ability to tap into new market leaders.

We would take the deal. The IPO offers a good discount to listed peers, while demonstrating faster growth than peers. In addition, past listing in the sector have performed well. The main concern would be the short operating history of the company, combined with its ability to tap into new market leaders.

Offers a good discount to listed peers although short operating history is a concern

China

Q TECHNOLOGY (GROUP) Company Limited is a PRC-based camera module manufacturer focusing on mid-to-high end camera module market for Chinese branded smartphone, tablet and PC manufacturers.

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Q Technology Group (1478 HK)

Q Tech (1478 HK): Supplying China's Smartphone Players

Good price momentum, high level of cash sales, and high earnings quality relative to its sector Q Tech should see a solid increase in revenue...

A. Stotz Investment Research

Offers a good discount to listed peers although short operating history is a concern

We would take the deal. The IPO offers a good discount to listed peers, while demonstrating faster growth than peers. In addition, past listing in...

Sumeet Singh

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