In this briefing:
- SYNEX: New Smartphone Launches Help Drive Earnings Momentum in 2019
- LG Electronics – Boost from Higher Dividends, Air Motion Technology, & The War Against Huawei
1. SYNEX: New Smartphone Launches Help Drive Earnings Momentum in 2019
SYNEX’s 4Q18 net profit was at Bt190m (+16%YoY, +18QoQ), in-line with our expectation
- Record-high level of sales at Bt10.38bn is the major contributor to impressive 4Q18 performance. Meanwhile , gross margin drops below 4% in the first time due to changing product mix towards more on device segment
- SYNEX post 2018 net profit of Bt721m (+15%YoY) driven by 18% increase in revenue
- We maintain our positive view toward FY19-20E earnings outlook driven by (1) number of flagship smartphone model launches and new brands for low budget users, Neffos, and, (2) higher sales contribution from high-margins product such as gaming desktops and post-sales services.
We maintain our BUY rating with a new target price of Bt16.80 (previous target price at Bt15.0) derived from 17xPE’2019E, which is the average of the World information and technology sector
2. LG Electronics – Boost from Higher Dividends, Air Motion Technology, & The War Against Huawei
- In this report, we provide an update on Lg Electronics (066570 KS), including the potential impact of the war on Huawei on the company, dividend policy, debt issue, sales of non-core assets, and the launch of new smartphones.
- Although LG’s V50 ThinQ product is a bit disappointing, another new LG smartphone called G8ThinQ appears to be promising. This is one of the first smartphones to use “air motion” technology to activate some of the features including playing a song or video or adjusting volume (remember Tom Cruise in the movie Minority Report)? The airmotion technology could bring back the “thrill” of using a smartphone.
- Many investors around the world are asking, “What companies will benefit from the continued war on Huawei by the US government?” LG Electronics, the 7th largest smartphone maker globally, could be one of the key beneficiaries of the war on Huawei.
- LG Electronics recently announced that it will pay DPS of 750 won for its common shareholders in 2018, which is nearly twice as high the DPS of 400 won in 2017.
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