3Q results confirmed ODM back on track; poised for further growth

（以下内容从招银国际《3Q results confirmed ODM back on track; poised for further growth》研报附件原文摘录）
闻泰科技(600745)
Wingtech released its 3Q23 results with revenue/NP growth of 11.9%/11.4%YoY and 2.9%/5.5% QoQ, respectively. The Company’s gross margin remainedconsistent while improving slightly from 17.3% in 2Q23 to 17.4% in 3Q23. Wecontinue to see strength in Company’s legacy business, which alleviated marketconcerns on its legacy business’ competitiveness and new business’ integrationand growth as we previously expected (link). Maintain BUY with unchangedTP of RMB68.
ODM: The Company’s ODM business segment saw revenue growth of24.3% YoY and 4.6% QoQ, respectively. This was also the secondconsecutive quarter that the Company saw its ODM business turningprofitable even under the current macro environment. Additionally, ODMsegment’s GPM/NPM rose from 8.8%/1.1% in 2Q23 to 10.0%/2.3% in 3Q23,respectively, confirming these businesses are back on track for growth. Thedecent recovery in ODM segment should ease some investors’ concernregarding the sustainability of its ODM recovery. The management team isalso confident to see growth in ODM in 2024.
Semi: The Company’s semi business segment saw its revenue decline by6.8% YoY but increased by 4.1% QoQ, respectively. GPM/NPM of semibusiness segment saw decline from 41.3%/18.9% in 2Q23 to 37.7%/17.1%in 3Q23, respectively, mainly due to longer-than-expected weakness of semidown cycle. Looking forward, we believe the Company’s semi business willcontinue to show strength. The Company has strategically positioned itssemiconductor business segment, Nexperia, to more effectively address thespecific requirements of its diverse downstream customers. We anticipatethat there will be sustained demand for the company's auto products, thanksto its ongoing efforts to enhance the performance of its MOSFET products.
Maintain BUY with unchanged TP at RMB68, based on the same 25xFY24E P/E, slightly below avg. 1-year forward P/E multiple. Upsidecatalysts: 1) new 12-inch factory to progress as planned; and 2) ODM andoptical modules’ new projects to begin mass production. Downside risks:1) macro challenges such as overseas inflation and slowdown in economicgrowth; 2) delay/disruption in operations; and 3) further share selling frommajor shareholders.