(BUY, S$0.31, TP S$0.45)
2Q Results in line with expectation; Reiterate BUY. Trek’s 2Q results came in within our expectation with S$0.9m in PATMI (-3.7% YoY) on the back of S$20.7m in revenue (-1.9% YoY). The decrease in revenue is mainly attributable to the weaker demand from its mobile media solution segment which saw a 3.2% decline in revenue. 1H PATMI accounted for 29% of our full year estimates, as we expect the bulk of earnings to come in 2H, driven by the shipments of the FluCard®, which is expected to be a new world-wide SD card standard. Reiterate BUY with an unchanged TP of S$0.45 based on the industry average 7x FY12 P/E.
Carrying the national flag. In the recent SD Card Association forum held in Turkey, Trek's FluCard® made a stunning impact on the participants present. With a majority of the founding members' vote, the design for the FluCard® is set to become the worldwide standard for all future SD Cards. Currently, Trek’s management is working closely with other major Japanese camera manufacturers in making its FluCard® the crucial weapon for camera makers to win back the fight against the smartphone makers. We expect the new specification to be finalised by Oct 2011, and more exciting news to be rolled out in the next few months.
Expecting massive earnings boost. We believe that upon the finalisation of the new SD card standard, most of the world’s major camera makers will become Trek’s customers. There are two ways that the MNCs can use Trek’s invention, either 1) purchase the license annually if they choose to develop on their own or 2) make Trek an OEM for all. Either way will enable Trek to unleash its full earnings potential, and we expect its profit to surge in the next two years.
No comments:
Post a Comment