FY25 in-line; Positive outlook on CCM share gain and drone／auto／XR momentum

FY25 in-line; Positive outlook on CCM share gainand drone/auto/XR momentum Target PriceHK$13.39(Previous TPHK$13.18)Up/Downside46.5%Current PriceHK$9.14 Q-TechpostedFY25 revenue/NP growth of 29%/435% YoY, in-line with priorprofit alert,mainly driven by non-handset CCM (+171% YoY, 27% of CCMsales),mobile CCM ASP hike (+20% YoY),disposalgaininIndiaand Newmaxoperating improvement. Looking into 2026,we are positive onmgmt.guidance:1)handset CCM: 5% YoY volume growth withoverseas sharegains, Indiacapacity andspec upgrade(periscope/variable aperture); 2)non-handset CCM:50% YoY volume growthdriven by auto/drones/robots/XR. We slightly adjustedour estimates to reflect in-line FY25resultsand stronger FY26 guidance onhandset CCM andIndia business. Trading at11.2xFY26E P/E, we thinkthestock is attractive. Maintain BUY. Upcoming catalysts includeIndiashipmentand non-handsetCCM order wins. China Technology Alex NG(852) 3900 0881alexng@cmbi.com.hk Hanqing LIlihanqing@cmbi.com.hk FY25 in-line;handset CCMupgrade (ASP +20% YoY)and non-handsetCCM salesmomentum(+171% YoY).Q-Tech FY25 revenue growth of29.3% YoY was in line with our/market expectation,driven by non-handsetCCMsales(+171% YoY), CCM ASP hike (+20% YoY) andFPMupgrade(+26%YoY).FY25GPM climbed 1.7ppts YoY to 7.8%(vs 6.1% in FY24),thanks to higher ASP andrising UTR.Overall,net profitgrew 435% YoYtoRMB1,494mn, in-line withprior profitalert. Excluding one-off disposal gain(Q-tech India), net profit grew 144%YoY to RMB680mn. 2026guidance:5%/50% YoY volume growth inhandset/non-handsetCCM.Looking into 2026,we are positive on better-than-feared guidance: 1)handsetCCM:+5% YoYshipment growthdespite memory costhike impact,asQ-Tech will focus onhigh-end spec(periscope/variable aperture) andoverseas client expansion; 2) non-handset CCM: 50% YoYshipment growthdriven by auto Tier-1/OEM project win,drone order momentum, smartglasses cooperation androboticclient wins. 3) FPM: share gainsthroughultra-sonic FPM expansion and breakthrough in PC market. In addition,mgmt. guided FY26Ecapexof RMB 1bn for auto/IoT capacity ramp-up,smartphone high-end tech upgrade andglobal plants’ construction. Maintain BUY with new TP ofHK$13.39.We are positive onQ-Tech’ssolid 2026shipment guidance, India capacity ramp-up,andmultiple growthdrivers innon-mobile CCM segment.We adjusted our estimates to reflectFY25positive profit alertandbusiness outlookin FY26E. Our new TP ofHK$13.39is based onsame17xFY26E P/E.Reiterate BUY. Source: FactSet 2025earnings review Earnings Revision EarningsForecasts Valuation Maintain BUY withnewTPofHK$13.39 We slightly adjusted our estimates to reflect in-line FY25 results and stronger FY26guidance on handset CCM and India business, despite smartphone weakness on memorycost hike. We expect non-mobile biz to become major growth driver with57% revenueCAGR in FY25-27E, accounting for38%/45% of revenue in FY26/27E (vs. 24% in FY25). Our new TP of HK$13.39is based onsame17x FY26EP/E.Reiterate BUY.Upcomingcatalysts include India shipment and non-handset CCM order wins. Source: Company data, CMBIGM Source: Company data, CMBIGM Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifies thatwith respect to the securities or issuer that theanalyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subjectsecurities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded inthe stock(s) covered in this research report within 30 calendar days prior to the date of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3)serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies coveredin this report. CMBIGM RatingsBUY : Stock with potential return of over 15% over next 12monthsHOLD: Stock with potential return of +15% to-10% over next 12 monthsSELL: Stock with potential loss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform therelevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevantbroad market benchmark over next 12 monthsCMB InternationalGlobal MarketsLimited Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”) is a wh