Equity Analysis /

CN : Hongfa Technology - 1H21 results beat expectations, turning more bullish on relay business growth

    Mark Po
    Mark Po

    Research Analyst

    30 August 2021
    Published byCGS-CIMB

    Hongfa Technology (Hongfa) released its 1H21 results after market close today, which exceeded market expectations. Revenue grew 43.8% yoy, and net profit rose 45.6% yoy in 1H21. Revenue growth was mainly from its HVDC, auto and power relay business. Given its strong 1H21 growth, we are more positive on its core relay business growth and raised our revenue and earnings forecast in 2021–2023F by 10–16%. We reiterate our ADD rating and raise our target price (TP) to Rmb76.60, based on 42x P/E, unchanged. We believe the Company’s outperformance in 1H21 should reinforce market confidence in its business growth outlook from 2021 onwards.