Han’s Laser Earnings: Recovery in Consumer Electronics Offset by Gluts Elsewhere

We maintain our fair value estimate for Han’s Laser of CNY 20 as a gradual recovery in consumer electronics is weighed down by gluts in electric vehicles, lithium batteries, and solar power-generation industries. We view the stock as fairly valued and prefer surveillance and automation product vendor Hikvision as a China industrial recovery play. Two possible upside catalysts are the company’s commitment to repurchase almost CNY 200 million worth of stock by May 2 and artificial intelligence features successfully spurring replacement demand in consumer electronics.