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Q Technology (Group) Co Ltd Shs Reg S 01478

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Stock XHKG Rating as of
HKD 3.34 +0.08 (2.45%)
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As of Delayed Price Closed
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Company Report

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Q Technology Earnings: Profitability Widens Despite Intense Competition; Raised Valuation by 21%

Phelix Lee, Zachary Seng

We raised our fair value estimate for Q Technology, or Q Tech, to HKD 5.7 from HKD 4.7 as we think its competitive position in camera modules has improved, and we expect the trend to persist until 2026. At 0.75 times book value and 6.7 times 2025 forward price/earning, Q Tech’s shares are the most undervalued among our smartphone camera coverage, as we are more optimistic about its earnings recovery through 2025 due to product mix improvement and the overall demand recovery for smartphone camera modules.

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Price vs Fair Value

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01478 is trading at a 45% discount.
Price
HKD 3.13
Fair Value
HKD 7.70
Uncertainty
Very High
1-Star Price
HKD 7.59
5-Star Price
HKD 6.58
Economic Moat
Wfdt
Capital Allocation
Zhxrsfvn

Bulls Say, Bears Say

Bulls

Greater integration and partnerships with suppliers of lenses and voice coil motors could drive revenue growth.

Bears

Persistent price competition in a fragmented handset camera module market could render the business unprofitable.

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Trading Information

Previous Close Price
HKD 3.26
Day Range
HKD 3.24–3.38
52-Week Range
HKD 2.48–4.97
Bid/Ask
HKD 3.33 / HKD 3.35
Market Cap
HKD 3.96 Bil
Volume/Avg
3.4 Mil / 3.1 Mil

Key Statistics

Price/Earnings (Normalized)
83.31
Price/Sales
0.28
Dividend Yield (Trailing)
—
Dividend Yield (Forward)
—
Total Yield
—

Company Profile

Q Technology is engaged in the design, research and development, manufacture, and sales of camera modules and fingerprint recognition modules. It is the third-largest supplier in China and mainly supplies domestic firms. Camera modules account for most of the company’s revenue and are primarily used in smartphone cameras. Other camera modules are used in drones, virtual and augmented reality headsets, and automobiles. The company also supplies 3D modules, underglass, and capacitive fingerprint recognition modules, mainly used in smartphones. It employed 9,629 employees as of Dec. 31, 2023.
Sector
Technology
Industry
Electronic Components
Stock Style Box
Small Value
Total Number of Employees
9,629
Website
http://www.qtechglobal.com

Competitors

Valuation

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Metric
01478
02018
02382
Price/Earnings (Normalized)
 83.3147.0829.68
Price/Book Value
 0.721.281.54
Price/Sales
 0.281.341.11
Price/Cash Flow
 —8.9012.22
Price/Earnings
01478
02018
02382

Financial Strength

Metric
01478
02018
02382
Quick Ratio
 0.831.301.39
Current Ratio
 1.151.631.65
Interest Coverage
 0.492.572.74
Quick Ratio
01478
02018
02382

Profitability

Metric
01478
02018
02382
Return on Assets (Normalized)
 0.50%1.89%5.08%
Return on Equity (Normalized)
 1.41%3.46%10.03%
Return on Invested Capital (Normalized)
 0.97%2.72%7.84%
Return on Assets
01478
02018
02382
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