Luxshare Precision Industry drew a series of analyst price upgrades after the Chinese assembler of Apple’s AirPods revealed a roughly 80 per cent surge in first-half profit and sales.
The company, regarded as a bellwether for China's consumer hardware industry, is expected to become an increasingly important supplier of components for wearable devices like the Apple Watch, some analysts say. Goldman, CICC and Morgan Stanley were among the investment houses that lifted their stock price target on the consumer hardware firm after it posted results late Tuesday.
Luxshare is among the largest of a crop of Chinese manufacturers of consumer electronics that're increasingly winning orders from longer-established firms like Foxconn Technology Group. The Shenzhen-based firm has in past years become a primary supplier of AirPods, one of the fastest-selling consumer accessories in the market. TF International analyst Kuo Ming-chi estimates AirPod shipments could rise 60 per cent-70 per cent for 2019, and 50 per cent-60 per cent for 2020.
"Luxshare is in a fast-growth phase thanks to its comprehensive product lines and expertise in R&D and production of precision electronic components, which provide a defensive moat," Csc International analyst Zhu Jixiang said. "Apple's AirPods in particular are a bright spot in the market, and Luxshare has a significant share of assembling that product."
Luxshare's stock slid 2 per cent on Wednesday but Bright Smart Securities analyst Mark Huang blamed that partly on a conservative projection for current-quarter net income growth of 18 per cent to 38 per cent. Huang said any losses presented a buying opportunity.
Only one of 32 analysts covering the company rated it a sell, according to Bloomberg-compiled data (the rest were Buys). – Bloomberg