FIH Mobile (富智康, 2038 HK)

Business

FIH sits a sweet spot despite its high exposure to China brands (and we hold cautious view on overall China smartphone demands) thanks for its good customer profile (Xiaomi, Huawei, and Oppo – we view outperform among China brands) and increasing metal casing orders.

Sectors

Sales breakdown by clients & products in 2015 (Source: Barclays)

Plastic casing: FIH has been themajor plastic casing source for Nokia and iPhone (5c)

Metal casing: 估计富智康2015年有4000台机器（主要是母公司鸿海淘汰的机器），客户主要是Xiaomi和Huawei。In 2015, Daiwa estimated metal casing contribution should rise to mid-teens of rev from mid-single digit in 2014 driven by more orders win (start from Xiaomi Mi 4 in 2H14, now has Xiaomi, Hauwei, Oppo, and etc).

• Samsung: 金属机壳一方面通过越南自建工厂供应，另一方面由于前期自建工厂未投产需要BYD-E和长盈精密来供应；
• Xiaomi: Tongda, FIH, Casetek
• Huawei: BYD-E, Tongda, Huawei

OEM/EMS: Huawei, Xiaomi

India Business

FIH finally decides to take the action and targets to set up new production sites by end of 2015. FIH has announced plans to work with several clients, such as Google (GOOG US), Apple (AAPL US) and Xiaomi, to assemble their smartphone for the India market.

Updates

2Q15

2Q15 Results: strong component business offset the EMS slowdown.

Jefferies‘s Ken Hui (June 2015): First, we believe that Xiaomi sees high-end models tracking below expectations, thus negatively impacting both assembly and component businesses for FIH. Second, we believe FIH has lost share in assembly for Redmi.

Redmi 2A: 50% Wingtech (the design house for the model), 50% Inventech.

Oppo guided up 2015 sales volume to 45mn from 40mn, which will make up Xiaomi's weak high-end affect to FIH.