Longcheer

Longcheer: 2QFY14 net profit surged 86% to Rmb36.4m alongside a 89% increase in revenue taking 1HFY14 net profit to Rmb59.0m (+173%). The increase in revenue was largely due to a 63% rise in total shipment and 16% increase in average selling prices of handset solutions, propelled by the group's strategy of product rationalization with focus on high value 3G smartphones. Going forward, the group guides for a further transition of the industry from 2G feature phones to 3G smartphones, although despite the strong demand, the 3G smartphones market is highly competitive and competition is going to be intensive in the future, with the ASP and gross margins facing continued pressure. Valuations are undemanding with the group trading at ~0.67x P/B and 3.2x annualized P/E