In his note, Chong expresses his belief that PC Partner is well-positioned to “capitalise” on present tailwinds in gaming and AI hardware.
“The company’s close partnerships with NVIDIA and AMD give it early access to cutting-edge GPU technology, as evidenced by securing RTX 50-series supply promptly in 2025,” writes Chong. The RTX 50-series refers to a product line of the NVIDIA graphics processing unit (GPU).
Chong expects the RTX 50-series line to continue to drive “strong double-digit” revenue growth in the VGA segment for FY2025. With gamers upgrading for stronger performance and AI features, the growth in this segment is estimated to be 25% y-o-y. He notes that PC Partners’ sales trends in the first half of FY2025 aligns with this surge and the momentum to continue in the second half.
The analyst also seemingly suggests that several corporate actions have enabled the company to gain competitive advantages. Firstly, the relocation to Singapore and its secondary listing on SGX have presumably benefitted the company as it regained access to the top tier RTX 5090 GPU after these moves. PC Partner’s sales for its own-branded products rose 60.3% with 1H FY2025 revenue print of approximately HKD6.56 billion and earnings per share at around HKD0.645.
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“With this cyclical upswing underway, PC Partner appears poised to restore earnings to a healthier trajectory in 2025,” shares Chong who projects revenue and margins to continue growing in the short-term.
In addition to shifting to Singapore, the company has expanded its production capacity in Southeast Asia by opening a new Batam plant for high-end VGA cards. Chong believes that this move provides more options for the company to navigate US tariffs and export controls, reducing policy risk while maintaining production and market share.
“PC Partner increases its appeal as a manufacturing partner,” notes Chong. “We expect operational benefits from this expansion, including access to new talent pools, potential tax incentives, and broadened investor base via SGX listing.”
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Recently, the dual-listed company announced that it would be delisted from the Hong Kong Stock Exchange (HKEX) and its shares withdrawn on Jan 14.
Thirdly, PC Partners is also diversifying its into adjacent markets and new geographies, which should drive incremental growth and mitigate risk according to Chong. He also points out that the company is investing in new verticals such as AI computing and specialty personal computers.
Chong believes the firm would be able to leverage on its existing engineering capabilities to develop new products that could add “mid-single-digit” percentage to revenue.
For FY2025, KGI forecasts earnings to be around doubled from 2024, attributed to higher volumes and stronger margins. Chong notes that PC Partner’s “robust” balance sheet, with estimated net cash of around HKD500 million, allows the company to engage in research and development and support dividends.
At its valuation of approximately 7.5 times trailing P/E and 0.8 time P/B on the HKEX, Chong views the counter as a “bargain” which is trading at a “steep” discount.
Using a blended valuation approach incorporating a dividend discount model (DDM) as the primary tool, supplemented by discounted cash flow (DCF) analysis and a future share price (FSP) scenario, KGI values the counter’s shares at approximately FY 2026 estimated EPS of eight times and P/B of 1.1 times, or $1.73.
Key risks for the counter include a sudden cyclical downturn, the company’s GPU supply and single supplier dependence.
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For Chong, PC Partner is a “leading” GPU add-in-board (AIB) producer with a “global customer base” and a “growing” regional footprint.
“PC Partner offers a combination of growth and value,” he notes. “A recovering earnings story in a structurally important niche, at a valuation that implies limited downside barring another severe industry downturn.”
At around 3.13pm on Jan 12, shares in PC Partner are trading at around $1.10, a drop of five cents or around 4.3% from the previous trading day.
