EPS revision on stock dividend
To factor in a 40% stock dividend ratio, we revise our 2019E/2020E EPS eachby 40%. Accordingly, we cut our target price to RMB38 from RMB53.2.
Valuation and risks
Our new target price of RMB38 is still based on 28x 2019E EPS, or 1.0x PEG (inline with the Asian peer average of 20-30x P/E, or 1.0-1.2x PEG). The valuationis justified by a promising sector outlook. Risks: We anticipate continuingautomotive relay ASP growth, driven by stronger ADAS and EV proliferation.Slower-than-expected EV and ADAS growth could pose a downside risk to ouroptimistic ASP estimate.