CALB’s Second-Half Margin and Core Profit Beat; HKD 20.0 Fair Value Estimate Maintained

No-moat CALB reported its first set of financial results after listing in Hong Kong last year. The company posted 4 times year-over-year net profit growth for 2022, which was helped by capacity expansion and margin improvement. While revenue was largely in line with our expectation, gross margin beat with a 3-percentage-point increase from a year ago. We reduce our 2023 and 2024 net profit forecasts by 11% and 2%, respectively, despite higher margin assumptions, to reflect lower government grants, and we maintain our fair value estimate at HKD 20.0 per share. Our fair value implies a forward price/earnings ratio of 13 times. At the current price, the shares are trading in Morningstar 3-star territory, fairly valued in our view.