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=MARKET BUZZ: Q Tech Slumps On Second 1H Profit Warning, Morgan Stanley Cuts TP

HONG KONG (Jul 16) -- Q Technology Group slumps 14.4% to HK$4.72, set for over 18-month low, after issuing second profit warning for 1H. Mobile phone parts maker now expects loss of about CNY50 million for period instead of 50% on-year decrease in net profit forecast in May; cites May and June sales volumes missing target due to "periodical shortage" of certain raw materials and components. Morgan Stanley cuts 2018 and 2019 EPS view by 97% and 14%, reflecting worse profitability in compact camera module business; lowers TP to HK$3.50 from HK$4.00, keeps underweight rating. House sees further downside for margins in 2018, expects average CCM selling price to decline 41% on-year due to “intense competition” among low-end dual-cam smartphones, low yield control for new high-end projects and yuan depreciation. Q Technology to report interim results mid-to-late August.

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