Apple's (AAPL) China Metrics Still Solid Following Recent Checks - Stifel

Stifel is out with commentary on Apple (Nasdaq: AAPL) with respect to the company's China exposure.

Analyst Aaron C. Rakers said, At $13.2 billion in revenue during Apple’s June ’15 quarter (+112% y/y), Greater China accounted for 26.7% of Apple’s total revenue. On a trialing 12-month basis, Apple generated $52.5 billion in revenue from Greater China, up 66% y/y and accounting for 23.4% of Apple’s total revenue. However, we believe the more notable metrics investors are focusing on is the fact that Greater China has accounted for 49.7% of Apple’s y/y growth generated during the first three quarters of F2015. In terms of operating income (EBIT), Greater China accounts for approximately 30% of Apple’s segment operating income (note: excludes R&D expenses and other corporate expenses; we would estimate ~35% of total reported operating income). Apple’s y/y growth in Greater China operating income over the trailing 12-months accounts for 53.6% of the company’s total segment operating income y/y growth.

On handset exports, Rakers said, While our tracking of mobile phone exports out of China shows July data up 5.5% y/y and units as being roughly flat y/y, we would note that mobile phone exports coming out of the Henan Province (the largest province in terms of Apple iPhone production) were up more than 70% y/y. This compares to a 47% y/y increase in the June 2015 quarter, with our data showing a +54%, +65%, and +23% y/y trend in April, May, and June, respectively. In addition to export data, we would note that our tracking of China mobile phone production grew 2% y/y in July at 142.1 million (vs. -11% y/y in June), in which mobile phone production coming out of the Henan province grew 44% y/y (vs. +28% y/y in June; +14% y/y in June quarter).

Rakers also noted that non-Android smartphone adoption in China is up 167 percent over last year in July. The analyst commented, In terms of internal smartphone adoption in China, we highlight our prior reports that Mainland China smartphone shipments stood at 38.9 million in July, up 10% y/y. Within this, we find that reported Android smartphone shipments were roughly flat y/y...

Stifel has Apple with a Buy rating and $150 price target.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

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