Electronic companies will remain the mainstream stocks on the TAIEX in the second quarter and the market will focus on the electronic upstream sector, market watchers said yesterday.
"As there was no new story happening in raw-material-related shares, which have soared to reflect the international markup since last year, we expect that electronics-related stocks will continue [their recent momentum] to become the mainstream on the main board this quarter," said Calvin Chen (
The upstream component makers are expected to outperform downstream companies on the stock market, Chen said.
"Component makers will enjoy better gross margins than the downstream assembling industry, which has been cutting prices to fight for orders amid keen competition," he said.
Chen encouraged investors to look at mobile-phone parts makers, as their efforts to improve quality will help them obtain orders from local original-equipment or design manufacturers.
Another analyst agreed, saying mobile-phone component companies, including the super-twisted-nematic liquid-crystal display (STN LCD) maker Wintek Corp (勝華科技) and cellphone-shell manufacturer Taiwan Green Point Enterprises Co (綠點), are ideal investment targets.
"Green Point's earnings per share is estimated at NT$10 to NT$12 and its share price may climb to [between] NT$140 and NT$150," said Cliff Chuang (莊弼彥), an associate manager at Barits International Securities (倍利證券).
Green Point's clients include the top five mobile-phone brands worldwide, such as Nokia Ojy and Motorola Inc.
Its shipments may grow to between 56 million units and 60 million units this year from 49 million units last year, Chuang said.
Sales last month soared by 55 percent year-on-year to NT$247 million and first-quarter revenue rocketed by 73.3 percent to NT$736 million over the same period.
It was rated worth buying by Merrill Lynch yesterday.
The sizzling dynamic-random-access memory (DRAM) as well as thin-film-transistor LCD (TFT LCD) stocks remain on top of the list for investment portfolios, the analysts said.
DRAM supply remains tight, Chen said, adding that the outlook for related stocks on the TAIEX looks bright for the end of this quarter, along with the rising momentum in the spot price.
Companies recommended by both Chen and Chuang include Powership Semiconductor Corp (
Powership reported first quarter revenue of NT$10.54 billion with unaudited EPS of NT$0.95 and a gross margin of 35 percent.
JP Morgan Chase Bank has said that it expected Powership Semiconductor to be the most profitable DRAM maker in the country with the highest output and a competitive cost basis.
TFT LCD related stocks would continue to be hot until the end of this year, as the industry is booming, Chen said.
He said that AU Optronics Corp (
With a small growth potential forecasted for global personal-computer (PC) shipments this year and slim margins in the industry, PC companies would not be as lucrative for investors as the above two sectors, both analysts said.
Green Point dropped 2.13 percent to NT$115 on the TAIEX yesterday, while Wintek stayed unchanged at NT$45.
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