Taiwanese electronics component makers are set to take over from electronics assemblers as some of the most actively traded targets on local stock markets, riding on the craze for Apple Computer Inc's digital music player iPod products, a securities house based in Taipei said in its latest report.
Strong demand for iPod around the globe has boosted the shares of Taiwanese companies that make or supply components for the stylish MP3 players over the past three months.
On Taiwan's Emerging Stock Market (
Some question whether the momentum can be sustained.
"We don't think the share prices of iPod-related companies have fully factored in future growth prospects," KGI Securities said in a report (
Strong demand will accelerate outsourcing, leaving room for potential orders to new suppliers for components and assembly, according to the report. Sales of iPod products will more than double to 9.5 million units by the end of this year, from 4.5 million in the first quarter, KGI Securities projected.
"Electronics component suppliers, which lagged behind iPod assemblers in terms of stock price, will outpace other stocks in the rest of the year," the report said.
Component suppliers Cheng Uei Precision Industry Co (
The three companies should post strong sales, growing from 15 percent to 30 percent annually, the broker said.
To reduce risk, investors should target stocks with potential for growth that are still cheap, the report said.
"Jin-Haw, Taiwan's No.2 maker of cables for game consoles and MP3 players, and Acon Advanced Connectek Inc, (
KGI Securities also recommended investors buy other iPod-related stocks, naming Asustek Computer Inc (
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