Cheng Uei expected to see price rebound

Despite recent share price weakness, Cheng Uei Precision Industry Co (正崴精密), a provider of connectors and Bluetooth modules, is expected to see a price rebound after the second quarter, analysts said yesterday.

"We retain our `Outperform' rating as we believe demand slowdown in the first quarter is not a long-term issue and are also positive on Cheng Uei's new products, such as iPhones, Apple TV, new video iPod and Bluetooth for tier-one customers," Macquarie Research Equities said in a report yesterday.

But the equities house decided to lower Cheng Uei's target price to NT$128 (US$3.9) from NT$152, because of weaker-than-expected component demand from Xbox game consoles, iPod music players and handsets in the current quarter.

Cheng Uei's shares were up 3.8 percent yesterday to close at NT$108.5. Citigroup Research, however, is not upbeat on Cheng Uei's long-term prospect.

Because of factors including a sales slowdown and an order reduction from brand maker Motorola Inc, component suppliers including Cheng Uei, as well as keypad maker Ichia Technology Inc (毅嘉科技) would see their business performance affected, Citigroup analyst Dale Gai said in a report on Wednesday.