Acer Inc, the world’s No. 3 computer maker, is among the nation’s technology stocks that could perform well in a “tough” year with demand only recovering in the second half of this year, Goldman Sachs Group Inc said.
Weakening demand, a lack of innovation, the global recession, intensifying competition and declining shipments will weigh on technology companies at least in the first half, Goldman Sachs analysts led by Henry King (金文衡) wrote in a report.
The weakness in share prices of so-called industry leaders is a “good entry point” for long-term investors, they said.
“We believe 2009 should remain a tough year for tech not only because of sluggish demand due to the weak macro environment but also due to a lack of technology innovation,” the analysts said in the report. “Unless macro conditions improve dramatically, we are unlikely to see a significant rebound in tech stocks in 2009.”
Technology companies account for about half the weighting on the TAIEX index. The benchmark index has dropped 5.3 percent this year, adding to last year’s 46 percent retreat as the global recession hurt consumer spending.
Demand for so-called upstream products could recover from the second quarter, while downstream orders will probably rebound in the third quarter, Goldman Sachs said.
Upstream companies are suppliers of chips and other electronic parts, while downstream companies make computers, mobile phones and other consumer goods.
“If macro conditions improve in the second half, we would expect the market to trend up,” the analysts wrote. “The magnitude of rebound in upstream should be greater than in downstream due to significant supply reduction in the fourth quarter of 2008 and the first quarter of 2009.”
Investors should buy shares of Acer because the Taipei-based company has lower costs and can sell its netbooks, or low-cost laptops, more aggressively, the analysts said.
JPMorgan Chase & Co is also advising investors to buy shares of Acer over rival Lenovo Group Ltd (聯想集團) because the Taipei- based company has been protecting its margins and will likely gain market share in a recovery, analysts led by Nick Lai wrote in a report released on Monday.
Acer has lost 0.5 percent in Taipei trading this year. Lenovo, China’s biggest PC maker, has dropped 33 percent in Hong Kong.
Goldman Sachs also has “buy” recommendations on Powertech Technology Inc (力成科技), Taiwan Semiconductor Manufacturing Co (台積電), Wistron Corp (緯創) and Compal Communications Inc (華寶通訊).
Asustek Computer Inc (華碩電腦), Delta Electronics Inc (台達電子), Hong Kong-listed Foxconn International Holdings Ltd (富士康) and United Microelectronics Corp (聯電) are among companies that investors should sell, Goldman Sachs said.