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Compal net income beats estimates on investment gains

Compal Electronics Inc (仁寶電腦), the world’s second-largest maker of notebook computers, reported second-quarter profit that beat estimates on investment gains.

Net income was NT$3.24 billion (US$98 million), the company said yesterday. That’s 0.6 percent more than the NT$3.22 billion profit a year earlier and beat the NT$2.93 billion median of 15 analyst estimates compiled by Bloomberg.

Compal, supplier to Hewlett-Packard Co and Dell Inc, posted stronger shipment growth than rival Quanta Computer Inc (廣達電腦), but did not give details on the investments that boosted earnings. Shipments may climb further this quarter as clients release new products and the global economy improves.

“Investment gains were a surprise,” said Calvin Huang (黃文堯), who rates the company “buy” as an analyst at Daiwa Securities Group Inc (大和證券).

Huang expected investment gains or losses to be zero for the period.

Investment gains were NT$639 million on an unconsolidated basis for the period, compared with a NT$611 million loss in the prior quarter and profit of NT$963 million a year earlier, Compal said.

Sales climbed 41 percent to NT$122 billion on an unconsolidated basis, the strongest growth since the third quarter of 2007. Compal shipped 7.9 million laptops in the April to June period, 25 percent more than the preceding three months, monthly data from the company showed.

Operating profit, or sales minus the cost of goods sold and administrative expenses, climbed 47 percent to NT$3.42 billion, compared with the median NT$3.48 billion estimate from 10 analysts. The operating margin climbed to 2.8 percent from 2.7 percent a year earlier, and declined from the 3.1 percent posted in the prior quarter.

Compal shares climbed 2.2 percent to close at NT$32.7 yesterday in Taipei trading, taking this year’s gain to 91 percent, compared with a 48 percent advance in the benchmark TAIEX index.

Stronger sales boosted operating profit while the company also posted a foreign exchange loss, Compal spokesman Chang Chih-ming (章啟明) said by telephone.

New products for Hewlett-Packard and Dell, as well as demand fueled by the release of Microsoft Corp’s Windows 7 operating system will spur 11 percent quarter-on-quarter shipment growth at Compal to 8.8 million units, Richard Ko, an analyst at Jih Sun Securities Co (日盛證券), wrote in an Aug. 10 report.

Ko said he rated the stock “outperform.”
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