French brokerage BNP Paribas said yesterday that it was maintaining a “buy” recommendation on Acer Inc (宏碁) after the personal computer manufacturer reported higher-than-expected operating profit for the third quarter of this year.
The brokerage reiterated a target price of NT$92 for Taipei County-based Acer.
A day earlier, Acer announced it posted NT$5.28 billion (US$172 million) in operating profit for the July-September period, marking a quarterly record high and up 11 percent from a year earlier.
The company said its net profit during the same period totaled NT$4.29 billion, up from NT$3.47 billion a year earlier, on sales of NT$167.2 billion.
In a research note, BNP Paribas said it expects Acer’s sales for the fourth quarter to increase 5 percent from the third quarter, with shipments of notebooks expected to grow at a similar magnitude.
cooperation
The brokerage also said that Acer’s cooperation with the Founder Group (北大方正集團), a Chinese counterpart, which became effective earlier this month, will contribute about NT$500 million, or 3 percent of Acer’s sales, in the fourth quarter.
Looking ahead, the ties with Founder could generate NT$600 million to NT$700 million in sales, representing 3 percent to 3.5 percent of Acer’s total sales contribution every quarter.
The deal allows Acer to take advantage of Founder’s comprehensive distribution network to sell Acer products in tier 4-6 Chinese cities — which have populations of less than 20,000 — and rural areas, while targeting corporate and government clients.
Founder is also working with Acer to design and develop Founder-branded products, including notebooks, netbooks and mobile Internet devices such as e-readers.
BNP Paribas said it expects that “Acer’s operating margin will continue to grow but is unsure whether it will be able to reach 3.5 percent by the year-end.”
record high
In the third quarter, Acer’s operating margin stood at 3.16 percent, hitting a quarterly record high on successful efforts to control marketing costs, the company said.
The brokerage said it “remains positive” about Acer’s market share gain, in particular in China, as well as the prospects for its tablet computer business.
Acer closed up 3.11 percent at NT$83 on the Taiwan Stock Exchange yesterday.
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