The market value of HTC Corp (宏達電) is likely to reach US$100 billion in the next three to five years, 2.4 times higher than what it is now, as the company rides the broadband convergence trend, Goldman Sachs said in a research report last week.
Shares of HTC rose 0.95 percent to NT$1,060 on Friday, giving the Taiwanese maker of both Android and Windows-based handsets a market capitalization of NT$866.71 billion (US$29.3 billion) and making it the nation’s fourth-largest listed company, Taiwan Stock Exchange data showed.
As of Friday, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, remained ahead of other listed companies as the country’s largest company, with a market value of NT$1.84 trillion (US$62.35 billion).
Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract manufacturer of electronics, was the runner-up, with a market capitalization of NT$1.02 trillion.
It was followed by Formosa Petrochemical Corp (台塑石化), the nation’s only publicly traded oil refiner, with NT$884.01 billion, the exchange data showed.
In the report, Goldman Sachs devised a framework to analyze HTC’s market potential in the long term and found the company possesses “a very unique business model and ecosystem strategy” that helps it expand business quickly.
Goldman Sachs forecast the company would ship 200 million smartphones and 30 million tablet computers each year over the next three to five years. Under that scenario, HTC is likely to have a global market share of 15 percent in the smartphone business, up from its current 11 percent, and enjoy an 11 percent share of the tablet market. The company introduced its first tablet, called the Flyer, last month.
“This reflects its superior position, which allows it to benefit from the broadband convergence trend, significant growth potential in emerging markets, as well as its leading product roadmap and branding campaign that continue to increase its preference among global consumers,” Goldman Sachs analyst Robert Chen (陳柏宇) said in the report on Thursday.
HTC shares have jumped 186.87 percent over the past 12 months, compared with a 9.31 percent rise in the benchmark TAIEX over the same period. The ballooning share prices also helped company chairwoman Cher Wang (王雪紅) to overtake Hon Hai chairman Terry Gou (郭台銘) as Taiwan’s richest person on Forbes magazine’s billionaires list this year, with a net worth of US$6.8 billion.
The company’s market value is now valued at more than 33.6 times what it was in 2004, when the company posted a market value of NT$25.05 billion, after profiting from increasing handset demand in the US, Europe and emerging markets.
However, a shortage of components from Japan following a devastating earthquake and tsunami on March 11 could pose risks to the company, Goldman Sachs said.
Citigroup Global Markets analyst Kevin Chang (張凱偉) said he did not expect the supply chain disruption to have a significant impact on HTC’s second-quarter shipments, as the company had a sufficient inventory of components prior to the quake.
However, Chang said AT&T Inc’s announcement last week of its plan to acquire T-Mobile USA from Deutsche Telekom AG may have a negative impact on HTC, if the deal obtains US regulatory approval.
HTC has partnerships with both AT&T and T-Mobile, but T-Mobile has been one of the most “pro-HTC” carriers, while AT&T tends to focus mainly on the iPhone, Chang said.
“Basically, the better the availability of the iPhone, the less room there is for other device makers to grow,” he wrote in a note on Monday last week.
Goldman Sachs maintained its 12-month share price target of NT$1,400 for HTC, which represents a 32.1 percent upside from the stock’s Friday closing price. Goldman’s target price compared with Citigroup’s NT$1,280, Credit Suisse’s NT$1,240, Barclays’ NT$1,300 and NT$1,125 from Macquarie Research Equities.
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