The stock price of Apple Inc touch module supplier TPK Holding Co Ltd (宸鴻) yesterday soared by the 7 percent daily limit after the company on Monday raised its revenue forecast for the current quarter on better-than-expected customer demand.
TPK shares increased to a high of NT$647, while rival Wintek Corp (勝華) saw its shares drop for the fifth consecutive day to NT$25.75 after a 2.65 percent decline.
Two weeks ago, TPK chief financial executive Freddie Liu (劉詩亮) told the company’s quarterly investors’ conference that revenues could fall by 3 percent to 5 percent this quarter from the record NT$32.53 billion (US$1.12 billion) last quarter, citing setbacks in customer orders amid the faltering economies in the US and Europe.
Liu changed the company’s guidance yesterday on still-strong demand for smartphones and tablets.
“The third-quarter revenues will be flat [from the second quarter],” he said by telephone.
“The business is very dynamic. We have secured orders from existing customers and new customers, and we have new products shipping this quarter,” Liu said. “The speculation about [TPK’s] order losses has been overblown.”
TPK, which has more than 30 customers in Japan, South Korea and the US, generated more than 70 percent of its revenues from Apple, its largest customer.
Wintek suffered from a weak yield rate and could not live up to expectations for raising its supply of Apple’s new-generation iPad 2 tablet, UBS Securities analyst Arthur Hsieh (謝宗文) said in a research note yesterday.
Hsieh said “all orders are returning to TPK,” because Chimei Innolux Corp (奇美電子), which competes with TPK to supply touch panels to Apple with the help of its major shareholder, Hon Hai Precision Industry Co Ltd (鴻海精密), is not ready to increase touch panel supplies.
Hon Hai, the world’s biggest contract electronics manufacturer, assembles iPhones and iPads for Apple.
“This is not because TPK cut prices further to regain orders, but rather because touch panels are difficult to make and even an experienced company like Wintek cannot deliver consistent quality,” Hsieh said.
Hsieh reiterated his “buy” rating on TPK with a target price of NT$925, implying a 43 percent upside during the next 12 months, while retaining a “sell” rating on Wintek.