Smartphone vendor HTC Corp (宏達電) is likely to see flat sales growth this month, after sales last month climbed to their highest level in 11 months, Citigroup said.
“We expect HTC shipments to peak in May, stay at a similar level in June and start to decline in July,” Citigroup Global Markets Inc analyst Kevin Chang (張凱偉) said in a note on Wednesday.
Chang’s forecast came after HTC on Tuesday reported its consolidated revenue for last month increased to NT$29 billion (US$969.4 million), up 48.03 percent from April, thanks to better-than-expected sales of its flagship HTC One smartphone.
“We estimate that HTC One accounted for around half of HTC’s May sales,” Chang said, adding that the company might have shipped around 1.2 million units of the phone last month, up 100 percent from April.
REVISION
Citigroup originally forecast HTC wouldship only 1 million HTC Ones last month before ramping it up further this month.
Chang said he revised his shipment forecast upward because HTC’s component yield rate had improved faster than expected, which in turn had enabled it to push some shipments to last month from this month.
However, “with One volume peaking and other models still weak, we believe May will be the peak of near-term sales,” he said in the note.
HTC may experience a similar scenario as last year, when sales also peaked in May and June, he added.
The Taoyuan-based company could also face headwinds from the generally slow market demand in the high-end smartphone segment, according to Citigroup.
Chang attributed the slow demand to a combination of saturation in developed markets and demand being delayed to next year as consumers wait for the launch of the big-screen iPhone.
EXPLANATIONS
“This is probably why iPhone shipments are still stable at around 30 million units per quarter despite the poor consumer feedback on iPhone 5 for its small screen,” Chang said. “We suspect this could be the reason HTC One is not doing particularly well despite other brands not doing so well either.”
Citigroup maintained a “sell” rating on HTC shares and a NT$205 target price. HTC shares fell 1.4 percent to NT$285 yesterday.
In a separate note on Tuesday, Morgan Stanley Taiwan Ltd said that HTC needs to conquer its structural issues to win more ground in the competitive smartphone market, despite the success of the HTC One.
It said that HTC’s sales upsurge last month was probably the result of wider distribution and improved component supply.
The market has already anticipated the robust sales, and HTC’s risks now lie in the sustainability of its sales into the third quarter, the brokerage said.
“While new HTC One feedback has been constructive, we are mindful of a few structural issues,” Morgan Stanley’s equity analyst Jasmine Lu (呂智穎) wrote.
First, HTC is not well-positioned in relation to the industry’s dynamic shift from developed markets to emerging markets, especially as its brand awareness in China is weaker than that of archrival Samsung Electronics Co, Lu said.
US MARKET
The Taiwanes/be firm’s market gains in the US are not enough to drive growth because of the deceleration of growth in the US market and a higher mix of prepaid smartphones in the US without operators’ subsidies, she added.
Moreover, HTC’s component sourcing strategy has been problematic, causing it to miss the best window of opportunity, despite having a well-received product, said Lu, who rated the stock “underweight,” with a target price of NT$199.
NOT JUSTIFIED: The bank’s governor said there would only be a rate cut if inflation falls below 1.5% and economic conditions deteriorate, which have not been detected The central bank yesterday kept its key interest rates unchanged for a fifth consecutive quarter, aligning with market expectations, while slightly lowering its inflation outlook amid signs of cooling price pressures. The move came after the US Federal Reserve held rates steady overnight, despite pressure from US President Donald Trump to cut borrowing costs. Central bank board members unanimously voted to maintain the discount rate at 2 percent, the secured loan rate at 2.375 percent and the overnight lending rate at 4.25 percent. “We consider the policy decision appropriate, although it suggests tightening leaning after factoring in slackening inflation and stable GDP growth,”
DIVIDED VIEWS: Although the Fed agreed on holding rates steady, some officials see no rate cuts for this year, while 10 policymakers foresee two or more cuts There are a lot of unknowns about the outlook for the economy and interest rates, but US Federal Reserve Chair Jerome Powell signaled at least one thing seems certain: Higher prices are coming. Fed policymakers voted unanimously to hold interest rates steady at a range of 4.25 percent to 4.50 percent for a fourth straight meeting on Wednesday, as they await clarity on whether tariffs would leave a one-time or more lasting mark on inflation. Powell said it is still unclear how much of the bill would fall on the shoulders of consumers, but he expects to learn more about tariffs
Greek tourism student Katerina quit within a month of starting work at a five-star hotel in Halkidiki, one of the country’s top destinations, because she said conditions were so dire. Beyond the bad pay, the 22-year-old said that her working and living conditions were “miserable and unacceptable.” Millions holiday in Greece every year, but its vital tourism industry is finding it harder and harder to recruit Greeks to look after them. “I was asked to work in any department of the hotel where there was a need, from service to cleaning,” said Katerina, a tourism and marketing student, who would
i Gasoline and diesel prices at fuel stations are this week to rise NT$0.1 per liter, as tensions in the Middle East pushed crude oil prices higher last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week rose for the third consecutive week due to an escalating conflict between Israel and Iran, as the market is concerned that the situation in the Middle East might affect crude oil supply, CPC and Formosa said in separate statements. Front-month Brent crude oil futures — the international oil benchmark — rose 3.75 percent to settle at US$77.01