Fri, Jul 12, 2013 - Page 14 News List

Fubon lowers forecast for Pegatron

TIME IS MONEY:One reason that Fubon lowered its forecast for Pegatron is because of the possibility of a delay in the launch of a second-generation iPad Mini

By Helen Ku  /  Staff reporter

Fubon Securities Co (富邦證券) yesterday lowered its forecast for Pegatron Corp’s (和碩) earnings this year by 7.86 percent from its previous estimate, citing potentially lower demand for Apple Inc’s next-generation iPhone and iPad.

Pegatron is one of the major assemblers of Apple’s iPhone and iPad products.

The brokerage now expects the company to increase this year’s earnings by 44.15 percent to NT$8.79 billion (US$295 million), rather than the previous forecast of an increase of 56.3 percent to NT$9.54 billion, Fubon analyst Arthur Liao (廖顯毅) said in a report.

Pegatron reported NT$6.1 billion in net profit last year.

“Since both the new iPhone 5 and the low-priced iPhone are likely to retain a 4-inch display, we remain cautious about the sell-through of the low-priced iPhone in the future,” he said.

PROFITABILITY

As both of the new iPhone products may come out in 4-inch models, Apple is not likely to gain more market share in the smartphone market against larger-sized smartphones, which might also affect Pegatron’s profitability, Liao said.

Another reason that Fubon had decided to lower its forecast for Pegatron is because of the possibility of a delay in the launch of a second-generation iPad Mini.

Liao said Apple had planned to delay shipment of its new iPad Mini until the first quarter of next year, which means the product may enter mass production from February next year.

As a result, Fubon downgraded its rating on Pegatron’s shares to “reduce” from “add,” and lowered its target price for the stock to NT$43 from NT$58.

Pegatron shares closed up 1.94 percent in Taipei trading yesterday.

Meanwhile, the report said Apple might not be able to compete against Chinese smartphone vendors in the mid-end smartphone market, as the US company’s iPhone Mini might be priced between US$350 and US$400 each, about the same as that of typical high-end smartphone models in China.

‘WINNERS’

“We believe that large-scale players such as Lenovo Group Ltd (聯想) and Huawei Technologies Co Ltd (華為) will be the biggest winners in the low-to-mid-end smartphone market in China,” Liao said.

“Since the low-price iPhone will have a 4-inch display and the purchase policy of Chinese operators depends upon a larger display [at least more than 4.5 inches], we predict that Apple may revise down its fourth-quarter forecast,” he said.

“This would impact Pegatron’s sales momentum during the same period,” Liao said.

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