Thu, Aug 22, 2013 - Page 13 News List

PC maker sales remain resilient

LOOKING GOOD:Pegatron and Compal sales were set to stay buoyant this year because of the launch of new iPhone and iPad products, Citigroup said

By Helen Ku  /  Staff reporter

Contract notebook makers Pegatron Corp (和碩) and Compal Electronics Inc (仁寶電腦) are set to remain resilient this year despite weakening global demand for PCs, Citigroup Inc said on Tuesday.

The outlook for Pegatron was buoyed by the expectation that the firm, the world’s fifth-largest contract laptop maker, will benefit from production of low-cost iPhones and iPads for Apple Inc during the second half of the year, Citigroup analyst Wei Chen (陳思維) said in a report.

Pegatron is also likely to improve its margin for this quarter and next as improvements to its assembly yield rate stay on track with the company’s plans, Chen said.

Compal, the world’s second-largest contract laptop maker, is set to benefit from the reversal of non-operating losses in the next six to 12 months, the brokerage added.

Chen said the possibility of Compal selling off its subsidiary Vibo Telecom Inc (威寶電信) in the next six to 12 months is high, as the company needs to reduce its risk-to-reward ratio and boost its attractiveness to long-term investors.

The company is likely to increase its non-operating income after posting NT$405 million (US$13.52 million) in non-operating losses for last quarter, and thus yield better net profits afterward, he added.

Citigroup retained “buy” ratings on Compal and Pegatron shares, with target prices of NT$25 and NT$55 respectively.

By contrast, the brokerage suggested investors avoid holding shares in Quanta Computer Inc (廣達) and Wistron Corp (緯創), as Quanta would receive limited benefits from sales of servers and Wistron might lose Lenovo Group Ltd’s (聯想) laptop orders to Compal over the next two years.

Chen said that for Quanta, both Apple’s and Hewlett-Packard Co’s revenue contribution would decline at a double digit annual rate this year, and its server business is too small to compensate for the decline in its core business.

Citigroup forecast that global laptop shipments would contract 13 percent annually this year, larger than the 11 percent decline it previously forecast.

Though PCs powered by Intel Corp’s new-generation Haswell central processing unit (CPU) have entered the market, Chen said changes in consumers’ PC usage has made the new CPU’s higher battery efficiency less attractive, as more people use laptops at home and mobile devices on the road.

Despite more PC products running Microsoft Corp’s Windows 8.1 operating system, and Intel’s Bay Trail Atom chip set to hit the market next quarter, clashes with a variety of new tablets launched by major brands and white-box makers could dampen demand, he said.

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