Sat, Mar 15, 2014 - Page 14 News List

Chicony shares rise on upbeat report

SUCCESSFUL TRANSITION?The firm’s products now cover tablets, smartphones, wearable devices, game consoles, cloud-related power supplies and LED lighting

By Kevin Chen  /  Staff reporter

PC peripheral maker Chicony Electronics Co’s (群光) shares got a boost yesterday after the company said revenue would show robust growth from next quarter following a flat performance this quarter.

The stock closed up 1.43 percent at NT$77.80 yesterday on the Taiwan Stock Exchange, compared with the broader market’s 0.69 percent decline.

Chicony is one of the world’s leading PC peripheral makers, whose product lineups include computer keyboards, PC webcams, as well as camera modules and adapters for notebooks.

To enhance its profitability, the company has been adjusting its product mix to include products used in tablets, smartphones, wearable devices, digital video cameras for sports, game consoles, cloud-related power supplies and LED lighting items.

In a conference call organized by UBS Securities on Thursday, Chicony said it was expecting a 20 percent rebound in sales for next quarter, driven mainly by demand for the power supply in game consoles and keyboards for tablets, with the full-year revenue set to increase by between 10 and 15 percent from last year.

Operating income would also expand by 15 percent year-on-year this year, the company said.

The company generated a record revenue of NT$74.54 billion (US$2.45 billion) last year, 10.4 percent higher than the previous year’s NT$67.51 billion.

Operating income rose by an annual rate of 5.85 percent to NT$4.25 billion, according to the company’s balance sheet.

“We believe Chicony could benefit from an upward trend in the use of wearable devices this year, as image capture and processing functionality is one of the key features for wearable devices,” UBS analyst Patrick Chen (陳鈞寧) said in a client note yesterday.

Chen said Chicony’s expertise in integrating image and Wi-Fi functions, as well as its system manufacturing capability, put the company well ahead of its competitors.

As a result, he forecast the firm’s wearable device revenue would grow 38 percent annually to account for 15 percent of its overall revenue this year.

Citigroup Global Markets Inc said Chicony could also benefit from the trend toward larger and two-in-one tablets this year.

“We believe a 12-inch iPad could be in the making, and having an Apple [Inc] keyboard accessory to accompany it would make a lot of sense,” Citigroup analyst Wei Chen (陳思維) said in a separate note.

“Chicony, as an industry leader in the tablet keyboard market, could naturally be seen as the best candidate for Apple,” Chen added.

Chen also said that Chicony is likely designing a keyboard accessory for Samsung Electronics Co, following the launch of the 12-inch Galaxy NotePro tablet earlier this year.

Meanwhile, the company has proposed to pay a cash dividend of NT$4.6 and a stock dividend of 5 percent on last year’s earnings per share (EPS) of NT$5.83, which implies a cash payout ratio of 78.9 percent, the highest in the company’s history.

Last year’s EPS of NT$5.83 were lower than the previous year’s NT$6.02, affected by a one-time reserve of NT$144 million for its subsidiary, Chicony Power Technology Co (群光電能), which is engaged in a lawsuit with Comarco Inc, a US company that develops technologies and products for charging portable battery-powered devices.

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