Barclays PLC yesterday raised its estimates for HTC Corp’s (宏達電) earnings per share for this year and next year, citing an improved cost structure and lower inventory risk in China for the Taiwanese smartphone maker.
The bank has boosted its earnings per share forecast for HTC by 12 percent to NT$1.78 this year from NT$1.58, driven by the company’s cost reductions and better channel management.
For next year, HTC’s earnings per share estimate is adjusted to NT$2.98, from a loss per share of NT$0.30, based on stronger sales and deeper penetration into the China market, Barclays said in a note to clients.
Barclays analyst Dale Gai (蓋欣山) found that Chinese component maker BYD Electronics (比亞迪), which has 50 percent of the orders for metal casings for HTC’s new flagship M8, has indicated that the M8’s casing cost is 20 percent lower than that of its predecessor.
Moreover, HTC has started to promote the M8 aggressively in Suning (蘇寧電器) electronics and home appliances stores in China, with the device already available before the debut of Samsung Electronics Co’s Galaxy S5, he said.
“This implies that HTC’s gross profit margin could improve year-on-year in 2014, driven by a better cost structure and reduced inventory risk in China,” Gai wrote in the note, adding that HTC’s gross margin could rise to 21.9 percent this year from 20.8 percent last year.
The analyst maintained his forecast for HTC’s shipments at 23 million units this year, up 12 percent from last year.
HTC shares closed up 0.33 percent at NT$154 yesterday.