Taiwanese listed firms are forecast to see an average annual increase of 24 percent in earnings this year, in view of the margin recovery in the technology sector and an upward revision in the petrochemical sector’s earnings forecast, UBS Securities Pte Ltd said yesterday.
The report, titled “Good Start in 1Q, Waiting on 2H,” said the main boost to earnings came from the technology sector, especially within upstream technology and selective hardware components companies.
Upward revision in the petrochemical sector also partially contributed to higher market earnings estimates, UBS analysts William Dong (董成康) and Camellia Cheng said in the report.
The brokerage’s forecast came as the Taiwan Stock Exchange Corp (TWSE) yesterday released financial results for all publicly traded companies listed on the main bourse for the first three months of the year, showing that they earned a total of NT$349.9 billion (US$11.59 billion) before taxes, an increase of 8.97 percent from NT$321.1 billion during the same period last year.
The 794 companies listed on the main bourse (excluding 15 financial holding companies) generated NT$6.11 trillion in total revenues in the first quarter, up 4.36 percent year-on-year from NT$5.85 trillion, the TWSE said in a statement.
The improved first-quarter results were led by the semiconductor sector thanks to increasing demand for DRAM chips, smartphone chips and other wafer applications, the exchange said.
Over the past two weeks, upstream technology companies and selective components suppliers generally reported robust results for last quarter and positive guidance for this quarter, data showed.
Although most downstream technology firms exhibited mixed results last quarter, they forecast that the second half would be better than the first.
Among non-technology sectors, financial, petrochemical and telecoms delivered robust results for last quarter, while performances in the cement, steel and consumer segments were more stable than those of airline and shipping firms.
The TAIEX ended 0.13 percent higher at 8,899.90 points yesterday.
So far this year, the index has gained 3.35 percent, with technology companies substantially outperforming their non-technology peers on the main bourse, according to UBS, which has maintained its year-end index target at 9,650.
Despite a good start to last quarter and an anticipated inventory buildup this quarter ahead of a new product cycle including Apple Inc’s new iPhone model, Dong and Cheng said the key question is whether this growth momentum could be sustained into the second half this year.
“We believe evidence is needed to back forecasts of further uptrend in fundamentals in the second half, for which we should get clarity by July and August,” they said.