Zhen Ding Technology Holding Ltd (臻鼎) and Career Technology Co (嘉聯益), the nation’s largest and second-largest suppliers of flexible printed circuit boards (FPCBs) are forecast to see revenue growth of between 5 percent and 10 percent this quarter from last quarter, while smaller rival Flexium Interconnect Inc (台郡) may see its sales contract by 11 percent quarter-on-quarter, HSBC Securities Corp Ltd said on Wednesday last week.
In the first quarter, Zhen Ding’s sales registered a 21.92 percent year-on-year increase to NT$14.78 billion (US$491.6 million), while Career posted a 0.14 percent annual decrease to NT$2.9 billion and Flexium saw sales rise 6.72 percent from a year earlier to NT$2.51 billion.
HSBC said Zhen Ding is likely to continue gaining order allocation within Apple Inc’s FPCB supply as well as benefit from its greater exposure to non-Apple mobile devices such as handsets by Chinese brands and tablets from Sony Corp and Amazon.com Inc.
“Zhen Ding can continue gaining share given its technology leadership in FPCB assembly along with its greater manufacturing scale, which allows it to better adjust to last minute changes in production plans,” HSBC analyst Yao Tse-yong said in a client note.
Bank of America Merrill Lynch and UBS Securities Pte Ltd agreed, saying Zhen Ding would see revenue momentum pick up strongly in the second half of this year, driven by the launch of the iPhone 6. The company is a subsidiary of Hon Hai Precision Industry Co (鴻海), a major iPhone and iPad assembler.
In recent research notes, Merrill Lynch forecast Zhen Ding’s revenue for next quarter would grow 27 percent from this quarter and another 45 percent in the fourth quarter, while UBS said the company could also maintain its gross margin due to its rising automation and cost-control capabilities.
UBS is also upbeat about Career, which has higher exposure to tablets and non-Apple smartphones than its local peers, expecting the company’s revenue to grow by 13 percent this quarter from last quarter, 53 percent sequential increase for next quarter and 27 percent for the final quarter of the year.
“We believe the key growth driver is that Career has become an FPCB supplier for upcoming new iPhone models,” UBS analyst Samson Hung (洪希民) said in a separate note on Wednesday. “In addition, we expect Career to benefit from potential upcoming new wearable devices. We also expect China’s smartphone customers to account for 15 percent to 20 percent of revenue in 2014.”
As for Flexium, HSBC said the company could see sales grow by 75 percent next quarter from this quarter because of the iPhone 6 launch, but its full-year revenue growth is likely to grow only 5.3 percent from last year due to less exposure to non-Apple clients, especially Chinese smartphone makers.
So far this year, shares in Zhen Ding have risen 32.45 percent and those in Career have increased 64.84 percent, while Flexium shares have fallen 15.94 percent. In comparison, the TAIEX has increased 7.69 percent over the same period.
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