Morgan Stanley has recommended four Taiwan-listed stocks in the display supply chain in the third quarter due to increasing demand for ultra-HD televisions and inventory buildups for the iPhone 6.
With better utilization of capacity, favorable product mixes and enhanced operating efficiency, most display suppliers are forecast to improve their margins in the second quarter, Morgan Stanley said in a research note last week.
The US brokerage expects LED maker Epistar Corp (晶電), as well as flat-panel makers Innolux Corp (群創) and AU Optronics Corp (AUO, 友達光電), to have the best performance and show a margin gain of 3 to 8 percentage points in the April-June period.
Looking to the third quarter, Morgan Stanley suggested that investors stick with beneficiaries of ultra-HD4K TVs such as AUO and display driver IC supplier Novatek Microelectronics Corp (聯詠科技), iPhone display IC suppliers like Chipbond Technology Corp (頎邦科技) and LED lighting foundries such as Epistar.
Taipei-based Morgan Stanley analyst Sharon Shih (施曉娟) said optimism is also based on expectations that the suppliers of Apple Inc’s upcoming iPhone 6 should build their inventories to a high level in the third quarter, while notebook panel prices have stabilized.
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