Wed, Jul 23, 2014 - Page 14 News List

Notebook sales continue to rise for dominant Compal

POSITIVE OUTLOOK:Laptop sales have topped expectations so far this year for the electronics company, with growth expected to continue

By Kevin Chen  /  Staff reporter

Compal Electronics Inc (仁寶), which makes notebook computers for Lenovo Group (聯想), Hewlett-Packard Co and Dell Inc, is forecast to ship 42.8 million laptops this year, higher than the company’s original estimate of 42 million, CIMB Securities Ltd said yesterday.

The company, which also manufactures products for Apple Inc’s iPad, as well as smartphones for Lenovo and HTC Corp (宏達電), could ship 35.4 million smart devices this year, up 128.4 percent from last year, CIMB analysts Wang Wanli (王萬里) and Felix Pan (潘俊宏) said in a client note.

Overall, the company’s sales and earnings this year may top market expectations on the back of strong demand for commercial notebook computers and in the wake of its smooth integration of handset subsidiary Compal Communications Inc (華寶), the analysts said.

Net income may increase 150 percent to NT$6.17 billion (US$20.55 million) this year from NT$2.47 billion last year, with earnings per share of NT$1.4, while consolidated sales may rise 21.87 percent to NT$844.24 million from NT$692.75 million over the same period, CIMB forecast.

Compal, which has overtaken Quanta Computer Inc (廣達) as the world’s largest contract notebook computer maker, benefits when market demand for corporate laptops is stabilized, even though it is still premature to say the overall PC market is in full recovery as the consumer segment remained weak in the first half of the year, based on the latest industrial data compiled by both Gartner Inc and International Data Corp.

Also fueling the company’s growth momentum is an industry consolidation trend in the PC market, with Lenovo, HP and Dell gaining market share from rivals, helping push Compal’s sales for last month up 12.8 percent to NT$76.71 billion month-on-month and up 34.6 percent year-on-year. Last month’s sales were Compal’s highest in 44 months.

Last month, Compal shipped 4.4 million laptops, higher than rival Quanta’s 4.3 million units, to become the world’s largest contract notebook computer maker.

In the second quarter, Compal reported laptop shipments of 10.6 million units, up 17.8 percent quarter-on-quarter, compared with Quanta’s 11.5 million units, an increase of 9.5 percent from the previous three months.

“As long as corporate PC demand remains healthy in the second half of 2014, these three major PC vendors are likely to gain more market share globally,” Wang and Pan wrote in the note. “Other PC vendors either have limited exposure to the corporate segment or have already exited the market.”

Last week, market researcher Digitimes Research said Compal could beat Quanta in laptop shipments for the second half of the year on the back of increased orders from Lenovo, HP, Acer Inc (宏碁) and Toshiba Corp.

Compal shares gained 2.60 percent to end at NT$29.55 yesterday in Taipei trading following the report.

The stock has climbed 50 percent over the past 12 months, Taiwan Stock Exchange data showed.

CIMB upgraded its investment rating on Compal shares to “add” from “hold” and raised its target price on the stock to NT$34 from NT$28.8.

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