British bank Barclays PLC yesterday advised investors to hold on to their cumulative preferred stocks in Apple Inc’s supply chain in Taiwan, citing strong demand for iPhones with bigger screens.
Barclays analyst Kent Chan (陳衛斌) said the bank remains upbeat on Taiwanese assemblers Hon Hai Precision Industry Co (鴻海精密) and Pegatron Corp (和碩), and component suppliers Largan Precision Co (大立光) and Catcher Technology Co (可成), four of the so-called Apple concept stocks, which are all rated “overweight.”
“Although some investors have been taking profit since the launch of the new iPhone 6 models on Sept. 10, we believe it is still too early to take profits on Hon Hai and Pegatron,” the Taipei-based analyst said in a note to clients.
With the improved hardware specifications of the iPhone models with bigger screens — the 4.7-inch iPhone 6 and the 5.5-inch iPhone 6 Plus — their shipments are likely to exceed market expectations, Chan forecast.
If Apple can resolve the component shortage issue for the 5.5-inch model, shipment growth can be expected in the first half of next year, given the upbeat demand for that model in Asian markets, he said.
The analyst did not go into details about the component shortage, but it was reported in Taiwanese media in July that there was a bottleneck in the supply of touch panels and metal casings for the iPhone 6 Plus.
According to a report in the local daily DigiTimes on Thursday last week, Apple has told its partners in the Taiwan-based supply chain that it will require 80 million units of the iPhone 6 and iPhone 6 Plus by the end of the year to meet demand.
Regarding the component suppliers, Chan said the outlook for both Largan and Catcher will remain robust in the second half of the year in view of the longer product cycle of the new iPhones.
In addition, strong orders and revenues can be expected in the Apple supply chain in Taiwan as Apple prepares to launch new models of the iPad Air and iPad mini in the fourth quarter of the year and a 12.9-inch iPad in the first quarter of next year, he said.
At a gala event in California on Tuesday last week, Apple unveiled its new iPhones, a fingerprint-based Apple Pay feature for wireless mobile payments and its first wearable device — the Apple Watch.
Compared with previous iPhone models, the iPhone 6 and iPhone 6 Plus are said to be between 7 and 10 percent slimmer, 25 percent faster, between 38 and 89 percent bigger and have between a 10 and 40 percent longer battery life.
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