Tue, Sep 30, 2014 - Page 14 News List

UBS downgrades Compal shares on order reshuffle

Staff writer, with CNA

UBS Securities has revised downward its business outlook for Compal Electronics Inc (仁寶), the world’s No. 2 contract laptop PC maker, citing a reallocation of orders by the company’s major clients.

The Swiss brokerage downgraded Compal shares from “buy” to “neutral,” to reflect weakening PC demand during the year-end shopping season and changes in orders placed by Hewlett-Packard Co, Acer Inc (宏碁) and Toshiba Corp — three of Compal’s major clients.

“We are becoming more cautious about PC demand heading into the holiday season. Macroeconomic uncertainty and potentially higher channel inventory could mean slower OEM [original-equipment manufacturer] bookings,” UBS analyst Edward Yen (顏子傑) wrote in a note to clients on Friday last week.

“We also believe our previous forecast for Compal’s 2015 notebook shipments may have been too optimistic in light of the potential order reshuffling,” Yen said, cutting his estimate for Compal notebook shipments next year from 47.9 million to 45 million units.

While the laptop manufacturer is making solid progress on HP orders, Yen said that next year, its Acer business is likely to drop to between 5 and 10 percent of its total notebook shipments, compared with this year’s estimated share of between 20 and 25 percent.

The analyst also forecast a decrease in Compal’s orders from Toshiba as the Japanese company is restructuring its PC business and currently accounts for about 5 to 10 percent of the Taiwanese firm’s notebook shipments.

Compal shares plunged 3.2 percent to NT$22.7 in Taipei trading yesterday, while rival Quanta Computer Inc (廣達) saw its stock fall 0.13 percent.

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