Shares of MediaTek Inc (聯發科), one of the nation’s leading integrated circuit designers, yesterday closed down by its daily limit to NT$454 after the company’s first-quarter sales forecast was lower than expected, dealers said.
With the Lunar New Year holiday approaching, many investors also tended to lock in gains built in recent sessions to maintain liquidity, and MediaTek, as with other large-cap stocks, became a target because of the first-quarter forecast, they said.
MediaTek shares opened down 7 percent — the maximum daily decline — and remained low throughout the session, with 7.97 million shares changing hands.
The weighted index on the Taiwan Stock Exchange was down 0.3 percent at 9,393.70.
“At a time when many investors want to increase their cash holdings ahead of the long Lunar New Year holiday, it was no surprise that MediaTek shares came under heavy pressure following the first-quarter sales forecast,” investment consulting firm CMoney analyst Chen Wei-tai (陳維泰) said.
At an investors’ conference on Monday, MediaTek projected its first-quarter consolidated sales at between NT$45.5 billion and NT$49.9 billion (US$1.4 billion to US$1.6 billion), down 10 percent to 18 percent from a quarter earlier.
The company’s forecast was lower than general market expectations of a roughly 10 percent sequential fall.
MediaTek, which garners most of its revenue from smartphone chips, said the sequential sales fall largely reflected slow season effects and fewer working days this month, with the Lunar New Year holiday from Feb. 18 to 21.
In addition, the global smartphone market is going through a transition period this quarter, which is having an impact on smartphone chip shipments, the company said.
Amid expectations of escalating competition, in particular in 4G smartphone chips, MediaTek said its gross margin could range from 46 percent to 48 percent, compared with 47.9 percent recorded last quarter.
Despite a potentially sluggish first quarter, MediaTek expressed confidence in its performance for the year, expecting sales to pick up quarter by quarter and increase up to 20 percent for the year as a whole.
The company said smartphone chip shipments for the year could increase to 450 million units, including 150 million 4G chips, from about 350 million units shipped last year.
“Few people anticipated that MediaTek would make a breakthrough in the first quarter. To me, its sales forecast was not too bad, but investors are being cautious before the long holiday and simply cutting their holdings for the moment,” Chen said.
“Judging from its results for 2014, MediaTek remains a fundamentally sound company,” Chen added. “The company is still riding an uptrend in 2015 based on its forecast for 2015.”
Last year, the IC designer saw net profit rise 68.8 percent from a year earlier to NT$46.40 billion, the highest in the company’s history. It posted earnings per share of NT$30.03, compared with NT$20.51 in 2013.
MediaTek’s consolidated sales for last year rose 56.6 percent from a year earlier to NT$213.1 billion, also hitting a new high, while its gross margin rose 4.8 percentage points to 48.8 percent.
“After the current sell-off, I expect many investors who remain upbeat about MediaTek’s profitability will resume their buying by taking advantage of its relatively low valuation,” Chen said. “NT$450 could be a good buying point.”
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