Catcher Technology Co (可成), which supplies metal casings for Apple Inc’s iPhone, might see its earnings pick up this year on the back of increasing adoption of metal casings in the mobile phone industry and its share gain in the iPhone supply chain, UBS Securities Pte Ltd said.
UBS said it expects the demand for metal casings to be stronger this year, thanks to the growing adoption of metal casings in high-end smartphones.
“Given that Catcher is a total solution provider with expertise across all metal treatment processes, we are positive that the company will be a major beneficiary of the rising demand for metal casings, and it could expand its market share in the industry,” UBS analysts Alice Chen and Arthur Hsieh (謝宗文) said in a recent research note.
The analysts said they believe metal casings produced by one computer numerical control (CNC) method will dominate high-end smartphones and Catcher could benefit from the trend given its technological edge in the industry.
“Catcher would be the first choice to supply casings for mid-range to high-end products,” the analysts said.
Catcher’s continued capacity expansion and new plant construction lend support to its management’s confidence in strong demand over the next two to three years, UBS said.
Catcher announced it would spend NT$22.3 billion (US$702.7 million) in capital expenditures last year, and recently announced NT$1 billion earmarked for equipment purchases and NT$901 million for the construction of a new plant, the analysts said.
The analysts said Catcher’s better-than-expected sales last month should calm the market’s concerns about the company’s yield rate or share loss in the iPhone supply chain.
They pointed out that Catcher’s revenue of NT$5.96 billion for last month, which represented a 66.7 percent increase year-on-year, already accounted for 40 percent of UBS’ forecast of NT$14.96 billion in revenue for this quarter.
Investors should be aware that Catcher is a strategic supply chain partner for Apple and could be less affected by a seasonal correction in iPhone sales, the analysts said.
The company’s industry-leading technology in metal casings would allow it to gain further share in the iPhone supply chain and remain the major metal casing supplier for Hewlett-Packard Co and Dell Inc’s milestone products, the analysts said.
While the metal casing maker could outperform the slow season this quarter, UBS maintains its quarterly revenue forecast of NT$14.96 billion due to uncertainty of labor supply after the Lunar New Year holiday.
Labor shortage issues in China hit Catcher, weighed on its production and caused a decline in revenue last year.
For the entire year, Catcher might report a 27 percent year-on-year growth in sales, estimated at NT$70.19 billion for this year, compared with NT$55.27 billion last year, the analysts said.
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