Mon, Apr 16, 2018 - Page 16 News List

Weak forecast for contract electronics

By Chen Cheng-hui  /  Staff reporter

Taiwanese contract electronics makers’ sales growth is likely to be relatively weak in the first half of this year, with a few exceptions, but recover in the second half, a recent KGI Securities Investment Advisory Co (凱基投顧) report said.

Shipments of local contract electronics makers are to be capped by major brand vendors’ product transition this quarter, the report said.

However, local supply-chain makers for Apple Inc’s Macbook laptops and some server producers for other global vendors would see better sales and earnings outlooks this quarter, KGI researchers led by Angela Hsiang (向子慧) said in the report on Tuesday.

KGI’s forecast came after the nation’s major contract electronics hardware makers last week released their first-quarter top-line figures, which were generally in line with market expectations, despite unfavorable foreign-exchange rates and weak first-quarter seasonality.

Based on the companies’ filings with the Taiwan Stock Exchange, Quanta Computer Inc (廣達) reported sales of NT$220.9 billion (US$7.39 billion), down 3.07 percent annually and 21.58 percent quarterly, while Compal Electronics Inc (仁寶) posted sales of NT$196.1 billion, up 4.63 percent year-on-year, but down 23.05 percent quarterly, which matched market expectations.

Pegatron Corp’s (和碩) sales grew 17.53 percent from a year earlier to NT$280.9 billion, but declined 25.6 percent from the fourth quarter, while Inventec Corp (英業達) reported a 5.07 percent annual increase in sales to NT$104.81 billion, a quarterly drop of 21 percent.

Wistron Corp (緯創) saw sales increase 28.89 percent year-on-year, but fall 17.03 percent on a quarterly basis to NT$217.05 billion.

Most Apple suppliers have not shown notable sales recovery, with the exception of metal casing supplier Catcher Technology Co (可成), which reported that monthly sales grew 31 percent and quarterly sales grew 40 percent from a year earlier thanks to the contribution from its iPhone casing assembly business, the report said.

Pegatron, Wistron and flexible printed circuit board supplier Flexium Interconnect Inc (台郡科技) also benefited from their increasing share of iPhone order allocation, boosting quarterly sales by between 15 and 40 percent from a year earlier, KGI said.

As Apple is expected to launch its new Macbook Air after June, some Taiwanese supply-chain firms are likely to see recovering sales momentum by the end of this quarter, it said.

However, supply-chain makers for iPhone, iPod, Apple Watch and AirPod products would still face weak growth in sales this quarter, as Apple plans to launch new versions of these devices sometime in the second half, KGI said.

Inventory depletion in retail channels would also add pressure to local suppliers’ shipments, it said.

With Intel Corp’s launch last summer of its next-generation Purley processor platform, supply-chain players are ready to unveil their new cloud-computing servers and devices this quarter for HP Inc, Dell Inc and other vendors, which could provide a slight lift their quarterly sales, it said.

KGI’s top picks among Macbook supply-chain stocks include Quanta, Catcher and notebook hinge maker Shin Zu Shing Co Ltd (新日興), while its recommended stocks for the server industry are Inventec, slide rail kit supplier King Slide Works Co (川湖) and Lotes Co Ltd (嘉澤), which makes connectors and other electronic components.

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