Synnex Technology International Corp (聯強), Asia’s largest distributor of information technology products and electronic components, has seen a 4.77 percent drop in its share price in the past month amid investor concerns over the company’s business performance in the light of US-China trade tensions.
In a note to clients on Friday, Yuanta Securities Investment Consulting Co (元大投顧) maintained its “buy” rating for Synnex, but cut its target price from NT$57 to NT$50, saying the company has seen limited effect from the trade dispute due to its low sales exposure in the US market.
“Most of its products are sold in Southeast Asia, China and Taiwan, with limited exposure to the US market,” Yuanta analyst Calvin Wei (魏建發) said in the note.
“We believe industrial PC makers will see limited impact from the dispute, as they can avert the US’ extra tariffs via their production bases in Taiwan,” Wei said. “However, it is still to be seen whether trade disputes will impact global demand for PCs and other products.”
Synnex’s sales in the US are mainly indirect sales of IC components to industrial PC clients.
Yuanta’s 12-month target price of NT$50 implies a 28.4 percent upside from Friday’s close of NT$38.95. The stock has fallen by 3.95 percent this year to date, while the broader market is up 3.42 percent in the same period, Taiwan Stock Exchange data showed.
While the market is cautious about Synnex’s shares, Wei said that its sales have actually improved lately, thanks mainly to rising shipments in the data center, artificial intelligence, Internet of Things, gaming and drone segments.
With sales in its data center business rising 21 percent, 18 percent in gaming products and 72 percent in handsets in the first half of the year, “we expect third-quarter sales to rise 21 percent quarter-on-quarter to NT$109.4 billion [US$3.58 billion], with year-on-year growth of 9 percent, due to a shortage of Intel Corp CPUs and a high base in the second half of 2017,” Wei said.
In the first eight months of the year, Synnex’s sales increased 12.55 percent annually to NT$247.75 billion and Yuanta said sales for the whole year could rise 11 percent annually to a record NT$403.7 billion, the note said.
Yuanta said that Synnex’s earnings per share would be NT$4.44 for the year and NT$4.62 next year, compared with NT$3.67 last year.
With a high dividend yield of nearly 8 percent, the stock remains a "decent defensive play" among local tech stocks, Wei said.
EQUITIES TAIEX closes above 11,000 Local shares yesterday moved higher, closing above 11,000 points on the back of an overnight rally in US markets, as investors embraced expectations that businesses would reopen and the development of a COVID-19 vaccine by US-based Novavax Inc. However, the upturn was limited, with some investors shifting into sell mode after Washington reacted to security laws proposed by China to tighten control over Hong Kong, dealers said. The TAIEX ended up 17.45 points, or 0.16 percent, at 11,014.66 on turnover of NT$156.24 billion (US$5.2 billion). Foreign institutional investors bought a net NT$332 million of shares on the
Latin America’s largest airline LATAM Airlines Group SA yesterday said that the company and its affiliates in Chile, Peru, Colombia, Ecuador and the US have filed for Chapter 11 bankruptcy protection in the US. LATAM is the latest corporate victim of the COVID-19 pandemic that has virtually halted air travel, joining Colombia’s Avianca Holdings SA and Australia’s Virgin Australia Holdings Ltd in bankruptcy protection as it seeks to restructure its debt. “We have implemented a series of difficult measures to mitigate the impact of this unprecedented industry disruption, but ultimately this path represents the best option,” LATAM chief executive officer Roberto Alvo
UNDERESTIMATED: The agency said that as its previous forecast was guided by the SARS crisis, it did not adequately account for disruptions caused by the pandemic The nation’s economy might grow just 1.67 percent this year squarely on the back of government expenditure and private investment, as exports and consumer spending have stalled, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The forecast is a sizeable retreat from an estimate of 2.37 percent growth made in February before the COVID-19 outbreaks became a pandemic. “The previous forecast was guided by the SARS crisis in 2003 and therefore underestimated the ongoing pandemic, which is hitting economic activity hard at home and abroad,” DGBAS Minister Chu Tzer-ming (朱澤民) told a media briefing in Taipei. The agency now expects exports
GRIM OUTLOOK: Consumer sentiment slid for a fourth straight month as the jobless rate spiked to a seven-year high and the number of people on unpaid leave climbed Consumer confidence this month tumbled to near an 11-year low, as people turned gloomy about household income after the unemployment rate exceeded 4 percent and could further deteriorate with the advent of the graduation season, a survey by National Central University showed yesterday. The consumer confidence index printed 64.87, falling for the fourth straight month to the weakest level since November 2009, dragged by bleak household income and employment expectations, the survey found. The sub-index on household income lost 10.5 points to 78.05, while the gauge on the job market outlook shed 10.3 points to 71.5, the worst since April 2010,