Mon, Oct 08, 2018 - Page 16 News List

Aspeed shares continue to dive amid volatile trading

By Chen Cheng-hui  /  Staff reporter

Shares in Aspeed Technology Inc (信驊), a leading fabless chip design house for server management and PC/audio and video extension solutions, fell by the daily maximum of 10 percent in Taipei trading on Friday as investors worried whether the firm’s performance would return to normal among changing market dynamics.

As trading of Aspeed shares has become volatile and met stock exchange regulators’ “attention securities” criteria, trade matching was manually conducted once every five minutes beginning on Friday, with securities brokers required to collect buy-side payments or sell-side securities in advance.

The practice is to continue until at least Oct. 19, as Aspeed shares have traded abnormally, the Taipei Exchange said in a statement on Thursday.

The company’s shares ended at NT$472.5 on Friday, down 22.54 percent for the week. They have declined for a consecutive 11 sessions, dropping 36.15 percent since Sept. 19, when they traded at NT$740 on the Taipei Exchange.

However, CGS-CIMB Securities (Hong Kong) Ltd (銀河-聯昌證券) said Aspeed stock “has been significantly oversold due to the short-sighted conformism” in the market, which has resulted in many “knee-jerk reactions.”

“Unless we consider 5G, augmented reality, e-sports and various artificial-intelligence related applications (eg, facial recognition and autonomous cars) meaningless, server demand ... will continue to see a compound annual growth rate of 24 percent in 2018-2020,” CIMB analyst Peter Chan (詹逸群) said in a note on Thursday.

Aspeed, which has its headquarters at Hsinchu Science Park (新竹科學園區), reported consolidated revenue of NT$181.5 million (US$5.9 million) last month, down 9.53 percent month-on-month, but up 7.68 percent year-on-year.

Third-quarter revenue largely tracked market expectations to reach NT$583.34 million, up 6.5 percent from the previous quarter, while cumulative revenue for the first nine months increased 19.35 percent year-on-year to reach NT$1.67 billion, but analysts said a shortage of capacitors, the higher cost of Intel Corp’s new server platform “Purley” and the US-China trade war could still harm Aspeed’s sales this year.

“The newly implemented tariffs will likely result in an order push-out in the near term, and downward earnings revisions appear to be inevitable at this point,” although the slowdown would be “temporary rather than structural,” Yuanta Securities Investment Consulting Co (元大投顧) analyst Calvin Wei (魏建發) said in a note on Wednesday.

Aspeed last week posted earnings per share (EPS) of NT$1.89 for August and NT$4.09 for July and August, compared with the NT$9.48 it made in the first half of the year.

As certain server components were included in Washington’s US$200 billion tariff list on Chinese goods, some clients have likely delayed purchases, while some might even consider moving their production lines elsewhere, Wei said.

As a result, Yuanta predicted Aspeed’s fourth-quarter revenue would decline by a double-digit percentage from last quarter, and the full-year revenue could grow just 18 percent annually, lower than the company’s average long-term growth rate of about 20 to 25 percent, he said.

Yuanta estimated Aspeed would have EPS of NT$20.31 this year and NT$26.6 next year, down 8 percent and 21 percent from its previous estimates respectively.

CIMB forecast EPS of NT$18.53 this year and NT$27.75 next year.

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