SinoPac Securities Investment Service Corp (永豐投顧) has given broadband and wireless networking equipment maker Sercomm Corp (中磊) a long-term “buy” rating with a target price of NT$88.
The stock on Friday ended down 1.74 percent at NT$79, while the local stock exchange’s benchmark index, the TAIEX, closed 0.39 percent lower.
In an investment note issued on Friday, SinoPac said current orders exceeded the company’s shipments despite Sercomm’s expanding production capacity in Taiwan and the Philippines, which suggests strong sales growth in the second half of this year.
In the first eight months of the year, the company’s cumulative revenue totaled NT$18.9 billion (US$608.9 million), down 10.12 percent from NT$21.03 billion in the same period last year.
“Although we trimmed our estimate of the company’s 4G small cell product shipments in 2020, as it will be affected by Rakuten Mobile Inc’s delayed completion of 4G base station construction in the short term, we still expect shipment growth in 2020 due to a low base [in 2019] and rising demand from US carriers,” SinoPac said.
Sercomm supplies small cell base stations to Rakuten Mobile, which is Japan’s fourth broadband network operator and the first in the country to adopt virtual radio access network technology.
Rakuten has delayed the nationwide launch of its mobile service planned for next month and instead is preparing a trial service for a limited number of subscribers from Oct. 1, before rolling out full-scale services in April next year, Japanese news outlets reported earlier this month.
As Chinese-made network products and surveillance devices have triggered concerns over information security among US clients, some US vendors have transferred their orders to Sercomm.
The firm also aims to supply broadband products to telecom operators directly, instead of supplying them through system integrators, to boost revenue growth with a higher gross margin.
Sercomm is likely to begin shipments for 5G small cell products in 2021, SinoPac said.
Sercomm reported net profits of NT$391.21 million in the first half of the year, up from NT$323.09 million a year earlier, with earnings per share of NT$1.6, company data showed.
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