Barclays expects Pegatron to ship 3 million units of iPad minis in Q4

Staff writer, with CNA

Mon, Oct 01, 2012 - Page 14

Pegatron Corp’s (和碩) non-notebook computer business would continue to drive its sales growth in the second half of the year despite the low initial yield rate of Apple Inc’s smaller iPad, British bank Barclays PLC said.

In a research note dated on Thursday, Barclays said it expected the Taiwanese contract maker to ship 3 million units of the iPad mini in the fourth quarter, which would result in revenues of NT$16.2 billion (US$552.4 million) or an 8 percent hike in its current sales forecast for the period.

Barclays had originally forecast that Pegatron would assemble 70 percent of the total iPad mini production this year, but the ratio was revised down to 30 percent because of Pegatron’s likely yield rate issue, the bank said.

Unlike Hon Hai Precision Industry Co (鴻海), Pegatron lacks the experience for tablet assembly, which has a long learning curve,” Kirk Yang (楊應超), a Hong Kong-based analyst at Barclays, wrote in the note.

In particular, the new iPad mini is expected to have a narrower bezel allowing for a larger screen in the 7.85-inch form factor, causing a relatively lower assembly yield rate than the 9.7-inch iPad version, Yang said.

Hon Hai, which was the exclusive assembler of iPads, would assemble 6 million to 7 million units of the iPad mini, or 60 percent of the total allocation for 2012, he added.

Although Barclays’ analysis suggested that the mass production of iPad minis had been delayed from last month to this month on account of supply constraints of some key components, Yang believed Apple would not postpone its iPad mini launch.

“As most iPad component vendors ramp up shipments in September that would continue into the fourth quarter of 2012, we do not see any signs of a postponed shipment schedule, suggesting an on-time October product launch,” Yang said.

In addition, Yang forecast Pegatron’s non-Apple tablet shipments to grow by 29 percent year-on-year to 4 million units this year, helped by new orders from software giant Microsoft Corp, US bookstore chain Barnes & Noble Inc and some white-box makers.

A white-box tablet is a model without a registered brand name, which is usually cheaper than branded tablets and is expected to gain traction among price-sensitive consumers.

Barclays maintained its “overweight” stock rating on Pegatron with a target price of NT$47.

Shares of Pegatron closed 2.28 percent higher at NT$38.15 on Friday.