Credit Suisse upgrades Pegatron, Hon Hai forecasts

By Kevin Chen  /  Staff reporter

Fri, Jan 18, 2013 - Page 14

Credit Suisse AG yesterday upgraded its earnings forecasts for Hon Hai Precision Industry Co (鴻海精密) and Pegatron Corp (和碩) for last quarter and this quarter, despite recent worries of weaker iPhone shipments hitting many local companies in Apple Inc’s supply chain.

Hon Hai, which assembles Apple’s iPads and iPhones, is forecast to report NT$37.18 billion (US$1.28 billion) in net profit last quarter, or earnings per share of NT$3.15, Credit Suisse analyst Thompson Wu (武光明) said in his latest industry report, citing stronger demand for iPad Mini tablets.

The forecast represents an increase of 22.87 percent from the NT$30.26 billion profit Hon Hai posted for the third quarter and an upward adjustment of 7.73 percent from Credit Suisse’s previous forecast of NT$34.51 billion.

Credit Suisse said higher shipments of MacBook and iMac computers as well as better-than-expected PC server-related sales prompted it to lift its earnings forecast for Hon Hai last quarter, in addition to iPad Mini shipments.

The bank forecast earnings per share of NT$9.46 for Hon Hai this year and NT$8.25 last year.


Pegatron Corp (和碩), another system assembler of iPads and iPhones, is expected to report NT$1.54 billion in net profit, or NT$0.68 per share, for last quarter, a sequential increase of 14.07 percent from NT$1.35 billion and 3 percent higher than Wu’s earlier forecast of NT$1.498 billion.

“While its [Pegatron’s] computing business is tracking to the lower end of its guidance, we believe fourth-quarter sales upturn was primarily driven by demand for consumer electronics, especially for iPad Mini tablets,” Wu said.

Credit Suisse expects Pegatron to report earnings per share of NT$2.22 for last year and NT$4.06 this year to reflect the company’s improved product mix in the consumer electromics segment.

However, Wu adjusted downward his near-term outlooks on Acer Inc (宏碁) and Quanta Computer Inc (廣達) after the two companies last week reported disappointing sales for last month and last quarter.


The weakening demand for the iPhone 5 has also caused Fubon Securities Co (富邦證券) to shift focus to companies which are not in the Apple supply chain, such as smartphone maker HTC Corp (宏達電), contract notebook maker Wistron Corp (緯創) and Silitech Technology Corp (閎暉), which supplies cellphone keypads to Nokia Oyj and Research In Motion Ltd (RIM).

“The key reasons the iPhone 5 failed to gain market share after its launch are its smaller screen size and competition,” Fubon analyst Jeff Pu (蒲得宇) said in a separate report yesterday.

“Looking ahead, with no new models until June, the downtrend will likely continue,” he added.

Forecasting that iPhone market share would decline to 17 percent this year from 20 percent last year, Fubon downgraded its outlooks on Hon Hai, metal casing manufacturer Catcher Technology Co (可成科技) and camera lens maker Genius Electronic Optical Co (玉晶光) in the Apple supply chain.

However, the brokerage still held positive prospects on camera lens maker Largan Precision Co (大立光) and Pegatron owing to the two firms’ diversified client bases and expected market share gains from rivals, Pu said.