Daiwa Securites bullish on HTC stock

By Kevin Chen  /  Staff reporter

Wed, Apr 17, 2013 - Page 14

HTC Corp’s (宏達電) stock could rise 15 percent over the next six months as its latest flagship smartphone could help the company narrow the gap with rivals and increase its earnings, Daiwa Securities Group Inc said in a report yesterday.

The foreign brokerage raised its target price for HTC from NT$265 to NT$305, which represents an increase of 14.88 percent from its closing price of NT$265.50 in Taipei trading yesterday.

Daiwa became the second foreign brokerage to upgrade its outlook and raise its target price for HTC within a week, after JPMorgan Securities Ltd lifted its target price to NT$330 from NT$160 on Thursday last week.

“The stock is heading for another upcycle, driven by the company’s new flagship device, the HTC One,” Daiwa analyst Birdy Lu (呂家霖) said in the report, adding that initial demand for the new product is strong in HTC’s key markets and the shortage of parts for making the product is easing.

In the first quarter, HTC was troubled by a shortage of key components, such as anti-vibration voice coil motors, metal casings and ultrapixel sensors, raising market concern over shipments.

Daiwa said the shortage was easing on the back of supply-chain companies’ efforts to reduce production bottlenecks and HTC’s efforts to add more qualified suppliers.

As a result, Daiwa said production of the HTC One would ramp up to 800,000 units this month and reach more than 1 million units next month, from 300,000 units last month.

Daiwa’s shipment forecast compares with JPMorgan’s prediction of 1.2 million units this month and 2 million units next month.

“[The HTC One] could account for 50 percent of HTC’s second-quarter sales,” Lu said in the report, adding that he expected company sales to reach NT$70.94 billion (US$2 billion) this quarter, with a net profit of NT$3.59 billion to reflect strong demand for the new HTC One.

Due to delayed shipments of the HTC One, the company reported its lowest quarterly profit on record in the first quarter at NT$850 million on revenue of NT$42.79 billion.