Devices and materials to fuel global casings sector

LEADERS’ INFLUENCE::A smartphone’s case might not be the most expensive component in the product, but its design and construction poses challenges for firms

By Kevin Chen  /  Staff reporter

Thu, Oct 31, 2013 - Page 14

The rapid growth of smart devices and the increasing use of advanced casing materials will continue to boost the global casings sector, but major players will face challenges due to a higher degree of industry concentration in the smart device business, Daiwa Capital Markets Co said in a report yesterday.

Since the smart device market is likely to be dominated by a few companies such as Apple Inc and Samsung Electronics Co, these firms’ operating performances could have a significant impact on casing makers in terms of business performances and share prices, Daiwa said.

“Casings are playing an increasingly important role in the design of mobile products, despite comprising a fairly small portion of the material costs of these devices,” Daiwa analyst Steven Tseng (曾緒良) said in the report.

Tseng said the value of the global mobile product-related casings segment is expected increase at a compound annual growth rate of 11 percent from this year through 2016, driven mainly by higher demand of smartphones and tablet computers.

“Since the casing is the major factor in determining the aesthetics of a mobile device, clients usually focus more on features than cost when it comes to selecting casings,” Tseng said, referring to the use of thinner, lighter and stronger materials.

Therefore, Daiwa said the need for more advanced materials, which have higher gross margins than their plastic-based counterparts, will boost the sector’s profit margins and earnings growth.

The brokerage forecast that global metal casing makers will increase their output by a compound annual growth rate of 12 percent between this year and 2016, while composite casing suppliers could see the growth rate hit as high as 75 percent in the four-year period.

Within this sector, Ju Teng International Holdings Ltd (巨騰) is forecast see solid earnings growth through 2015, driven by its shift from plastic to metal and composite materials, while Catcher Technology Co (可成) could retain its leading position in the sector because of new metal casings orders from heavyweight smartphone clients set to roll in over the next three years, the report said.