BenQ Corp (
Shares in BenQ, Taiwan's leading consumer electronics maker and the nation's largest handset maker by volume, added NT$1.7, or 4.9 percent, to close at NT$36.2.
Turnover also surged to a four-month high to NT$2.13 billion since the end of April as investors snatched up the company's stocks.
"Nokia has picked a clamshell GPRS model from BenQ, with dual CSTN screens but no camera, in order to strengthen its clamshell-phone line, especially those destined for the China market," said Vincent Chen (
The original design manufacturer (ODM) contract is what "every ODM and every EMS company in this business sector has been trying to get for years," Chen said.
Chen believes the Nokia order will boost BenQ's earnings per share (EPS) by 2 percent this year, raising its share price to NT$4.35, while also adding another 9 percent to its EPS next year -- boosting its share value to NT$4.93.
Taoyuan-based BenQ is expected to supply at least 1.5 million mobile-phones to Nokia this year, according to Chen.
Stevie Chou (
Nokia, which holds about 30 percent of the world's market, has rarely farmed out production, Chou said. This has made it difficult for local companies to build on their global market share in the line, which stands at 10 percent.
As of last quarter, Taiwanese companies only had an 8.4 percent market share in the line. That was down from nearly 9 percent last year. Companies shipped about 12.59 million mobile phones in the second quarter, according to market researcher Market Intelligence Center (MIC,
The global mobile handset market is expected to pass 595 million units this year from 520.8 million last year, IDC forecast in May.
BenQ told investors last week that it aimed to boost mobile handset shipments to 16 million units this year, with around half going to Motorola Inc, BenQ's sole handset customer before landing a deal from Nokia.
Mobile phone products accounted for around a quarter of BenQ's total sales of NT$42 billion in the second quarter, the second largest contribution after computer monitors.
"The new handset order will help BenQ offset the growing pressure on its margins, which continue to erode its bottom line," SinoPac's Chou said.
The company's gross margin for handset ODM contracts could reach 30 percent, Chou said. This is compared to BenQ's average gross margin of 11.4 percent in the April-June period.
BenQ's gross margin was expected to shrink to around 10 percent this quarter before the Nokia order came through, Chou said.
BenQ may ship handsets to Nokia as soon as next month, the analyst said.
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