CLSA Ltd yesterday reiterated its "buy" recommendation on High Tech Computer Corp (HTC,
Speculation about losing major customers' orders to local cellphone makers including Inventec Appliance Corp (英華達) has caused HTC's shares to dive 37 percent in the past three months, despite record high monthly revenues.
"Overall, business conditions are actually much more stable than the share price. We believe the recent correction is overdone," CLSA analyst Vincent Chen (陳豊丰) said in the latest report.
Despite a rapid decline in orders from major customer, business with telecom operators and channel customers is still healthy, Chen said.
On Tuesday, HTC said in a filing to the Taiwan Stock Exchange that it would buy back a maximum of NT$4 billion (US$123 million) worth of shares over the next 45 days.
The company plans to repurchase as many as 5 million, or 1.15 percent, of its own shares at a price from NT$601 to NT$800 each.
The buyback started on Wed-nesday and will last until Jan. 19, the company said at the time.
"We think this is a positive sign that the management is confident on its business outlook," UBS AG said in a report after the buyback announcement.
UBS has a "buy" rating on the stock and a 12-month price target of NT$1,145.
HTC, whose rivals include Asustek Computer Inc (華碩) and Gigabyte Technology Co (技嘉), has more than 80 percent of the market for Windows-based mobile phones, according to the company.
The company posted a 4.9 percent rise in sales last month to NT$10.96 billion, its second consecutive monthly record.
During an investor's conference call on Thursday, the company reaffirmed its previous forecast of 20 percent to 30 percent growth for the current quarter.
The company said it was positive about its telecom operator and channel businesses in the US and Europe. In the new market, the company expects shipment volume to Japan to grow to a meaningful level next year.
Besides, growth momentum would persist next year, helped by faster new product launches than its rivals, HTC's financial executive Cheng Hui-ming (鄭慧明) said.
CLSA's Chen predicted that HTC would double its product portfolio next year from around 12 models this year.
With the robust outlook to support the company's fundamentals, Chen said "the overdone correction offers a good entry point."
He reiterated his "buy" on HTC with a target price of NT$894.5 during the next 12 months. The closing price yesterday was NT$651.
But, Chen cut slightly his forecast for HTC's revenues this year by 4 percent to NT$108.11 billion due to falling orders from original design manufacturing (ODM) customers such as Palm.
HTC's ODM business will decline from an estimated 29 percent of revenue this year to 9 percent by 2008, he projected.
Additional reporting by Bloomberg Newswire
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