Macquarie Research Equities yesterday said it maintained its "outperform" ratings and target price for Asustek Computer Inc (華碩電腦), despite speculations that it might lose notebook orders from Apple Inc.
The world's largest motherboard maker is reportedly losing the Macbook orders to rival Quanta Computer Inc (
"The market's concerns about Asustek's potential loss of MacBook orders have been exaggerated," Macquarie analyst Daniel Chang (
He said that Apple was unlikely to give 100 percent of its MacBook orders to Quanta, because the latter was already churning out Apple's iMac and MacBook Pro computers.
The possibility of order switching -- maybe in larger-than-expected quantities -- did not surprise the industry, but the impact should be minimal, he said, adding that Macquarie maintained Asustek's target price of NT$106 (US$3.2).
Shares of Asustek closed down 1.7 percent to NT$83 on the Taiwan Stock Exchange yesterday.
Macquarie expects Asustek's MacBook shipments may drop to 1 million and 1.5 million units, down from 2 million last year, but such shipments would account for only 3 percent to 4 percent of Asustek's pretax profits this year.
Macquarie is betting on Asustek's strong own brand notebooks to offset the loss of MacBooks, as own-brand computers offer as much as 18 percent gross margins, which are more lucrative than about 5 percent of contract productions.
"Asustek expects its own brand notebook volumes to grow by 80 percent year-on-year to nearly 4.8 million units this year, which is 20 percent higher than our estimate? We believe that its own brand is still the key focus for Asustek," Chang said in the report.
Goldman Sachs Group Inc, however, holds a different view.
"Apple remains the largest notebook contract client for Asustek, and sales momentum of Asustek will slow unless it is able to fill up the gap with new clients," Goldman Sachs' analyst Henry King (
King estimates that Apple's notebook orders would account for 11 percent of Asustek's total sales and 6 percent profits.
Affected by the possible order loss, he lowered the maker's ratings to
“Neutral” from “Buy,” as well as adjusted target price to NT$95 from
NT$103.
Though Asustek is set to usher in a better second half due to Vista effect
and brand businesses of motherboards and portable computers, sales by then
would only improve 3 percent than the first six months, he added.
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