Pegatron Corp (和碩), one of the nation’s leading contract notebook computer manufacturers, yesterday said notebook shipments could jump by 30 to 35 percent this quarter from the previous quarter, as major customers aggressively push mainstream models.
The company, a manufacturing spinoff of PC vendor Asustek Computer Inc (華碩), expects revenue from communications devices to grow by a low-single digit in the second quarter, while the contribution from consumer electronics should stay flat, chief executive Jason Cheng (程建中) said.
Cheng made the statement after the company reported NT$1.28 billion (US$43.44 million) in net profit during the January-to-March period, rising 31 percent from the preceding quarter and more than threefold that of a year ago.
Robust consolidated sales of NT$171.89 billion in the first quarter failed to boost Pegatron’s gross profit margin, which edged down to 4.7 percent, from 4.9 percent three months earlier and 4.8 percent a year ago, the company’s report showed.
However, operating profit margin rose to 0.8 percent in the first quarter, from 0.7 percent three months earlier, thanks to a better product mix, whose benefits would become more evident going forward, Cheng said.
The company's pro forma design manufacturing services (DMS) revenue reached NT$149.18 billion in the first quarter, down 3.2 percent quarter-on-quarter but up 74.2 percent year-on-year, with gross margin falling by a 0.2 percentage point quarter-on-quarter to 3.0 percent, while operating margin staying put at 0.3 percent.
“The second quarter will see an operating profit margin improvement, but I had better refrain from detailed comments,” Cheng said at an investors’ conference.
He said the current figure was not in line with expectations, but the company aims to raise it to 1 percent — a level that is acceptable for contract notebook makers.
Cheng attributed the company’s optimism on notebook shipments to continued gains in market share, with the addition of three major clients, including Apple Inc, last year.
Asustek, the company’s largest client, now accounts for less than 30 percent of orders, compared with more than 50 percent in the past, Cheng said.
Notebook shipments cover laptops, tablets and netbooks, Cheng said.
He did not provide a sales breakdown.
Tablets accounted for a modest share of overall shipments in the first quarter and are unlikely to make up a significant share this year, Cheng said.
He added that Pegatron is not the sole supplier of any individual customer.
Cheng said he was positive on Ultrabooks’ development, but gave a cautious estimate that they would account for 10 to 15 percent of overall notebook shipments this year — compared with other companies’ forecasts of 40 percent.
As for Pegatron, he expects Ultrabook shipments to rise 25 percent this quarter from three months earlier.
Capital expenditure is forecast at between US$300 million and US$400 million this year, with the majority being expended in the second half, chief financial officer Charles Lin (林秋炭) said.
Utilization rates for notebooks are estimated at 80 percent to 90 percent, but are likely to be lower for other product categories, he said.
A financial analyst at a local securities brokerage, who asked not to be named, said that Pegatron’s guidance was higher than market expectations of a 10 percent increase in notebook shipments.
He has a “buy” rating on Pegatron, with a target price of NT$50. The stock closed at NT$42.60 yesterday, after rallying 2.53 percent.
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