Analysts at Barclays Capital Securities Taiwan Ltd yesterday said they had raised their stock rating on touchpanel supplier TPK Holding Co (宸鴻), citing their upbeat outlook for the firm’s sales and operating margin in the near term as well as further positive catalysts in the long term.
The brokerage raised its rating on TPK’s shares to “outweight” from “underweight,” while increasing its stock price target to NT$220 from NT$153.
TPK was the worst performing stock in Taiwan last year, falling 65.69 percent for the year, followed by Mutto Optronics Corp (牧東光電), which dropped 64.01 percent last year, and Genome International Biomedical Co (基因國際), with a 59.3 percent decline, the Taiwan Stock Exchange’s data showed.
Yesterday TPK shares closed 2.84 percent higher at NT$181 on the first day of trading in Taipei this year.
Barclays analysts Jamie Yeh (葉婉屏), Sebastian Hou (侯明孝) and Andrew Lu (陸行之) said in a client note that they believed the company’s near-term outlook would be better than previously predicted.
The analysts said that TPK’s fourth-quarter sales are likely to beat the company’s sequential growth guidance of up to 20 percent, while its operating margin could reach 4 percent, above the firm’s own guidance of between 2 percent and 3 percent.
TPK reported a profit of NT$1.01 billion (US$33.7 million), or earnings per share of NT$3.08, in the third quarter of last year, but the company is expected to report a net loss for the final quarter of last year due to the one-time impairment loss of NT$2 billion stemming from Cando Corp (達鴻), its touchpanel subsidiary.
The analysts believe higher sales and improving margins could help pare the quarterly losses.
“We expect TPK to narrow its losses to NT$1.5 per share versus the current [market] consensus estimate of a loss of NT$3.12,” they said in the note.
In the long term, the brokerage forecast several catalysts that would help TPK resume year-on-year growth momentum, beginning in the second half of this year.
That includes an anticipated contribution from an upcoming 12.9-inch iPad and other tablets that use TPK’s touchpanel products. It also factors in the possible return of iPhone business from Apple Inc, which could lamination and sapphire cover glass, Barclays said.
Moreover, the industry’s move toward focusing on thinner bodies and unbreakable screens could lead Apple and non-Apple customers to use more of TPK’s proprietary touch-on-lens products, the brokerage said.
Nevertheless, TPK is still under margin pressure driven by the aggressive pricing strategy and fast ramp-up production yield rate from peers, especially General Interface Solution Ltd (GIS, 英特盛), which is a touchpanel manufacturing subsidiary of Hon Hai Group (鴻海集團).
Yuanta Securities Co (元大證券) yesterday retained its “hold” rating on TPK shares, citing its forecast losses for last quarter.
Yuanta analyst George Chang (張家麒) said in a separate note that he still holds a cautious view on the company’s near-term outlook, as the company’s shipments of tablet touchpanels tend to show a significant decline in the traditionally slow season this quarter.
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
INDUSTRY LEADER: TSMC aims to continue outperforming the industry’s growth and makes 2025 another strong growth year, chairman and CEO C.C. Wei says Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp and Apple Inc, yesterday said it aims to grow revenue by about 25 percent this year, driven by robust demand for artificial intelligence (AI) chips. That means TSMC would continue to outpace the foundry industry’s 10 percent annual growth this year based on the chipmaker’s estimate. The chipmaker expects revenue from AI-related chips to double this year, extending a three-fold increase last year. The growth would quicken over the next five years at a compound annual growth rate of 45 percent, fueled by strong demand for the high-performance computing
RSS