Compal Electronics Inc (仁寶), the world’s No. 2 contract laptop computer maker, yesterday reported an unexpectedly strong net profit of NT$2.47 billion (US$82 million) for last quarter on improved gross margins.
The company also expects shipments this quarter to grow 10 percent sequentially from last quarter’s 8.9 million units, benefiting from rising corporate PC replacement demand after Microsoft Corp retired its Windows XP operating system last month.
“The second quarter is usually a flat season for the notebook industry,” Compal president Ray Chen (陳瑞聰) told investors.
However, he expects shipments to grow this quarter because of new order gains and an improved client portfolio.
That strengthened the company’s confidence that it would be able to reach its target of shipping 40 million laptops this year, up 7.8 percent from 37 million units last year, Chen said.
Yuanta Securities Corp (元大證券) analyst Vincent Chen (陳豐丰) said that Compal’s guidance of 10 percent shipment growth easily outpaces forecast average growth of 5 percent for the industry.
The company has seen recovering corporate demand for laptops in the first half of the year, which would mitigate tablet’s cannibalization, Ray Chen said.
As a result, global notebook shipments are forecast to decline 5 percent annually this year and could hold steady next year, he said.
Compal and Lienpal Ltd (聯寶), its Chinese joint venture with Lenovo Group (聯想), account for about half of the global commercial notebook supply, with a better outlook ahead, he added.
Compal’s first-quarter net profit rose 1 percent to NT$2.47 billion from NT$2.45 billion in the fourth quarter of last year. That also represented an annual growth of 82 percent growth from NT$1.36 billion, after adding in contributions from its handset manufacturing subsidiary, Compal Communications Inc (華寶).
Compal’s quarterly figures are “impressive,” Vincent Chen said, as its earnings surpassed the broker’s estimate of NT$1.93 billion and the market consensus of NT$1.76 billion.
Gross margin also improved to 4.3 percent last quarter from 3.97 percent in the previous quarter and 3.93 percent a year ago, thanks to the acquisition of a smart device subsidiary and a favorable foreign exchange rate.
Yuanta retained its “buy” rating on Compal with a target price of NT$24. The stock surged 3 percent to NT$22.35 yesterday, outperforming the TAIEX, which gained 0.42 percent.
“The bullish outlook will give some upside” for Compal’s stock price, Vincent Chen said, adding that Compal is likely to assemble Apple’s new iPad Mini this year.
Another focal point of yesterday’s investors’ conference was Compal’s new customer, HTC Corp (宏達電), which is farming out production to save costs.
Ray Chen declined to reveal details, but said the company would stick to its previous forecast of shipping 35 million smart devices, including mobile phones and tablets, this year.
Compal’s board also approved yesterday a proposal to distribute cash dividends of NT$1 per common share, even though it only earned NT$0.57 per share last year.
That translates into a dividend yield of 4.5 percent.
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