A labor rights violation complaint in China is likely to have little impact on Catcher Technology Co (可成), Daiwa Capital Markets Co said last week.
Instead, the casing orders for the new iPhone that began shipping last month should be a key revenue driver for the company in the coming months, the brokerage said.
“So far we do not expect this incident to have any immediate impact on Catcher’s operation,” Daiwa analyst Steven Tseng (曾緒良) said in a client note on Friday last week, one day after Green America and China Labor Watch issued a joint report accusing the Greater Tainan-based company of several violations in a plant in Suqian, Jiangsu Province.
The two rights groups said Catcher had violated 22 Chinese labor laws through discriminatory hiring policies, incomplete training sessions, poor safety infrastructure and other inadequacies, as well as violating Catcher’s own policies and Apple’s Supplier Code of Conduct.
Apple Inc announced on Friday that it had sent a team to investigate the reported violations at the factory making aluminum enclosures for iPads and MacBooks.
Apple said its inspectors constantly audit its suppliers monthly, including Catcher’s Suqian facility. It said some of Catcher’s manufacturing processes “exceed international safety standards,” but it also noted some areas where improvement is needed, such as fire safety and excessive overtime.
Deutsche Bank also said that it did not expect the labor complaint to hurt Catcher, saying it is just “another regular report” from China Labor Watch focusing on Apple’s supply-chain firms.
“From the angle of human rights, we agree with China Labor Watch that manufacturing factories in China have room to improve, including Catcher,” Deutsche Bank analyst Birdy Lu (呂家霖) said in a separate note on Friday. “From the business fundamental view, this is a non-event.”
Shares of Catcher closed 1.5 percent lower at NT$303.5 in Taipei trading on Friday, compared with the broader market’s 0.22 percent decline. The local stock market was closed yesterday for the Mid-Autumn Festival.
Catcher on Friday reported NT$5.01 billion (US$166.99 million) in consolidated sales last month.
Tseng said the company’s combined sales for the past two months have reached 65 percent of Daiwa’s third-quarter sales forecast of NT$14.9 billion.
He said he expects the firm to remain on track to achieve its sales target for this quarter and next quarter, while retaining his “outperform” rating on Catcher’s shares with a price target of NT$315.
HSBC Securities Taiwan Corp Ltd said Catcher’s latest sales data confirmed its positive view and should further relieve market concerns over the company’s near-term outlook.
“On top of stable demand for commercial notebook and MacBook casings and a new model launch from Sony, iPhone 6 is another key driver,” HSBC Securities said in a note on Saturday. “We believe the ramp-up for iPhone 6 casings remained on track with yields at satisfactory levels.”
With iPhone 6 a key sales driver in the second half of the year, HSBC forecast Catcher’s third-quarter sales would grow by 16 percent quarter-on-quarter, followed by another 30 percent growth in the fourth quarter.
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