Analysts expect Pegatron Corp’s (和碩) revenue to pick up in the second half of this year as it focuses on assembling Apple Inc’s 4.7-inch iPhones instead of entering the supply chain for larger iPhones.
“Despite seasonal weakness in the first half of this year, we expect Pegatron’s revenue to improve in the second half after the likely launch of the next-generation iPhone around the third quarter of this year,” Daiwa Capital Markets analyst Steven Tseng (曾緒良) said.
The analyst’s remarks came after Pegatron on Thursday last week reported a record-high net income of NT$28.87 billion (US$887.08 million) for last year, which represented a 52.5 percent increase from NT$14.65 billion the previous year.
Tseng said he expects Pegatron to assemble between 45 percent and 50 percent of the 4.7-inch iPhones this year, gaining a larger share of Apple’s supply chain after it assembled 40 percent of the 4.7-inch iPhones last year.
Hon Hai Precision Industry Co (鴻海精密), the other main assembler of Apple’s iPhones, reportedly accounted for 60 percent of the 4.7-inch iPhone 6 and iPhone 6S models, while having about 100 percent share in the assembly of the iPhone 6 Plus and iPhone 6S Plus series, analysts said.
Tseng said Pegatron is to focus on the 4.7-inch next-generation iPhones, allowing the company to enjoy scales of economy and likely a much shorter learning curve when assembling the upcoming new iPhones in the third quarter of this year.
Yuanta Securities Investment Consulting Co (元大投顧) shared a similar view, saying that it expects Pegatron to focus on 4.7-inch iPhones rather than the larger models in the second half of this year.
“This could help Pegatron to avoid price competition from Hon Hai. It will also help reduce expenditure, and achieve a better yield and gross margin for Pegatron, which is a sensible decision in our view,” Yuanta analyst Vicent Chen (陳豊丰) wrote in a client note.
Tseng said he expects Pegatron’s revenue to fall 33.49 percent to NT$274 billion this quarter from last quarter’s NT$411.98 billion and remain flattish from last year’s NT$274.75 billion due to the slow season and weaker iPhone sales.
For the whole of this year, Tseng forecast Pegatron revenue would grow by 6 percent to NT$1.28 trillion from last year’s NT$1.21 trillion.
Chen expects the company’s annual revenue to increase by 8.9 percent year-on-year to NT$1.32 trillion this year.
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