Asustek Computer Inc (華碩) could miss KGI Securities Investment Advisory Co’s (凱基投顧) sales forecast for this quarter because the PC brand’s sales in October and last month were weaker than expected, the equity consultancy said on Friday.
KGI lowered its sales forecast for this quarter by 5 percent to NT$98.6 billion (US$3.19 billion) and warned that Asustek could post net losses per share of NT$5.01 in the quarter due to a one-time charge of NT$6.2 billion that it announced last week.
“The new estimate is way below our previous estimate of earnings per share [EPS] of NT$2.43,” KGI analyst Angela Hsiang (向子慧) said in a research note.
On Thursday, Asustek said its board of directors had agreed to list the one-time loss this quarter — which includes loss of inventory and royalties, as well as production costs and organizational adjustment expenses — as the company aims to transform its smartphone business to focus on gaming solutions.
Asustek announced a move to a dual-chief executive officer model after it named two vice presidents to the position of co-CEO, while current CEO Jerry Shen (沈振來) would resign to lead a new artificial intelligence and Internet of Things venture next year.
Accordingly, KGI has markedly revised downward its EPS estimate for this year from NT$11.93 to NT$4.48 and lowered next year’s EPS estimate from NT$17.05 to NT$16.68 to reflect the expectation that sales might turn weak next year, Hsiang said.
Given that Asustek’s transformation could take time and demand might turn weak, Hsiang said KGI has cut its 12-month target price for Asustek from NT$188 to NT$183, valuing the stock at 11 times its estimated EPS for next year.
Asustek shares fell 2.82 percent to close at NT$207 in Taipei trading on Friday. The stock has fallen 25.94 percent so far this year, compared with the broader market’s 8.16 percent decline over the same period.
“We think the stock does not offer an attractive valuation for the time being,” Hsiang said, retaining an “underperform” rating.
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