Taiwan Ratings Corp (中華信評) on Thursday affirmed its long-term “twA” and short-term “twA-1”’ credit ratings for Acer Inc (宏碁), with a stable credit outlook for the PC vendor.
The credit rating of a corporation is a financial indicator to potential investors of debt securities such as bonds.
Under Taiwan Ratings’ scale, “twA” is the sixth-highest level in the long-term issuer credit ratings regarding a company’s capacity to meet its financial commitments over a period of one year and above, while the “twA-1” short-term rating represents the fifth-highest for obligations less than 365 days.
Photo: Vanessa Cho, Taipei Times
“The stable outlook embeds our view that Acer could continue to register faster growth in Chromebook and gaming PC sales to sustain its revenue and margins, enabling the company to generate satisfactory positive free operating cash flow and sustain a net cash position over the next one to two years,” Taiwan Ratings, the local arm of Standard & Poor’s Global Ratings, said in a statement.
Work-from-home demand has remained strong a year after the outbreak of COVID-19, especially for educational products such as Chromebooks. Acer and its local peer Asustek Computer Inc (華碩) have said that growth momentum for Chromebooks has extended into this year from last year.
Taiwan Ratings said Chromebook demand last year nearly doubled from 2019, as the pandemic stimulated demand for cheaper devices for remote learning, which does not require high performance.
Demand is likely to remain strong this year, amid the ongoing pandemic and the growing popularity of PC gaming, it said, adding that gaming PCs have seen a much higher growth rate than the overall PC market during the pandemic.
“Acer’s much smaller market share and weaker brand name than that of its larger peers in the mature global PC market and relatively low profitability constrain its competitive position,” Taiwan Ratings said.
“However, Acer could take advantage of fast-growing gaming PC and Chromebook demand to sustain its market share with moderately strengthening profitability over the next two years,” it added.
Acer secured a 6.9 percent share of the global PC market last year, up from 6.4 percent in 2019, International Data Corp has said.
Its revenue reached NT$277.09 billion (US$9.8 billion) last year, up 18.27 percent from a year earlier and the highest level in six years, company data showed.
The company’s focus on growing its gaming PC and Chromebook segments is expected to help sustain its revenue growth this year, and therefore sustain its market share in the global PC market, Taiwan Ratings said.
Nonetheless, the company’s shipments and revenue next year might be negatively affected by a waning demand for remote working and remote learning, it said.
Acer remains positive for the global PC market this year, as PC demand is still far greater than supply, chairman Jason Chen (陳俊聖) said on Wednesday, local Chinese-language media reported.
The PC industry would continue to see shortages of key components, such as wafers, ICs and flat panels, as the whole supply chain has been strained by strong market demand, Chen said.
“There is no relief of this supply constraint in the foreseeable future,” the Chinese-language Commercial Times quoted Chen as saying on Thursday. “The busiest thing now is to grab production capacity, communicate with the supply chain, and strive to chase goods.”
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