Barclays Capital on Wednesday upgraded its target price for Catcher Technology Co (可成科技) shares, saying that the metal casings supplier would benefit from expectations that Apple Inc will launch a new version of its iPhone later this year.
Barclays raised its target price on Catcher shares to NT$300 from NT$235, while leaving its “overweight” recommendation on the stock unchanged.
Barclays said it expects Apple’s next-generation smartphone to be launched in the second half of the year and that shipments of the new model will be 35 to 40 percent higher than the previous one.
Catcher is likely to receive between 10 and 20 percent of the casing orders for the new iPhone, which should help lift its earnings in the second half of the year, Barclays said in a report.
Apple currently accounts for about 40 percent of Catcher’s total revenue.
Barclays said that the Taiwanese firm could also benefit from solid demand from its Chinese customers as China remains a fast growing smartphone market.
The report said that due to tight supply, Catcher is likely to increase its production capacity by between 20 and 40 percent in the second half of the year through the addition of 2,000 to 4,000 computer numerical control machines.
Barclays said Catcher is expected to post NT$3.8 in earnings per share for the first quarter, compared with NT$4.62 in earnings per share the previous quarter due to slow-season effects.
However, it projected Catcher’s earnings per share for the whole year to reach NT$20, up from NT$18.38 last year, adding that the figure could continue to rise to NT$26.13 next year.
The anticipated launch of larger iPhone models later this year should benefit Hon Hai Precision Industry Co (鴻海精密) because many smaller iPhones in circulation will likely be replaced, brokerage CLSA Ltd said.
Sales of the new iPhone 6 should be booming once it is launched because 225 million older iPhones will be up for replacement over the iPhone 6’s life cycle from September this year to August next year, CLSA head of technology research Nicolas Baratte said.
Of those 225 million older iPhones, 131 million are 3.5-inch models such as the iPhone 4S, the brokerage said.
“We concur that the launch of larger iPhones [4.7” and 5.5”] should trigger a larger replacement cycle as we believe that many smartphone users favor a display size of 4.5” or larger,” Baratte wrote in a note to clients on April 13.
The high volume of iPhone 6 shipments should increase Hon Hai’s operating margin to 3.1 percent this year from 2.8 percent last year, and company is also expected to more tightly control its working capital and improve its cash flow, he said.
On the back of its improved finances and the upcoming iPhone 6’s product cycle, Baratte upgraded his rating on Hon Hai shares from “underperform” to “outperform,” setting a price target of NT$96.50.
Hon Hai, the main assembler of Apple devices and the world’s largest contract manufacturer of electronic goods, posted consolidated sales of NT$883 billion (US$29.27 billion) in the first quarter of the year, down 33.5 percent from the previous quarter due to the slow season, but up 9.15 percent year-on-year.
STEEP DECLINE: Yesterday’s drop was the third-steepest in its history, the steepest being Monday’s drop in the wake of the tariff announcement on Wednesday last week Taiwanese stocks continued their heavy sell-off yesterday, as concerns over US tariffs and unwinding of leveraged bets weighed on the market. The benchmark TAIEX plunged 1,068.19 points, or 5.79 percent, to 17,391.76, notching the biggest drop among Asian peers as it hit a 15-month low. The decline came even after the government on late Tuesday authorized the NT$500 billion (US$15.2 billion) National Stabilization Fund (國安基金) to step in to buoy the market amid investors’ worries over tariffs imposed by US President Donald Trump. Yesterday’s decline was the third-steepest in its history, trailing only the declines of 2,065.87 points on Monday and
TAKING STOCK: A Taiwanese cookware firm in Vietnam urged customers to assess inventory or place orders early so shipments can reach the US while tariffs are paused Taiwanese businesses in Vietnam are exploring alternatives after the White House imposed a 46 percent import duty on Vietnamese goods, following US President Donald Trump’s announcement of “reciprocal” tariffs on the US’ trading partners. Lo Shih-liang (羅世良), chairman of Brico Industry Co (裕茂工業), a Taiwanese company that manufactures cast iron cookware and stove components in Vietnam, said that more than 40 percent of his business was tied to the US market, describing the constant US policy shifts as an emotional roller coaster. “I work during the day and stay up all night watching the news. I’ve been following US news until 3am
Six years ago, LVMH’s billionaire CEO Bernard Arnault and US President Donald Trump cut the blue ribbon on a factory in rural Texas that would make designer handbags for Louis Vuitton, one of the world’s best-known luxury brands. However, since the high-profile opening, the factory has faced a host of problems limiting production, 11 former Louis Vuitton employees said. The site has consistently ranked among the worst-performing for Louis Vuitton globally, “significantly” underperforming other facilities, said three former Louis Vuitton workers and a senior industry source, who cited internal rankings shared with staff. The plant’s problems — which have not
TARIFF CONCERNS: The chipmaker cited global uncertainty from US tariffs and a weakening economic outlook, but said its Singapore expansion remains on track Vanguard International Semiconductor Corp (世界先進), a foundry service provider specializing in producing power management and display driver chips, yesterday withdrew its full-year revenue projection of moderate growth for this year, as escalating US tariff tensions raised uncertainty and concern about a potential economic recession. The Hsinchu-based chipmaker in February said revenues this year would grow mildly from last year based on improving supply chain inventory levels and market demand. At the time, it also anticipated gradual quarter revenue growth. However, the US’ sweeping tariff policy has upended the industry’s supply chains and weakened economic prospects for the world economy, it said. “Now
RSS