Shares of local passive component suppliers ended the week on a high note after being hammered by heavy selling in an earlier session due to reports of a capacity adjustment by a major supplier in Japan.
Despite the volatility, many firms in the sector, led by Yageo Corp (國巨) and Walsin Technology Corp (華新科), have seen their shares surge this year, while most other electronics shares remain in the red.
The rally on Friday last week showed that investors believe that the sector was oversold during the week on news that Japan’s Murata Manufacturing Co might adjust its capacity strategy to deal with a shortage of multilayer ceramic capacitors (MLCC), Capital Investment Management Corp (群益投顧) said in a note to clients.
“The share prices have factored in this news excessively,” the investment consultancy said.
Local Chinese-language media on Thursday reported that Murata, the world’s leading MLCC maker, might reallocate some high-end, MLCC capacities, including for automotive applications, in a bid to supply up to 1 billion units of MLCC per month to Taiwanese original design manufacturers (ODMs), including Pegatron Corp (和碩) and Inventec Corp (英業達).
However, Murata released a statement on its Web site later the same day, denying the media reports that it has signed contracts with some Taiwanese ODMs.
“Certain media outlets have falsely reported on our supply of multilayer ceramics capacitors. There is no truth to such reports,” Murata said in the statement. “Murata wishes to make it clear by this statement that it has not made any such announcement.”
Passive component stocks rebounded as investor sentiment improved following the statement, with Yageo, the nation’s top passive components supplier, rising 4.98 percent to NT$886 on Friday, recovering from a plunge of 8.86 percent on Thursday.
The stock is up 6.75 percent for the week and has risen 150.99 percent since the beginning of this year.
Walsin and Chilisin Electronics Corp (奇力新) were both unchanged at NT$281.5 and NT$110.5 respectively on Friday, after declining 9.92 percent and 3.49 percent on Thursday.
Nichidenbo Corp (日電貿) shares on Friday rose 3.29 percent to NT$81.7 after a 7.92 percent decline in the previous session.
Holy Stone Enterprise Co (禾伸堂) was up 1.16 to NT$218.5 on Friday, recovering from a 10 percent dive on Thursday.
The MLCC shortage is not likely to ease in the short term, Capital Investment said.
“The MLCC market’s supply and demand conditions might remain tight in 2019, catalyzing the performances of Taiwanese vendors,” Capital Investment analyst Ray Tsai (蔡睿) said.
“Moreover, during the upcoming peak season for the electronics industry, the revenue and earnings momentum of passive components makers are expected to strengthen further. Their earnings might continue to outperform market expectations,” he said.
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