Micro-Star International Co (MSI, 微星科技), which makes gaming computers, graphics cards and motherboards, is likely to report a recovery in sales growth this quarter, after new product launches by Nvidia Corp and Advanced Micro Devices Inc (AMD), Yuanta Securities Investment Consulting Co (元大投顧) said on Thursday.
MSI sales are forecast to grow 19 percent quarterly and 9 percent annually to NT$31.2 billion (US$1.01 billion) in the July-to-September period after Nvidia launched its series of Super graphics cards and AMD introduced its RX 5700-series graphics processing units (GPUs), which raised gaming performance and boosted high-season demand, Yuanta said in a client note.
MSI’s gross margin is also predicted to bounce back to 15.5 percent, from 14.03 percent a quarter earlier, and earnings per share (EPS) are likely to rise to NT$2.43, compared with NT$1.48 three months earlier, Yuanta said.
“MSI has been a major beneficiary of the gaming boom, as the company’s gaming product line — covering notebook computers, desktop computers, motherboards, graphics cards, monitors, mice and keyboards — accounts for about 60 percent of its total sales,” Yuanta analyst Calvin Wei (魏建發) said in the note.
However, prior to this quarter, the company had been depleting its inventories of old GPUs due to weak demand for cryptocurrency mining machines, which was dragging on its earnings and sales, Wei said.
MSI’s cumulative revenue in the first eight months of the year totaled NT$76.73 billion, down 1.92 percent from NT$78.23 billion in the same period a year earlier, while EPS fell to NT$3.03 in the first half of the year, down from NT$4.56 a year earlier, company data showed.
As the company’s sales are highly related to new product launches by Nvidia, which usually overhauls its gaming product lines every two years, Yuanta said Nvidia’s major upgrade cycle beginning next year would bode well for MSI’s business performance.
“As Nvidia is likely to launch 7-nanometer products during next year’s major upgrade, and there will be few legacy GPUs to digest, we expect MSI’s sales and earnings to see a significant improvement,” Wei said.
Yuanta maintained a “buy” rating on MSI, but upgraded its target price for the stock from NT$103 to NT$115, compared with its closing price of NT$90.3 on Friday.
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