Com­pal over Wistron on Ap­ple: bro­ker­age

The China Post - - TAIWAN BUSINESS -

Tai­wan- based Com­pal Elec­tron­ics Inc. ( ) is more likely than ri­val Wistron Corp. ( ) to gen­er­ate earn­ings growth through par­tic­i­pa­tion in Ap­ple Inc.’s sup­ply chain, ac­cord­ing to a re­search note is­sued by a for­eign bro­ker­age on Mon­day.

Com­pal and Wistron be­came as­sem­blers for Ap­ple at the same time in 2014, with Com­pal man­u­fac­tur­ing iPads and Wistron pro­duc­ing iPhones.

“Cur­rently, we be­lieve Com­pal has a bet­ter chance of se­cur­ing or­ders and scal­ing iPad or­ders to profit than Wistron with iPhone,” the Euro­pean bro­ker­age said in a note to clients on Mon­day.

“We be­lieve Com­pal is tak­ing over iPad mini from Pe­ga­tron, and the prod­uct should be eas­ier to ramp to a profit, in our view,” it said.

“Wistron is tak­ing over iPhone 5C from Pe­ga­tron, but (the) prod­uct is more dif­fi­cult to as­sem­ble than iPad and more dif­fi­cult to scale up with prof­itable yields,” said the bro­ker­age, whose name can­not be dis­closed be­cause it was of­fer­ing spe­cific fore­casts that could in­flu­ence the mar­ket.

The Europe-based bro­ker­age forecast that Com­pal’s sales from the iPad will grow 161 per­cent in 2015 and 74 per­cent in 2016, while Wistron’s sales from the iPhone will in­crease 119 per­cent this year and 80 per­cent next year.

The Euro­pean bro­ker­age main­tained its “out­per­form” rat­ing on Com­pal and cut its price tar­get for the stock from NT$29 (US$0.9) to NT$27. The bro­ker­age also kept a “neu­tral” rat­ing on Wistron and low­ered its price tar­get from NT$23.28 to NT$14.

The bro­ker­age’s anal­y­sis co­in­cided with the change in the stakes in Com­pal and Wistron held by qual­i­fied for­eign in­sti­tu­tional in­vestors since the two com­pa­nies were added to the Ap­ple sup­ply chain last year.

The for­eign in­vestors held 49 per­cent stakes in both Com­pal and Wistron at the end of 2014, but they now hold a 54 per­cent stake in Com­pal and only a 29 per­cent stake in Wistron.

Com­pal shares re­mained un­changed Mon­day at NT$18.50, and Wistron shares ended down 2.8 per­cent at NT$13.90.

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