Compal over Wistron on Apple: brokerage
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.