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• | Harvatek (6168 TT, BUY): Initial: JUL 12, 2010 |  |
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• | Richtek (6286 TT, BUY): Long Report: JUL 8, 2010 | |
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• | I-Chiun (2486 TT, BUY): Initial: JUN 29, 2010 | |
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• | Longwell (6290 TT, BUY): Long Report: JUN 21, 2010 | |
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• | Chicony (2385 TT, BUY): Initial: JUN 7, 2010 | |
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• | Winbond (2344 TT, BUY): Initial: May 27, 2010 | |
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• | Yeun Chyang (2034 TT, BUY): Initiate: MAY 12, 2010 | |
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• | Chipbond (6147 TT, BUY): Initiate Coverage: MAY 3, 2010 | |
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• | Tainan Ent. (1473 TT, BUY): Long Report: APR 23, 2010 | |
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• | Merry (2439 TT, BUY): Long Report: APR 14, 2010 | |
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| More Titles | Page 1 2345678 | |
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| Title: | Harvatek (6168 TT, BUY): Initial: JUL 12, 2010 |
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| Download File: | 6168 TT Harvatek equity 100712--sinopac.pdf  |
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| Summary: | Harvatek (6168 TT, NT$41.65, LED Packaging): BUY
Surging growth momentum from new B/L business
Company profile: Established in 1995, Harvatek Corporation is a leading manufacturer of SMD LED (Surface-mount device LED) in Taiwan with sales from Nitride LED (60~65% in 1Q10), AIGalnP LED (30~35% in 1Q10), and high-power LED (2~3% in 1Q10). Primary applications for Harvatek・s LED include side-view and keypad for handsets (65%) and consumer electronics (20%). Harvatek is aggressively tapping into LED backlight business for large-sized panels in 2010 by extending its customer mix into Korean panel makers and Chinese TV vendors.
1) Surging 2H10 sales momentum supported by shipment of large-sized B/L: With current order visibility extends 1.5-months, we look for healthy shipment growth in 3Q10 amid hot seasonality for consumer electronics products, new LED TV/monitor B/L customers・ approvals, and increasing order booking. We expect Harvatek・s 3Q10 sales to reach NT$1.17bn, up 21.3% QoQ and up 44.7% YoY, and GM to inch up to 26.4%. Including dividend income of NT$21.6mn from Edison (3591 TT), or NT$0.116 to EPS, we forecast 3Q10 net profit at NT$179mn (EPS: NT$0.96), up 41.5% QoQ and up 74% YoY.
2) Edison (3591 TT) IPO could bring NT$6.00 EPS gain to Harvatek: Harvatek is the largest institutional shareholder of Edison (3591 TT) with a current share holding of 7,196,000 shares (10.47% stake). Edison plans to Gretai IPO in 2H10. Based on Edison・s JUN 21 share price of NT$168 (Emerging Stock Market) and Harvatek・s average holding cost of NT$12/per share, we estimate NT$1.12bn capital gain, or EPS contribution of NT$6 (based on 186mn shares), if Harvatek sells its entire holding.
3) BUY with a TP of NT$50.0 (15X 2011F EPS): We forecast 2010 sales at NT$4.34bn, up 60.5% YoY; GM at 26%; and net profit at NT$548mn, up 271% YoY, or EPS of NT$2.94. We forecast 2011 sales at NT$6.16bn, up 42.1% YoY; GM at 22%; and net profit at NT$606mn, up 10.7% YoY, or EPS of NT$3.25. Based on conservative accounting principle, our profit forecasts for Harvatek do not include the potential capital gain from selling shares of Edison. Our NT$50.0 TP reflects the positive earning outlook from surging sales momentum and potential gain from Edison・s IPO in 2H10.
Analyst: Raymond Kuo
raymond.kuo@sinopac.com
FINI Contact: Yafen Hsu
(886 2) 8161-8064
yafen.hsu@sinopac.com
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| Date: | 2010/07/12 |
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| Author: | TaiwanResearch.com |
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Market Commentary