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• | AUO (2409 TT, HOLD): AUG 27, 2010 |  |
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• | Yungtay (1507 TT, BUY): AUG 27, 2010 | |
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• | Hon Hai (2317 TT, BUY): Initial: AUG 26, 2010 | |
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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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| More Titles | Page 1 23456789 | |
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| Title: | Chicony (2385 TT, BUY): Initial: JUN 7, 2010 |
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| Download File: | 2385 TT Chicony initial 100607--sinopac.pdf  |
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| Summary: | Chicony (2385 TT, NT$95.2, Computer Hardware): BUY
Leader in various PC components with catalysts
Company profile: Chicony is a leading PC keyboard, NB camera module, web camera, and CMOS DV provider.
1) 2Q10 sales to grow 5% QoQ: We estimate that Chicony¡¦s monthly sales will range between NT$4.7bn and NT$5.0bn in 2Q10 and forecast a 5% QoQ sales growth for 2Q10, in-line with our growth assumption for the industry overall and the historical trend. We forecast OM at 6.8% in 2Q10 from 6.6% in 1Q10, the low season. However, we forecast 2Q10 EPS will decrease to NT$1.44 from 1Q10¡¦s NT$1.54 owing to a high non-op base in 1Q10 (reverse of previous investment loss of NT$123mn).
2) Camera ¡V strongest momentum with various drivers: 1) We assume penetration rate of camera module in NB will increase to 75-80% in 2010 from 2009¡¦s 67%. We thus forecast 25% growth in Chicony¡¦s NB camera module shipment in 2010 vs. 20% growth for the NB industry overall. 2) Our checks show that Chicony will add another client in 2H10. Together with the trend of increasing outsourcing rate from Japanese clients, we forecast Chicony¡¦s DV shipment will grow 30% in 2010.
3) Keyboard and power supply ¡V stable market share and ASP: These industries are both dominated by the top three players, which have a combined 90% market share (keyboard: Chicony, Sunrex, Darfon; power supply: Delta, Lite-On, Chicony). It is difficult for newcomers to compete owing to vastly inferior economies of scale. We forecast these two products will grow along with the industry at 20%.
4) Project Natal, a driver to power supply and a potential driver to camera: Chicony is already the main power supply provider to Microsoft¡¦s Xbox 360. We assume the launch of Project Natal will stimulate Xbox 360 shipment thus indirectly benefit Chicony. Furthermore, Chicony can potentially win camera module orders for Project Natal. On the assumption that Chicony will land 50% of total orders, the segment will contribute 5% of Chicony¡¦s total sales in 2010; this offers an attractive wild card since we haven¡¦t included it in our model yet.
5) Initiate at BUY with TP at NT$95.2 (13X 2010F EPS): Chicony¡¦s share price has normally traded between 10-13X. We think Chicony¡¦s growth momentum will outperform peers in 2H10 on strong camera growth, stable ASP in keyboard/power supply, and Project Natal play. We therefore expect the share price will trade towards 13X in the 2H10 hot season.
SinoPac Research, (886 2) 2316-5194
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| Date: | 2010/06/07 |
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| Author: | Bamboo Lin |
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Market Commentary