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Pegatron shares boosted by Q3 outlook

Pegatron shares boosted by Q3 outlook

Taipei, Aug. 13 (CNA) Shares of Pegatron Corp. got a boost Tuesday morning after the Taiwanese contract notebook computer maker gave an upbeat projection for its third quarter sales a day earlier, dealers said. Many investors were hoping that Pegatron will benefit from the launch of Apple Inc.'s new products later in the year after having made a concerted effort to diversify its product mix by adding mobile devices, they said. As of 11:27 a.m., shares of Pegatron had added 5.86 percent to NT$47.85 (US$1.60), with 14.58 million shares changing hands. The weighted index on the Taiwan Stock Exchange was up 0.72 percent at 7,960.03. "Pegatron shares were in consolidation mode for some time. Investors simply seized the company's optimistic assessment for the third quarter as a reason to pick up a bargain," Grand Fortune Securities analyst Chen Wei-tai said. At an investor conference held Monday, Pegatron said it expected consolidated sales from its non-computing segment, which includes communications products, to rise 40-50 percent in the third quarter from a quarter earlier. But it warned that shipments in the notebook computer segment could fall 5-10 percent quarter-on-quarter. "Pegatron is an Apple concept stock, and the upbeat third quarter estimate prompted many investors to think the Taiwanese supplier has secured orders from the U.S. buyer," Chen said. Apple is widely expected to unveil new versions of the iPad and iPhone in September, a move that Chen said could boost the sales momentum of its Asian suppliers, such as Pegatron, which is thought to be assembling iPad mini for the U.S. company. "Pegatron is one of the local notebook computer makers that have diversified their product portfolios in an attempt to offset the impact of falling global demand for notebook computers," Chen said. In July, Pegatron posted NT$72.95 billion in consolidated sales, up 9.63 percent from June, an increase that Chen said may point to an increase in orders from Apple. "Based on Pegatron's third quarter sales guidance, Apple's orders will continue to boost its revenue in August and September," the analyst contended. Chen cautioned, however, that retail investors should be wary when buying Pegatron shares because institutional investors are still on the sell side, referring to institutional investors' net sale of 1.72 million Pegatron shares on Monday. "I prefer to say the current gains posted by Pegatron shares were technical in nature and simply reflected the third quarter sales projection," Chen said. "To many institutional investors, Pegatron's falling profit margin remains a concern." In the second quarter, Pegatron posted NT$1.39 billion in net profit, down 39.6 percent from the first quarter, while its gross margin fell to 4.5 percent from 5.5 percent. Its second quarter earnings per share stood at NT$0.61, down from NT$1.01 recorded in the first quarter. Chen said the fall in Pegatron's gross margin reflected the contract manufacturer's strategy to cut prices to secure orders. (By Han Ting-ting and Frances Huang)


Updated : 2021-05-16 15:15 GMT+08:00