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May 27, 2017

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Foreign brokerages raise target prices on Inotera shares to NT$36, NT$41

TAIPEI, Taiwan -- Preferring Inotera Memories Inc. (華亞科技) to Nanya Technology Corp. (南亞科技), two foreign brokerages on Wednesday respectively raised target prices for Inotera to NT$36 and NT$41.

The move came after the two dynamic random access memory (DRAM) chip suppliers reported improved first-quarter results at quarterly meetings with institutional investors.

"Foreign institutional investors prefer Inotera to Nanya as the former has a more solid bottom line because of its edge in production technology," MasterLink Securities analyst Tom Tang told the Central News Agency (CNA).

"Foreign investors are willing to pay a premium for Inotera shares," Tang said.

Bank of America Merrill Lynch has raised its target price for Inotera shares to NT$36 from NT$30, while Barclays Capital has hiked its target price on the stock to NT$41 from NT$35.

As of yesterday, shares of Nanya had added nearly 7 percent, the maximum daily increase, to NT$4.78 (US$0.16), with 19.37 million shares changing hands, while shares of Inotera also rose close to 7 percent to NT$31.55 on volume of 152.77 million shares.

The weighted index on the Taiwan Stock Exchange ended down 17.79 points, or 0.19 percent, at 8,956.92.

"The two DRAM makers reported improved first-quarter results, which prompted investors to pick up the two stocks soon after the local market opened," Tang said.

According to CNA, the global DRAM industry has benefited from a further increase in product prices. "In the first quarter, the average DRAM price rose about 6 percent from the fourth quarter and that's why the two companies reported such good results," Tang said.

"The rising product prices reflected moves by many major players to rein in capacity growth. In addition, demand for mobile devices, such as smartphones and tablet computers, rose, paving the way for further price hikes," Tang added.

Amid a generally positive market outlook, Nanya said average DRAM prices are likely to rise 5-10 percent in the second quarter, and tight supplies can be expected to continue into the third quarter.

Holding a similar outlook, Inotera said the company's bottom line in the second quarter is expected to remain as strong as it was in the first quarter.

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