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May 30, 2017

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Shares of Inotera jump after shipment forecast upgrade

TAIPEI--Shares of Inotera Memories Inc. (華亞科技) soared Thursday morning after the DRAM maker upgraded its shipment forecast for the second quarter amid lingering optimism toward global demand, dealers said.

Strong interest also reflected a move by Barclays Capital to raise its target price on Inotera shares, which prompted investors to chase prices soon after the local bourse opened, the dealers said.

As of 11:19 a.m., shares of Inotera had gained 5.82 percent to NT$41.85 (US$1.39) with 91.12 million shares changing hands, extending from a 1.41 percent increase seen a session earlier. The weighted index on the Taiwan Stock Exchange was down 0.11 percent at 9,111.50 points.

Inotera is a joint venture of Taiwan-based Nanya Technology Corp. and Micron Technology Inc. of the U.S. Inotera and Nanya are two of the DRAM manufacturing arms of the Formosa Plastics Group conglomerate.

"The shipment forecast upgrade for the April-June period served as the major catalyst to a strong showing of the stock today," MasterLink Securities analyst Tom Tang said.

"The revised estimate indicates that Inotera will continue to benefit from solid demand for mobile devices as the company has assigned large resources to specialty DRAM production to cater to mobile device manufacturers," Tang said.

Many DRAM suppliers are gearing up to adjust their product portfolios by adding specialty DRAMs to offset the impact of the weakness of the global PC market.

5% Shipment Growth in Q2

In an investor conference held a day earlier, Inotera announced that it has raised the sequential shipment growth for the second quarter to 5 percent from the previous estimate of 1-2 percent.

With supply remaining tight, Inotera has anticipated that DRAM prices will continue to rise so that its gross margin for the second quarter could top 54 percent seen in the first quarter. The 54 percent was the highest level of the gross margin in Inotera history.

Inotera's net profit for the quarter rose 2 percent from the fourth quarter to NT$11.25 billion, the highest in the company's history, with earnings per share (EPS) of NT$1.84.

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