'Apple concept stocks' a good buy later: Nomura
January 16, 2014, 12:10 am TWN
TAIPEI -- Investors should accumulate certain stocks in the Apple Inc. supply chain late in the first quarter after companies have absorbed the impact of the slower winter season, Japanese brokerage Nomura Securities recommended in a research note.
Nomura said its top picks for 2014 within Apple's supply chain in Taiwan remain assembler Hon Hai Precision Industry Co. (鴻海精密), camera lens maker Largan Precision Co. (大立光電) and metal casing supplier Catcher Technology Co. (可成科技), all of which were given a "buy" rating.
Anne Lee, a Taipei-based analyst at Nomura, said she believes that these companies are well-positioned to benefit from the launch of the new, larger-sized iPhone 6, which is expected to be unveiled in the second half of the year.
"After better-than-expected December sales, Apple plays' share prices started to encounter profit-taking pressure recently ahead of the upcoming slow season," Lee wrote in the note dated Jan. 13.
"We believe the recent share price correction will offer a good opportunity to accumulate in late first quarter of 2014 for investors to position on iPhone 6 strength in the second half of 2014," she said.
The analyst believed that the April-June period will likely continue to be a weak quarter for the Apple supply chain, ahead of the introduction of new or refreshed products in the second half.
Most of the specifications and supplier lists of the new iPhone 6 will be determined, however, no later than March or early in the second quarter of 2014, and the suppliers will need to announce their necessary capital expenditure at around that time, she said.
"Thus, we believe share prices of the supply chain will start to perform in the second quarter of 2014," said Lee, indicating that Apple concept stocks should be bought no later than the start of the second quarter before the expected upswing begins.
Nomura set price targets for Hon Hai at NT$104 (US$3.46), for Largan at NT$1,413 and for Catcher at NT$216.