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September 22, 2017

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Inventec shares up on solar energy hopes, handheld device shipments

TAIPEI -- Shares of Inventec Corp. (英業達), a leading contract laptop maker, moved higher Friday morning after the company gave positive prospects about its investments in solar energy, part of its efforts to diversify its product mix, dealers said.

The buying also reflected optimism toward Inventec's bottom line after the company said it expects its handheld device manufacturing arm will see shipments grow 50 percent in 2014, they said.

As of 11:17 a.m., shares of Inventec had added 3.79 percent to NT$28.75 (US$0.96) with 9.60 million shares changing hands, outperforming the broader market. The weighted index of the Taiwan Stock Exchange was down 0.11 percent at 9,194.20 points.

"Many investors have high hopes that Inventec's investments in the solar energy sector will generate more profit this year, indicating its strategy in diversifying its product portfolio have paid off," Ta Ching Securities analyst Andy Hsu said.

In an annual general meeting held Thursday, Inventec Chairman Lee Tsu-chin (李詩欽) told shareholders that the company's two invested solar energy firms — Inventec Energy Corp. and E-Ton (益通) Solar Tech Co. — narrowed down their losses and were on the verge of breaking even in the first quarter.

With global demand expected to increase and product prices on the rise, Lee said returns on Inventec's solar energy business will get a boost in the second quarter.

"Prospects for the solar energy business are also growing after international crude oil prices spiked overnight amid rising tensions in the Middle East, which could boost solar energy product prices accordingly," Hsu said.

"Many investors are encouraged by the rising crude oil to buy solar energy-related stocks, like Inventec," Hsu said.

Crude oil prices rose more than 2 percent after clashes erupted in Iraq. Crude futures on the New York Mercantile Exchange rose above US$106 per barrel, a new high since September 2013.

In addition, Lee said, Inventec's handheld device manufacturing unit Inventec Appliances Corp. will witness its shipments for 2014 rise to 45 million units from 2013's 30 million units.

"To my knowledge, Inventec Appliances have been benefiting from large orders from Chinese smartphone vendor Xiaomi. With demand for Xiaomi's gadgets remaining solid, the parent company is riding the waves of such an uptrend to strengthen its bottom line," Hsu said.

"The efforts to enter the solar energy and handheld device businesses are expected to continue to help Inventec offset the impact from the weakness of the global PC industry," Hsu said.

According to Inventec, the weighting of notebook computers in its total sales will continue to fall this year to 59.8 percent from 60.7 percent seen a year earlier. Servers, handheld devices and solar energy products are expected to account for 26.6 percent, 10.2 percent and 3.4 percent of its 2014 sales, respectively.

"Foreign institutional investors have started to accumulate Inventec shares in recent sessions. I think the stock will continue to move higher until it comes closer to the nearest technical resistance at around NT$30.8 NT$31," Hsu said.

The market expects that Inventec will post NT$2.18 in earnings per share in 2014, compared with the NT$1.97 recorded in 2013.

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