Samsung cut may hurt HTC sales in China: brokerage
October 16, 2012, 2:46 pm TWN
TAIPEI -- A deeper price cut on Samsung Electronics Co.'s flagship smart phone during China's "Golden Week" holiday might hurt sales of Taiwan's HTC Corp. in the coming months, J.P. Morgan Securities said in a recent report.
On Sept. 30, Chinese retailers cut prices on the Samsung i9300, which is sold outside of China as the Samsung Galaxy S III, for the third time, the U.S. brokerage said in a report dated Oct. 11.
The Samsung i9300 now sells at between 3,750 Chinese yuan (US$599) and 3,800 yuan, or three-quarters of its original retail price of 4,999 yuan when it went on sale on June 12, the report said.
"This could hamper HTC's momentum in the fourth quarter of 2012," Qin Zhang, a Hong Kong-based analyst at J.P. Morgan, wrote in the report.
Zhang said that Chinese electronics retailers generally cut prices on cellphones by 100 to 200 yuan during promotional periods, such as the Oct. 1-7 Golden Week holiday.
However, retailers have cut Samsung i9300 prices by a whopping 500 yuan, more than any other cellphone model, because its status as a high-end smart phone gave them more room to lower prices, he said.
While the price cuts will translate into a thinner profit margin for Samsung, it has helped the Galaxy S III model maintain its position as the best selling phone in some retail channels in China, Zhang said.
J.P. Morgan maintained its "underweight" stock rating and its target price of NT$160 for HTC. It estimated an annual drop of 65.2 percent in HTC's earnings per share this year and a decline of 12.4 percent next year.
HTC, the world's No. 5 smartphone maker, has intensified its onslaught on the China market, where smartphone sales are forecast to hit 300 million units in 2013.
U.S. brokerage Goldman Sachs forecast that for the whole of 2012, HTC will ship 32.3 million smartphones — 39 percent to the Asia-Pacific region excluding China, 25 percent to China, 19 percent to Europe and 17 percent to North America.
Ren Weiguang, president of HTC China, was quoted in the local media as saying on Sept. 25 that HTC has dropped its strategy of flooding the market with multiple models and is shifting its focus to just a few selected models in various price categories.