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May 29, 2017

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Credit Suisse raises target price on shares of Asustek

TAIPEI--Credit Suisse Group AG, a Switzerland-based bank, has raised a target price on shares of Taiwan's personal computer vendor Asustek Computer Inc. amid optimism toward its bottom line.

In a recent research note, Credit Suisse said the upgrade also reflected the PC vendor's rising market share in the global market.

The bank has lifted the target price to NT$380 (US$12.93) from NT$335, while maintaining an"overweight" rating on the stock.

Shares of Asustek closed up 1.55 percent at NT$295.00 on the Taiwan Stock Exchange Friday, when the benchmark weighted index ended down 0.19 percent, at 7,437.04 points.

According to market information advisory firm Gartner, Asustek shipped 6.38 million PCs in the third quarter of this year, up 11.8 percent from a year earlier, while global PC shipments fell 8.3 percent year-on-year to 87.50 million.

In the past three months, Austek grasped a 7.3-percent share of the global PC market, up from 6 percent recorded over the same period of last year.

On the back of high hopes about sales growth of medium-sized PCs, referring to 7-13 inch mobile devices, Credit Suisse has raised its forecast of Austek's earnings per share for 2013 to NT$31.63 from an early estimate of NT$30.41.

The bank said the annual compound growth rate of medium-sized mobile device sales between 2012 and 2015 is expected to hit 25 percent. It added tablet computers and ultrabook computers will serve as the driver to the growth in the PC industry.

It said Asustek's strength in research and development, ability in cost control and efficient operations are expected to help the company grasp a higher market share.

However, due to the weakness of the economic fundamentals, PC shipments for 2012 will be affected, Credit Suisse said. The bank has cut its forecast of Asustek's EPS for this year to NT$28.09 from the previous estimate of NT$28.80.

In the first half of this year, Asustek posted NT$5.14 in EPS, down from NT$6.08 recorded a year earlier.

On Oct. 16, the PC vendor is scheduled to unveil Padfone 2, the newest version of its three-in-one device, which comprises of a smartphone, tablet and notebook computer.

Asustek is planning to launch new models equipped with Microsoft's Windows 8 operating system on Oct. 24, and will release its earnings report for the third quarter by the end of this month.

Credit Suisse said these events could move Asustek's share prices in the near future.

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