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Server shares surge on Google investments

TAIPEI, Taiwan -- Propelled by Google's announcement of its intent to double its investments in Taiwan to US$600 million, shares of computing server module makers mounted spirited rallies during yesterday's trading.

Chaun-Choung Technology Co. (超眾), Zippy Technology Co. (新巨), and King Slide Works Co., Ltd. (川湖) were listed among companies likely to benefit from the U.S.-based company's investment, according to market observers.

Among the above companies, shares of King Slide Works, a maker of rail-mounting kits for server arrays, yesterday gained 4.05 percent, closing at NT$321. Prior to the closing bell, intraday gains for the company's shares peaked at 5.6 percent, reaching the NT$326 benchmark, a new record since the firm's listing. Shares of Zippy Technology Co. attained an intraday high of NT$33.9, and closed at NT$32.9, gaining 2.97 percent at the end of trading while recording a ten-year high.

Profit margins for both companies are also expected to continue rising next year, said institutional investors. King Slide earlier stated that they predict margins to climb to as high as 53 percent over 2014, while anticipating revenues to reach all-time highs and yield earnings of NT$14 to NT$15 per share, propelled by the commercialization of numerous newly developed high-end cloud computing and kitchenware products.

Prospects Tremendous for Google-concept Stocks

Institutional investors remarked that the two companies mentioned above have tremendous price-performance prospects, as their respective price-to-earnings ratios are estimated at around 11, much lower than the average of 15 to 20 among their peers in the industry.

Operating results for Zippy Technology Co. are expected to see continued growth next year, as demonstrated by the company's ability to maintain earnings in the conventional fourth-quarter year-end low season. According to market observers, demand for the company's power supply and micro-switch products are expected to grow, benefiting from increasing order volumes by clients from the cloud computing, automotive and medical sectors. The company's revenues this year are also anticipated to reach a seven-year high.

Shares of Chaun-Choung Technology Co. yesterday closed at NT$68.2, down NT$0.3, or 0.44 percent. Despite the lack of dramatic gains during yesterday's session, trading volume expanded markedly to 3.186 million shares.

The company has since established a lead as the world's largest supplier of heat dissipation solutions for data centers, commanding over 70 percent of the global market share. Its newly developed 0.8-mm-thick thermal module tailored for hot swappable servers is expected to begin shipping in March next year.

At the same time, its thermal tube solution for automobile headlights has been adopted by Japanese car makers, and is expected to begin contributing revenues in the latter half of next year, pushing earnings to new heights.

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