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Foreign brokerages optimistic on Catcher's outlook

TAIPEI, Taiwan -- Several foreign brokerages have expressed general optimism toward metal casing maker Catcher Technology Co.'s (可成科技) earnings outlook on strong demand from the major clients such as Apple Inc. and Sony Corp.

Catcher has said it has spent more than NT$7 billion (US$232 million) in capital expenditure so far this year. The market has expected the company's 2014 capex to exceed NT$9.6 billion, the level seen in 2013, to digest a swelling order backlog.

The metal casing supplier said its consolidated sales for the second quarter could grow more than 15 percent from the first quarter on rising smartphone demand through next year, beating an earlier market estimate of a 10-15 percent sequential increase.

Hong Kong-based CIMB Securities is one of the optimistic brokerages, voicing faith in Catcher's bottom line as the company gears up to expand its production capacity to meet demand.

CIMB said it has raised its forecasts for the company's earnings per share for 2014 and 2015 by 1 percent and 16 percent, respectively, to NT$19.2 and NT$23.7, compared with 2013's NT$18.38.

The brokerage has also upgraded a recommendation on shares of Catcher to “overweight” from “hold”, while raising a target price from NT$226 to NT$355, the highest so far issued by any of the foreign brokerages which track the stock.

Shares of Catcher closed up 0.98 percent at NT$257.00 on the Taiwan Stock Exchange on foreign institutional buying Friday.

JP Morgan Chase has boosted its recommendation on Catcher shares to “overweight” from “neutral” and hiked a target price on the stock to NT$330 from NT$190, while Nomura Securities has maintained a “buy” rating on the stock but raised a target price to NT$340 from NT$280.

However, Bank of America Merrill Lynch has left an “underperform” rating on Catcher shares unchanged as the stock's recent gains have largely reflected optimism about an increase in orders from Apple.

Even so, Merrill Lynch has still raised its target price on Catcher shares to NT$180 from NT$158.

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