Asia: Taiwan
Taiwan Market Daily
09 09 09 09 10 10 10 10 10 10 10 10 10 09 09 09 09 10 10 10 10 10 10 10 10 10 10
ASX 4.18 -0.48
• Momentum from WM7 to boost 4Q10 sales to grow by 25% QoQ: Besides its A
Performance %
of iOS and Android, Microsoft has put tremendous effort in WM 7 including
1-mth 3-mth 12-mth
Company 15.2 59.8 122.8
devising links to Zune and XBOX Live to create a smartphone-PC-game console
TAIEX 5 9.7 9.9 platform to compete with iOS and Android. We forecast HTC’s 4Q10 sales to
Current TAIEX: 8284.03
grow by 25% QoQ; OM to retreat to 15.5%; and EPS to grow to NT$16.09.
• Market share gain in smartphone with Android success: HTC’s market share
Revenue Breakdown % in smartphone had significantly increased from 6.2% in 1Q10 to 9.6% in 2Q10,
Android 75% and we forecast it will increase to 10.5% in 3Q10 and 11% in 4Q10. The
Windows Mobile 25% significant market share increase was mainly driven by the market share
expansion of Android. According to Gartner’s forecast, Android’s market share in
Major Customers % overall handset will increase from 17.7% in 2010 to 22.2% in 2011. Gartner also
Vodafone forecasts 2011 overall smartphone shipment will grow by 53%.
Verizon
Sprint
Major Competitors FYE 31st Dec (NT$mn) 2007 2008 2009 2010F 2011F
Revenue 118,218 152,353 144,493 269,228 412,605
RIMM
% chg 12.21 28.88 (5.16) 86.33 53.25
APPLE
Gross profit 44,824 50,991 46,163 80,554 118,169
PALM
Gross margin (%) 37.92 33.47 31.95 29.92 28.64
Op. profit 31,319 30,345 24,623 41,990 55,660
EBITDA 32,138 31,153 26,011 43,366 56,759
% chg 18.26 (3.06) (16.51) 66.72 30.88
Net profit 28,939 28,635 22,609 37,891 48,592
% chg 14.62 (1.05) (21.05) 67.59 28.24
EPS* (NT$) 35.39 35.02 27.65 46.34 59.43
Consensus EPS* (NT$) -- -- -- 45.17 56.38
PER (x) 13.24 13.38 16.95 15.51 12.10
PBR (x) 6.83 6.32 5.84 6.94 5.71
Bamboo Lin BVPS* (NT$) 97.84 81.38 83.20 103.54 125.90
(886 2) 2316-5194 DPS (NT$) 27.00 34.00 27.00 26.00 37.08
Yield (%) 4.77 4.96 6.03 3.62 5.16
bamboo.lin@sinopac.com
*Adj. for current shares out;
Source: CMoney, SinoPac Forecasts; consolidated
4.7% 5.2%
8.7% 4.7% 4.3% 3.9%
12.0% 11.8% 15.4%
17.1% 16.0% 15.4% 14.9%
14.4%
2.7% 8.2%
9.6% 17.5%
15.0% 13.6% 12.5% 11.7%
0.0%
16.6% 19.9%
0.5%
3.9% 17.7%
22.2% 25.4% 27.5% 29.6%
63.5%
52.4%
46.9%
40.1%
34.2% 32.9% 31.4% 30.2%
18x PE
1000
15x PE
800
12xPE
600
9x PE
400
6x PE
200
0
Au De Ap Au De Ap Au De Ap Au De Ap Au De Ap Au De Ap Au De Ap Au
g- c- r- g- c- r- g- c- r- g- c- r- g- c- r- g- c- r- g- c- r- g-
03 03 04 04 04 05 05 05 06 06 06 07 07 07 08 08 08 09 09 09 10 10
% Auto Chemical Electronics Financials Plastics Rubbers Steel Textiles NT$bn FINI Local Mutual fund Proprietary Trader
8
10
4 5
0 0
-2
-4 -5
Sep 30 Oct 01 Oct 04 Oct 05 Oct 06 Sep 30 Oct 01 Oct 04 Oct 05 Oct 06
%
NT$bn Long margin Short margin mn shares
2.2
300 1200
2
1000
1.8
200 800
1.6
600
0 0 1
Oct Nov Dec Feb Mar Apr May Jun Jul Sep Oct Nov Dec Jan Mar Apr May Jun Jul Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
08 08 08 09 09 09 09 09 09 09 09 09 09 10 10 10 10 10 10 10 08 08 08 09 09 09 09 09 09 09 09 09 09 09 09 10 10 10 10 10 10 10 10 10
35
100
34
200
95
33
32
90
100
31
85
30
0
29 80
Oct Nov Dec Feb Mar Apr May Jun Jul Sep Oct Nov Dec Jan Mar Apr May Jun Jul Sep
Nov Dec Jan Feb Mar May Jun Jul Aug Sep Oct Nov Dec Feb Mar Apr May Jun Jul Sep
08 08 08 09 09 09 09 09 09 09 09 09 09 10 10 10 10 10 10 10
08 08 09 09 09 09 09 09 09 09 09 09 09 10 10 10 10 10 10 10
Retail Long Margin's Top Increase and Decrease (October 4 ~October 6 2010)
Top increase Top decrease
Code Stock NT$m Code Stock NT$m
1718 CMFC 18.28 2457 PHIHONG (27.87)
2609 YMTC 13.02 2888 SKFH (17.13)
3474 Inotera 10.63 3049 SINTEK (12.81)
2542 Highwealth 10.50 2892 FFHC (7.78)
2534 HSC 7.64 1304 USI (5.87)
2515 BES 7.26 2887 TSFHC (5.87)
2504 GDC 6.51 2488 HANPIN (4.70)
1909 LCP 5.30 2345 ACCTON (4.64)
9904 PCC 5.29 2311 ASE (4.53)
2022 TYCOONS 4.85 2891 CFHC (4.46)
Financial Calendar
Monday Tuesday Wednesday Thursday Friday
10/4 10/5 10/6 10/7 10/8
● WPI, CPI ● Export ● US Unemployment
● ISM index
Non-Tech
Financials
2823 China Life z BUY 10/09/02 10/09/02 30.10 26.90 0.86 11.90 1476.29 1708.60 17.58 15.11 1.69 1.52 1.53 1.78 15.92 17.70 0.20 0.74 Financials Jeff Yu 1.81 16.38 p
2881 Fubon FHC z BUY 10/09/02 10/09/02 40.50 38.85 1.25 4.25 10674.87 8554.30 15.06 13.78 1.44 1.40 2.58 2.82 26.92 27.75 2.00 5.15 Financials Jeff Yu 2.45 26.21 c
2882 Cathay FHC z NEUTRAL 10/09/02 10/09/02 44.00 49.00 1.57 (10.20) 15982.59 10154.40 45.37 39.20 2.04 1.98 1.08 1.25 24.02 24.77 0.50 1.02 Financials Jeff Yu 1.14 22.28 c
2885 Yuanta FHC z NEUTRAL 10/09/02 10/09/02 17.00 19.10 0.61 (10.99) 4970.77 8102.10 24.81 22.74 1.36 1.33 0.77 0.84 14.09 14.34 0.60 3.14 Financials Jeff Yu 0.89 14.25 c
2886 Mega FHC NEUTRAL 10/09/02 10/09/02 18.20 21.70 0.70 (16.13) 7708.79 11059.40 15.07 13.91 1.19 1.17 1.44 1.56 18.19 18.50 1.10 5.07 Financials Jeff Yu 1.30 17.75 c
2891 Chinatrust FHC z NEUTRAL 10/09/02 10/09/02 17.10 19.95 0.64 (14.29) 6879.10 10735.00 15.11 12.09 1.52 1.40 1.32 1.65 13.10 14.25 0.50 2.51 Financials Jeff Yu 0.24 14.78 c
2892 First FHC z NEUTRAL 10/09/02 10/09/02 16.90 21.20 0.68 (20.28) 4410.57 6476.90 21.63 13.95 1.32 1.30 0.98 1.52 16.01 16.31 0.80 3.77 Financials Jeff Yu 0.44 16.12 c
Construction/Engineering/Property
2520 Kindom z NEUTRAL 10/06/28 10/06/28 25.00 29.60 0.95 (15.54) 465.44 489.40 8.48 11.04 1.49 1.43 3.49 2.68 19.83 20.70 2.30 7.77 Construction/DEV Jerry Lu 2.40 16.41 p
2536 Hung Poo NEUTRAL 10/10/06 10/10/06 50.00 48.55 1.56 2.99 451.95 289.90 8.47 8.56 1.34 1.23 5.73 5.67 36.30 39.40 2.50 5.15 Construction/DEV Jerry Lu 5.49 31.28 p
2542 Highwealth z NEUTRAL 10/08/11 10/08/11 46.50 55.70 1.79 (16.52) 1263.01 706.00 4.76 11.12 2.33 1.94 11.70 5.01 23.90 28.70 2.50 4.49 Construction/DEV Jerry Lu 6.55 18.02 p
9940 Sinyi z NEUTRAL 10/07/14 10/07/14 49.00 58.30 1.87 (15.95) 685.15 365.80 13.75 11.90 3.02 2.90 4.24 4.90 19.29 20.10 3.00 5.15 Realty Jerry Lu 4.87 17.65 p
2548 Huaku NEUTRAL 09/07/01 09/07/01 72.20 88.10 2.83 (18.05) 735.26 259.80 17.66 -- 2.68 -- 4.99 NA 32.83 NA 5.00 5.68 Construction/DEV Jerry Lu 10.61 35.82 p
5534 Chong Hong NEUTRAL 10/06/28 10/06/28 59.50 77.50 2.49 (23.23) 600.99 241.40 8.20 8.41 2.40 2.07 9.45 9.22 32.34 37.50 5.53 7.14 Construction/DEV Jerry Lu 5.25 27.88 p
SinoPac 2010 Stock Coverage Universe-October 7, 2010 (changes highlighted in yellow)
12-m P/E PB Adj. EPS BVPS Cash divDiv yield EPS 2009BVPS 2009
Rating Recent p/c*
Code Company Core Recom . Target Mkt price Mkt price Upside Mkt cap Capital 2010f 2011f 2010f 2011f 2010f 2011f 2010f 2011f 2011f 2011f Sub-industry Analyst
Date Research
Coverag (NT$) Prv. (US$)*
yy/mm/dd yy/mm/dd (NT$) (%) (US$m) (m shrs) (x) (x) (x) (x) (NT$) (NT$) (NT$) (NT$) (NT$) (%) (NT$) (NT$)
e close Prv.
Materials/Industrials/Textile
1507 Yungtay z BUY 10/08/27 10/08/27 49.50 40.60 1.30 21.92 535.78 410.80 11.70 10.20 1.37 1.50 3.47 3.98 29.67 27.05 2.00 4.93 Machinery/ Elec. Equ Jerry Lu 2.48 23.41 p
1531 Kaulin Mfg BUY 10/07/23 10/07/23 31.00 29.35 0.94 5.62 182.13 193.20 8.51 -- 1.45 -- 3.45 NA 20.19 NA 0.00 0.00 Machinery Fion Chen 0.52 20.19 c
2504 Goldsun Construction z BUY 10/04/21 10/04/21 22.50 16.25 0.52 38.46 785.04 1504.30 19.82 18.47 1.07 1.03 0.82 0.88 15.20 15.80 0.20 1.23 Ready Mix Cement/C Jeff Yu 0.42 15.60 p
2002 China Steel z NEUTRAL 10/08/27 10/08/27 30.00 32.40 1.04 (7.41) 14118.59 13566.20 13.79 15.80 1.63 1.60 2.35 2.05 19.90 20.30 1.60 4.94 Steel Jeff Yu 1.49 18.53 p
2006 Tung Ho Steel z BUY 09/05/21 09/05/21 40.00 29.90 0.96 33.78 937.62 976.20 12.01 -- 1.35 -- 2.49 NA 22.23 NA 1.50 5.02 Steel Jeff Yu 0.93 20.74 p
2015 Feng Hsin Steel z BUY 09/05/12 09/05/12 56.40 52.40 1.68 7.63 979.06 581.60 9.31 -- 2.14 -- 5.63 NA 24.50 NA 2.00 3.82 Steel Jeff Yu 2.63 24.77 p
2034 Yeun Chyang z BUY 10/05/13 10/05/13 31.50 23.80 0.76 32.35 282.67 369.70 8.21 9.30 1.36 1.31 2.90 2.56 17.50 18.16 2.00 8.40 Stainless Steel Jeff Yu 0.62 16.78 p
1717 Eternal Chemical BUY 10/07/26 10/07/26 37.00 32.90 1.06 12.46 998.65 945.10 12.56 -- 1.63 -- 2.62 NA 20.20 NA 1.80 5.47 Chemical Gary Wang 3.51 20.20 c
4716 Daily Polymer BUY 10/05/05 10/05/05 46.00 43.20 1.39 6.48 77.41 55.80 24.13 -- 3.01 -- 1.79 NA 14.33 NA 0.00 0.00 Chemical Gary Wang 0.65 12.54 c
4720 Tex Year BUY 10/09/03 10/09/03 33.00 22.55 0.72 46.34 50.43 69.70 23.74 -- 1.61 -- 0.95 1.50 14.03 15.52 0.50 2.22 Chemical Raymond Kuo 0.45 13.14 c
1434 Formosa Taffeta BUY 10/07/12 10/07/12 30.00 25.90 0.83 15.83 1401.45 1684.70 12.63 -- 0.85 -- 2.05 NA 30.51 NA 0.00 0.00 Textile Rae Sing 0.05 30.51 c
1473 Tainan Enterprises BUY 10/07/05 10/07/05 50.00 46.60 1.50 7.30 219.71 146.80 11.95 -- 1.73 -- 3.90 NA 26.99 NA 1.50 3.22 Textile Rae Sing 1.89 26.99 p
Auto/Rubber
2204 China Motor z BUY 10/09/14 10/09/14 25.20 27.85 0.89 (9.52) 1244.70 1391.30 21.76 -- 0.94 0.91 1.28 4.46 29.65 30.65 0.50 1.80 Auto Manufacturers Jeff Yu 0.62 28.62 p
1319 Tong Yang Industry z BUY 10/09/29 10/09/29 60.00 52.70 1.69 13.85 898.43 530.70 16.42 12.20 2.62 2.30 3.21 4.32 20.08 22.90 1.50 2.85 Auto Parts Jeff Yu 3.36 21.94 p
6605 Depo BUY 10/07/23 10/09/08 110.00 85.10 2.73 29.26 453.23 165.80 9.63 8.17 1.71 1.57 8.84 10.41 49.83 54.24 5.30 6.23 Auto Parts Jeff Yu 6.35 48.48 p
9942 NAK BUY 10/05/11 10/05/11 55.00 45.80 1.47 20.09 122.38 83.20 9.89 -- 1.95 -- 4.63 NA 23.53 NA 0.00 0.00 Auto Parts Iris Lin 2.59 21.69 c
3552 Tung Thih BUY 10/09/20 10/09/20 150.00 137.00 4.40 9.49 254.72 57.90 17.77 13.24 4.60 3.41 7.71 10.35 29.81 40.16 0.50 0.36 Auto Components Jeff Yu 5.06 23.69 c
6279 Hu lane BUY 10/09/13 10/09/13 86.30 82.00 2.63 5.24 216.18 82.10 14.54 11.82 4.47 3.84 5.64 6.94 18.34 21.34 4.00 4.88 Auto Components Jeff Yu 4.17 19.31 c
2105 Cheng Shin z BUY 10/08/31 10/09/21 84.90 69.40 2.23 22.33 4593.02 2060.40 13.37 10.63 3.40 2.58 5.19 6.53 20.42 26.94 2.00 2.88 Rubber Jeff Yu 8.15 24.33 c
2106 Kenda z BUY 10/06/23 10/06/23 39.00 34.00 1.09 14.71 677.76 620.60 9.55 8.15 1.57 1.36 3.56 4.17 21.65 24.93 1.10 3.24 Rubber Jeff Yu 4.51 18.65 c
Transportation
2610 China Airline BUY 10/10/07 10/10/07 27.00 24.60 0.79 9.76 3659.90 4631.60 7.32 9.39 1.98 1.64 3.36 2.62 12.40 15.00 0.00 0.00 Airline Yili Chen (0.83) 9.03 p
2618 Eva Airways BUY 10/10/07 10/10/07 35.00 29.10 0.93 20.27 2769.18 2962.70 6.19 7.86 1.83 1.48 4.70 3.70 15.90 19.60 0.00 0.00 Airline Yili Chen (0.96) 10.81 p
2601 First Steamship z BUY 10/06/03 10/06/03 61.20 68.10 2.19 (10.13) 596.17 272.50 15.20 13.05 2.58 2.23 4.48 5.22 26.40 30.60 1.00 1.47 Marine Trans Jerry Lu 3.75 22.91 c
2603 Evergreen Marine BUY 10/10/07 10/10/07 27.60 23.35 0.75 18.20 2308.88 3078.40 6.08 7.23 1.12 0.97 3.84 3.23 20.90 24.14 0.00 0.00 Marine Trans Yili Chen (3.22) 17.78 c
2609 Yang Ming Marine BUY 10/10/07 10/10/07 22.60 22.00 0.71 2.73 1811.00 2562.50 -- 6.41 1.31 1.09 4.70 3.43 16.80 20.20 1.00 4.55 Marine Trans Yili Chen (6.18) 12.39 c
2651 Wan Hai BUY 10/10/07 10/10/07 23.40 22.50 0.72 4.00 1527.05 2112.70 -- 7.71 1.42 1.20 3.41 2.92 15.90 18.80 0.00 0.00 Marine Trans Yili Chen (0.77) 12.44 c
2605 Sincere Navigation BUY 10/10/07 10/10/07 45.00 37.50 1.20 20.00 684.50 568.30 6.86 -- 1.25 -- 5.47 5.42 29.90 35.30 2.50 6.67 Marine Trans Yili Chen 5.42 24.56 c
2606 U-Ming BUY 10/10/07 10/10/07 74.00 63.30 2.03 16.90 1744.51 858.00 8.83 -- 1.86 -- 7.17 6.15 34.00 40.60 6.00 9.48 Marine Trans Yili Chen 6.60 32.85 c
Consumer Goods/Services
1233 Ten Ren NEUTRAL 10/05/25 10/05/25 46.50 50.10 1.61 (7.19) 145.83 90.60 20.53 20.12 3.21 2.94 2.44 2.49 15.63 17.02 1.08 2.16 Tea Jerry Lu 1.93 14.55 p
1216 UPEC z NEUTRAL 10/09/23 10/09/23 44.10 40.60 1.30 8.62 5591.03 4287.10 14.60 -- 2.37 -- 2.78 2.64 17.10 19.00 1.60 3.94 Food & Beverage Jerry Lu 2.02 16.53 p
1232 TTET BUY 09/06/15 09/06/26 43.30 41.30 1.33 4.84 212.32 160.00 11.44 -- 2.29 -- 3.61 NA 18.04 NA 2.40 5.81 Food Jerry Lu 3.68 17.39 p
9905 Great China Metal BUY 10/04/21 10/04/21 32.00 31.95 1.03 0.16 312.86 305.00 13.31 -- 1.33 -- 2.40 NA 24.00 NA 0.00 0.00 Beverage Packaging Rae Sing 1.77 18.12 p
9939 Taiwan Hon Chuan BUY 10/05/13 10/05/13 72.90 62.60 2.01 16.45 482.14 239.80 12.04 9.74 1.81 1.53 5.20 6.43 34.57 41.00 3.00 4.79 Beverage Packaging Jerry Lu 4.09 29.10 c
2903 FEDS NEUTRAL 10/04/16 10/04/16 32.00 41.30 1.33 (22.52) 1648.46 1242.60 9.39 -- 1.59 -- 4.40 NA 26.00 NA 2.00 4.84 Department Stores Jerry Lu 1.59 20.03 p
2915 Ruentex NEUTRAL 10/01/13 10/01/13 83.00 93.90 3.02 (11.61) 2145.70 711.40 66.60 -- 7.43 -- 1.41 NA 12.63 NA 0.00 0.00 Department Stores Jerry Lu 0.63 12.54 p
2911 Les Enphants BUY 10/09/17 10/09/17 54.30 46.60 1.50 16.52 271.75 181.50 22.96 19.02 2.68 2.47 2.03 2.45 17.39 18.85 1.00 2.15 Apparel/Accessories Jerry Lu 1.64 16.09 p
2912 PCSC z BUY 10/06/14 10/06/14 102.80 133.50 4.29 (23.00) 4458.11 1039.60 29.41 27.47 5.75 4.82 4.54 4.86 23.21 27.70 4.20 3.15 Convenience stores Jerry Lu 3.90 18.20 p
2704 Ambassador Hotel z BUY 09/04/10 09/04/20 50.40 52.60 1.69 (4.18) 619.94 366.90 37.30 -- 2.41 -- 1.41 NA 21.85 NA 0.50 0.95 Tourism Jerry Lu 0.50 23.08 p
1614 Sanyo z BUY 10/06/11 10/08/05 56.00 33.50 1.08 67.16 340.81 316.60 26.80 24.63 1.93 1.92 1.25 1.36 17.32 17.43 1.10 3.28 Household Appliance Jerry Lu 0.74 17.07 p
2908 TestRite BUY 10/09/10 10/09/10 27.30 25.85 0.83 5.61 428.82 516.40 32.31 32.31 2.23 2.19 0.80 0.80 11.58 11.80 0.50 1.93 Home Improvement Jerry Lu 0.26 11.36 p
9904 Pou Chen z BUY 10/03/15 10/03/15 29.00 29.05 0.93 (0.17) 2705.26 2899.10 13.77 11.35 1.59 1.48 2.11 2.56 18.26 19.61 1.28 4.41 Footwear Jerry Lu 2.47 18.18 c
9921 Giant BUY 10/05/11 10/05/11 110.00 116.50 3.74 (5.58) 1403.70 375.10 14.94 -- 3.42 -- 7.80 NA 34.08 NA 0.00 0.00 Bicycle Iris Lin 6.71 30.78 c
31.13 : TWD/USD
Taiwan Research
October 7, 2010 - Taiwan Market Daily
LONDON TAIPEI
SinoPac Securities (Europe) Ltd. SinoPac Securities Corporation
th
5 Floor, Habib House 18/F, 2 Chung Ching S. Road, Sec 1
42 Moorgate Taipei 100,
London EC2R 6EL Taiwan, R.O.C.
United Kingdom, Tel: (886 2) 2388-4583/2316-5150
Registered in England and Wales No. 3766464 Fax (886 2) 2375-1254
Tel: (44 20) 7614 9999
Fax: (44 20) 7614 9979
Disclaimer: This document is for information purposes only. The information presented above is produced by SinoPac Securities Corp
based on diverse sources. Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities. SinoPac
Securities accepts no liability for any damages or losses arising from use of this document or its contents.
Important Notice: This Document may only be issued or passed on to any person in the United Kingdom if that person is of a kind
described in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2001 or otherwise pursuant to
exemptions to section 21 of the Financial Services and Markets Act 2000. In addition, no person who is an Authorised Person may issue
or pass on this document, or otherwise promote the Company, to any person in the United Kingdom other than by the rules of the
Financial Services Authority (FSA) applicable to such Authorised Persons. This Document is confidential and is intended solely for the use
of its recipient..
SinoPac Securities (Europe) Limited is regulated by the FSA.
SinoPac
18F, 2 Chung Ching South Rd., Section 1, Taipei, Taiwan, R.O.C.
Tel (886 2) 2388-4583 -- Fax (886 2) 2316-5227
www.taiwanresearch.com
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