欣銓 / 奈普 / 新普 / 神達 / 國巨 / 凌巨

zakk

Ardentec (3264.TW)欣銓

Upgrade to Buy: Valuation Appears Attractive
Upgrading to Buy after recent correction — Despite our continuing concerns for YoY foundry sector momentum rolling over and utilization correction starting in 1Q09 or earlier to affect wafer probing demand, valuation appears attractive on a mid- and long-term basis. We thus upgrade Ardentec to a Buy (1L) from Sell and adjust our target price to NT$25 from NT$22.

Some early concerns have faded — 1) After a 19% correction in one month and 14% correction YTD, Ardentec fell to a trough valuation of 8-9x 2008-09E EPS and 1.2x P/BV with an ROE of 14-16%; 2) Our earlier concerns of op margin miss to 30% by 2Q08E from 37% in 1Q08 are now priced in; 3) Our earlier concern of probing orders cut by TI is now also priced in after sales decline of 5-10% QoQ in 2Q08, vs. most of supply chain vendors' 0-5% QoQ up.

Wafer inventory replenishment helps better 3Q08 — Helped by waferbank inventory replenishment by some customers, we now expect Ardentec to grow 5-10% QoQ in 3Q08 vs. our earlier flattish growth forecast.

Risks to our call — Despite that June-Sep sales will likely show sequential growth, we believe the company sees no visibility into 4Q08 as many of its top customers have high or record-high levels of inventories.

Adjusting EPS — We are raising our 2008E EPS by 2.5% to NT$2.33 due to better 3Q08 outlook. We are trimming our 2009E EPS slightly by 2.8% to NT$2.62 to factor in larger waferbank adjustment during 1H09.

austin

Citi：Taiwan Nano Electro-Optical Technology (6255.TW 奈普)
Analyzed Non-Rated Snapshot
Industry Overview — Taiwan Nano provides a channel check on the progress of LED adoption in NB PC. Mgmt foresees its LED NB shipments to increase by more than 3x HoH in 2H08 to more than 1m-1.2m units (competitor Coretronic has also recently guided similar growth). We continue to expect LED penetration in NB (including NetBook PC) to easily exceed mkt expectations of 10-15% in 08, it could even reach 30-40% in 09E. More than 90% of the new models being developed now are LED based, and assuming an average lifecycle of 2-3 yrs, it's likely we could see 100% penetration in LED NB by 2010E/11E. With the increased popularity of top-view architecture (cost competitiveness), Taiwan LED players will likely be the biggest beneficiaries of this migration. We maintain our
positive stance on Taiwan LED. Epistar (2448.TW; NT$62.90; 1M) is our top-pick.

shockly

Simplo Technology Co Ltd. 新普 6121

• We think Simplo’s recent stock price correction on battery oversupply and cobalt
  price correction concerns is overdone. We expect intact earnings delivery in
  2008/09E, and maintain our positive LT view on its revenue upside potential and
  solid execution. We trim our PO to NT$162 from NT$171 (14x P/E multiple from
  16x), given the unfavorable pricing environment, but retain our Buy rating.

MiTAC International (2315.TW 神達)

• We are adjusting our per share estimates and target price for MiTAC
  International post its 4% stock dividend on August 15. Our new EPS
  forecasts are NT$2.43, NT$2.52 and NT$2.57 for 2008E, 2009E and 2010E,
  respectively. Our earlier pre-dividend estimates for 2008E, 2009E and
  2010E were NT$2.62, NT$2.65 and NT$2.70, respectively. Accordingly, our
  12-month target price moves to NT$24, from NT$26 pre-dividend. We do
  not view these changes as material, and there is no change to our
  investment thesis or Neutral rating.
  

shockly

Taiwan Nano Electro-Optical Technology(6255 奈普)

• Industry Overview — Taiwan Nano provides a channel check on the progress of
  LED adoption in NB PC. Mgmt foresees its LED NB shipments to increase by more
  than 3x HoH in 2H08 to more than 1m-1.2m units (competitor Coretronic has also
  recently guided similar growth). We continue to expect LED penetration in NB
  (including NetBook PC) to easily exceed mkt expectations of 10-15% in 08, it
  could even reach 30-40% in 09E. More than 90% of the new models being
  developed now are LED based, and assuming an average lifecycle of 2-3 yrs, it's
  likely we could see 100% penetration in LED NB by 2010E/11E. With the
  increased popularity of top-view architecture (cost competitiveness), Taiwan LED
  players will likely be the biggest beneficiaries of this migration. We maintain our
  positive stance on Taiwan LED. Epistar (2448.TW; NT$62.90; 1M) is our top-pick.
  

shockly

Simplo Technology Co Ltd. 新普 6121

• Simplo's strong 3Q fin guidance and confirmation of healthy battery S/D outlook (at its analyst meeting on 26 August) should largely ease the market's recent concerns. We reiterate our positive LT view on Simplo, given its strong top-line growth and solid execution on margin retention. We believe the recent share price correction of about 20% offers a good entry point for investors. Our PO of NT$162 (based on 14x P/E) suggests upside of over 30%.

austin

Yageo 2327 國巨
2Q08 EPS of NT$0.18

Event
Yageo announced 2Q08 EPS of NT$0.18 (+172% QoQ, -48% YoY, bonus adjusted). This was higher than our estimate of NT$0.11 due to non-operating gains, with operating income in line.

Action and recommendation
We maintain an Outperform rating on Yageo and keep our target price at NT$12.10 based on a 2008E P/BV of 0.9x.

Giantplus 8105 凌巨
China handset recovering

Action and recommendation
We maintain Outperform and keep our target price at NT$34.9 based on a 2008E P/BV of 1.6x. The stock has traded at an historical average P/BV of 1.6x. Giantplus is a cyclical stock and we expect P/BV valuations to rise along with a pending upswing in the TFT-LCD cycle from 4Q08. Small panel stocks like Giantplus typically trade at a premium to their large panel counterparts.

shockly

MiTAC International (2315.TW 神達)
Slow pace ahead amid fiercer competition and lukewarm demand

Upon our forecast revisions, we are cutting our 12-m TP to NT$18, based on
10X next-12-m P/E (from NT$24, based on 10X ’08 P/E). While the stock is
trading at merely 0.67X ’08 P/B, we see few company-specific catalysts to
drive share upside in the near-to-mid term, given MiTAC’s mediocre 2H08 &
‘09 outlooks. We remain cautious and keep our Neutral rating on MiTAC.