See important disclosures, including any required research certifications, beginning on page 49 4 September 2013 Curtain call on new iPhones: likely winners and losers • Probable new range: 5S (high-end), 5C (mid-range), 4S (low end) • We forecast total production of 90m units for 2H13, with the high-end model accounting for only 38% vs. about 70% a year ago • We prefer EMS players over component companies. Top pick: Hon Hai. Avoid Largan, AAC and TXC Greater China Smartphone Sector Information Technology / China and Taiwan Positive (unchanged) Neutral Negative How do we justify our view? How do we justify our view?
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See important disclosures, including any required research certifications, beginning on page 49
4 September 2013
Curtain call on new iPhones: likely winners and losers
• Probable new range: 5S (high-end), 5C (mid-range), 4S (low end) • We forecast total production of 90m units for 2H13, with the
high-end model accounting for only 38% vs. about 70% a year ago• We prefer EMS players over component companies. Top pick:
Hon Hai. Avoid Largan, AAC and TXC
Greater China Smartphone Sector
Information Technology / China and Taiwan
Positive (unchanged)
Neutral
Negative
How do we justify our view?How do we justify our view?
Greater China Smartphone Sector 4 September 2013
Contents
New iPhones: we prefer the EMS companies to the component suppliers ................................. 3
‘Wow’ factor likely to be limited for new iPhones .................................................................... 3
Market expectations are low .................................................................................................... 4
A change in focus in the product mix to the mid-range .......................................................... 4
EMS companies should do better; components makers likely to suffer .................................. 5
What we recommend ................................................................................................................ 5
Appendix I: Pan-Asia Apple iPhone 5S/5C supply chain ............................................................ 7
Appendix II: what’s new in iOS 7 ................................................................................................ 9
New features and a new look ................................................................................................... 9
See important disclosures, including any required research certifications, beginning on page 49
■What’s new On 10 September, Apple is widely expected to unveil new iPhones. We outline our expectations for the new products and production volumes, and assess the implications for the Greater China supply chain. This report marks a transfer of coverage. ■ What’s the impact New iPhones: ‘wow’ factor likely to be limited. We expect Apple to announce two new handsets: a high-end flagship model (the 5S), and a new mid-range model (the 5C). We believe the 5S will be physically similar to the 5 but will have small upgrades to the battery, CPU and camera. The inclusion for the first time of a fingerprint scanner is likely to provide the only ‘wow’ factor. As for the 5C, we expect lower specs than for the 5, with a plastic, coloured casing and lower memory. We think prices for the 5C will range from USD429-479 (USD49-99 with a contract), and that Apple will keep the 4S, as the low-end model offered free by operators with a contract.
Market’s expectations low enough. Although we think the market sees limited spec upgrades for the new iPhones, we believe the market’s expectations on the iPhone volumes are too low. We forecast the total iPhone production volume to be 90m for 2H13, higher than the market’s expectation of 80-85m. Our research indicates that yield-rate issues with the fingerprint and display driver-ICs of the 5S, which are of concern to the market, were resolved recently. iPhone mix shifting focus to the mid-range. As the high-end smartphone segment is becoming saturated, we view the 5C as a clear indication that Apple is changing its focus to the mid-range segment. We forecast mid-range/legacy products to account for 62% of total iPhones for 2H13, up from 31% for 2H12. Electronic manufacturing services (EMS) players should do better than components suppliers. We expect the components firms to face increased pricing pressure, especially after the initial sell-in, due to the unfavourable product-mix change and the limited spec upgrades. Meanwhile, we believe the EMS firms – which are volume players – should enjoy scale benefits from the production-volume growth and possibly fast ramp-ups in yield rates due to the limited product-design changes. ■ What we recommend Within the Greater China Smartphone Sector, we prefer the EMS
companies when it comes to the forthcoming iPhones. For Hon Hai Precision Industry (Hon Hai), we reaffirm our Buy (1) rating given the 2H13 volume growth that we see from iPhones and overdone market concerns about new competition. We also like Pegatron Corp (Pegatron) for its expanding iPhone exposure. Among the components players, we downgrade both Largan Precision (Largan) and AAC Technologies (AAC) to Underperform (4) from Buy (1) due to rising margin risks on the back of the product-mix change. We downgrade TXC Corp (TXC) to Hold (3) from Buy (1) due to pricing pressure but see limited downside due to its undemanding valuation. The key risk to our sector view would be weaker-than-expected volumes for the new i-devices. ■ How we differ We are more positive on the iPhone production volume than the market for 2H13, but more concerned about pricing pressure on the components firms due to Apple’s product-mix change and limited spec upgrades to new products.
4 September 2013
Curtain call on new iPhones: likely winners and losers
• Probable new range: 5S (high-end), 5C (mid-range), 4S (low end) • We forecast total production of 90m units for 2H13, with the
high-end model accounting for only 38% vs. about 70% a year ago• We prefer EMS players over component companies. Top pick:
New iPhones: we prefer the EMS companies to the component suppliers
‘Wow’ factor likely to be limited for new iPhones
We expect two new iPhones this year Apple will hold a media event on 10 September, and is likely to unveil its new phones. We expect two new products – a high-end flagship model, the 5S, and a mid-range model, the 5C. We expect prices for the 5S to start at USD649 (USD199 with a contract) and for the 5C to range from USD429-479 (USD49-99 with a contract). We also believe Apple will keep the 4S in its line-up as a low-end model, free with a contract. We expect the 5S and 5C to have TD versions for the China market. Specs comparison – iPhone 5 vs. iPhone 5S and iPhone 5C Model iPhone 5S iPhone 5C iPhone 5
Dimensions 123.8 x 58.6 x 7.6 mm 123.8 x 58.6 x 8.2 mm 123.8 x 58.6 x 7.6 mmWeight 112 g (3.95 oz) 125g(4.41 oz) 112 g (3.95 oz) Casing Aluminium Plastic Aluminium Colour Black/white/gold 6 colours Black/white Fingerprint scanner Yes No No Embedded OS iOS 7 iOS 7 iOS 6 Display diagonal 4.0" (Retina) 4.0"(Retina) 4.0"(Retina) Display resolution 1136 x 640 pixels 1136 x 640 pixels 1136 x 640 pixels PPI 326 ppi 326 ppi 326 ppi CPU Apple A7 dual-core Apple A6 dual-core Apple A6 dual-core ROM capacity 16/32/64/128GB 8/16GB 16/32/64GB RAM capacity 2GB 1GB 1GB Wireless LAN 802.11 a/b/g/n 802.11 a/b/g/n 802.11 a/b/g/n Camera resolution 8 MP, f/2.0 8MP, f/2.4 8MP, f/2.4 Flash (Dual-LED flash) (Single-LED flash) (Single-LED flash) Camcorder 1080p@30fps 1080p@30fps 1080p@30fps
Secondary camera 1.2MP 1.2MP 1.2MP
Source: Company, Daiwa estimates
Note: We highlight the likely spec upgrades in dark blue and spec downgrades in light blue
Apple iPhone product profile expectations in 2H13 Category High-end Mid-range Low-end Model iPhone 5S iPhone 5C iPhone 4S
The 5S: fingerprint scanner may offer the only ‘wow’ factor, but value addition capped by lack of NFC Our market research suggests the 5S will be little different in appearance to the 5 (as was the case with the 4S and the 4), with small upgrades to the CPU, memory, battery, and camera, and the inclusion of a fingerprint scanner, which may be the only exceptional feature. We expect the fingerprint scanner to be used instead of passwords and the need to log in for some applications, and maybe to enhance security when one purchases items in the App Store. We believe this new feature would enhance the user experience but do not see it as a killer feature to attract consumers. In our view, the best use of a fingerprint scanner would be to enhance security, and provide privacy protection in an e-wallet environment. Meanwhile, our market research suggests there will be no NFC feature (which can turn the smartphone into an e-wallet) in the 5S. However, we do not see NFC as a technology whose time has come. While a good idea conceptually, the reality is that there is no international industry standard. The lack of an agreed standard is not just a “global” issue. There are no standards at a country level (or even at a city level), because of vested interests of the phone makers, credit-card issuers, mobile-service providers, and other related parties. Each party wants to take the lead, handle transactions, keep client data, and collect fees. Another limitation is that equipping smartphones with an NFC chip is not all that is required – two-way communication is needed for NFC to work. On the retail side, all shops and outlets would have to install scanners. This leads to the question of who would subsidise the hardware costs for retail stores (many of which may be mom-and-pop shops, rather than chain stores). iPhone 5C and iPhone 4S Based on our market research, we expect the mid-range 5C to be a lower-specification version of the 5, with a plastic, coloured casing and less memory. We think Apple will no longer offer the 5, replacing it with the 5C.
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The iPhone 5C should be a little thicker than the 5 due to the change in the casing material, but the other features – such as the camera specs, display resolution, and acoustic design– should remain the same. We expect prices for the 5C to range from USD429-479, targeting the mid-range smartphone segment. Our research also indicates that Apple will keep making the 4S, as a low-end model that is free with a contract.
Market expectations are low
Although we expect limited spec upgrades in the new iPhones, we believe market expectations of iPhone production volume in 2H13 are low. The market appears to be worried that production yield-rate issues for the 5S will affect production volume this year. Our research suggests that production bottlenecks on the 5S – possible yield-rate issues with the fingerprint IC and display-driver IC – were resolved recently. We now expect mass production of the iPhone 5S to start in September, and forecast total iPhone production volume of 90m for 2H13, a 36% HoH rise compared with the 26% HoH increase for 2H12, and higher than the market’s recently cut expectation of 80-85m. iPhone total production volume forecasts by quarter
Source: Daiwa forecasts
Note: This chart represents Daiwa’s iPhone production forecasts, which should be slightly different from the iPhone sales figures announced by Apple
A change in focus in the product mix to the mid-range
IDC forecasts a high-end smartphone shipments (those retailing at more than USD500) CAGR of 3.9% for 2013-15 compared with a CAGR of 19.4% for all smartphones over the same period. As Apple has to face the challenge of the high-end smartphone segment becoming saturated, we view its forthcoming iPhone 5C as a clear indication of the company’s strategy shift to a more mid-range focus. We forecast its mid-range/legacy phones to account for 62% of total iPhones for 2H13 compared with 31% for 2H12.
Global smartphone shipment forecasts by segment
Source: IDC, Daiwa forecasts
Note: We define low-end smartphones as those that cost less than USD200, mid-range as those costing USD200-500 and those costing more than USD500 as high-end
Global smartphone shipment forecasts by segment mix
EMS companies should do better; components makers likely to suffer
We consider Apple’s change in iPhone strategy – ie, moving from purely high-end iPhones to focus more on a mid-range one – and the implications on the supply chain. The EMS companies that focus on volume and delivering on the overall yield rate should benefit from the change in product mix, due to scale benefits from the volume growth and because they expect a fast ramp-up in the yield rate (because the design of the mid-range iPhone is not that different from the original design). However, we think the components makers could be adversely affected by the introduction of the new mid-range phone. Based on our estimates, the bill of material (BOM) cost for the iPhone 5C might be only 10-15% lower than that of the iPhone 5, but the retail price could be 25-35% lower than the iPhone 5, which implies to us that Apple might carry a lower margin for the iPhone 5C and it could, in turn, put more pressure on its component vendors. In addition, the market widely expects the components specs for the iPhone 5C to be the same as those for the iPhone 5, which should give Apple even more room to squeeze its vendors. We also see less pricing bargaining power for the vendors involved in making the iPhone 5S, due to the limited specs upgrades. We think this will be especially true for Apple’s main components suppliers, Largan and AAC (which usually enjoy better pricing power on new product launches, on the back of spec upgrades and better yield-rate delivery compared with Apple’s second-tier suppliers), given Apple’s decision to introduce a mid-range product with limited component spec improvements. Apple: Daiwa’s forecasts for the iPhone 5C Unit: USD iPhone 5 iPhone 5C
Retail price 649 429-479
Factory ASP 550 370-410
BOM cost 240 210
Other cost 60 50
Total COGS 300 260
Gross profit 250 110-150
Gross margin (%) 45% 30-37%
Source: Daiwa forecasts
Component ASP – product life cycle
Source: Daiwa forecasts
Notes: x-axis is the month that a new product is launched, and y-axis is. the original ASP and how it declines over time
What we recommend
Prefer EMS companies to the components makers In terms of the forthcoming iPhones, we are confident about the production-volume growth outlooks for 2H13 for both the EMS companies and the components makers, but we are concerned about the pricing pressure that the component makers are likely to face due to the change in Apple’s product mix. We believe Apple’s iPhone product-mix shift to a more mid-range focus could benefit the EMS vendors, but result in margin risk for the components vendors.
Within the Greater China Smartphone Sector, Hon Hai is our top pick as we see its earnings-growth momentum resuming in 2H13, driven by the launch of the next wave of i-devices and because we think the market’s concerns about new competition are overdone. We suggest investors avoid the leading components companies, Largan and AAC, due to rising margin risks on the back of the change in iPhone mix.
Following are our ratings and valuations for the Greater China iPhone supply chain stocks that we cover.
Hon Hai (2317 TT, TWD82.00, Buy [1], TP: TWD98)
We reiterate our Buy (1) rating on Hon Hai and believe the company will be the major beneficiary of the new i-devices. Our six-month target price is TWD98, based on a one-year forward PER of 11x (its past-three-year average). We forecast Hon Hai to regain its revenue-growth momentum in 2H13, as we expect the company to become the sole supplier for both the iPhone 5S and the next iPad, and that it will secure 25-30% of the mid-range iPhone orders. Moreover, we foresee margin
75%
80%
85%
90%
95%
100%
1 2 3 4 5 6 7 8 9
(Month)
Component ASP Cycle
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expansion for Hon Hai given its cost savings from relocating its production plants inland within China, increasing vertical integration and automation, as well as the product-mix change of its major client, Apple. The main risk to our rating would be slower-than-expected margin expansion. Largan (3008 TT, TWD1,050.00, Underperform [4], TP: TWD920)
We are downgrading our rating on Largan to Underperform (4) from Buy (1). We like Largan for its quality management and leading industry position, but we foresee pricing pressure in 4Q13 and think its current valuation of 16x 2013E PER is unattractive compared with its past-three-year average of 14x. For 2H13, we expect its earnings-growth momentum to slow from 4Q13 given the change in the iPhone product mix and limited contribution from new clients, after a stellar 3Q13 on the back of new product launches and the effects of the peak season. Our new six-month target price is TWD920, based on a one-year rolling-forward PER of 14x. The major risk to our negative view would be better-than-expected orders from new clients. AAC (2018 HK, HKD36.50, Underperform [4], TP: HKD33.50)
We are downgrading our rating on AAC to Underperform (4) from Buy (1). Our new six-month target price is HKD33.50, based on a one-year forward PER of 14x (in line with its past-three-year average). We are concerned about the saturation that we see in the high-end smartphone market and consider the stock‘s current valuation, at a one-year forward PER of 15.4x, unjustified. Furthermore, we believe AAC could be negatively affected by its major client’s product-mix change, with limited spec upgrades resulting in more severe pricing pressure. Overall, we expect AAC’s earnings growth to decelerate to a double-digit percentage YoY in the following 2-3 years from 70% for 2012. A better-than-expected margin would be the major upside risk to our negative view.
TXC (3042 TT, TWD40.50, Hold [3], TP: TWD41)
We are downgrading our rating on TXC to Hold (3) from Buy (1). We believe the worst of unfavourable currency fluctuations are now over for TXC and forecast 15% HoH revenue growth for 2H13. However, we expect TXC to experience pricing pressure in 2H13, on the back of its major client’s product-mix change. As such, we are more cautious than the market on the company’s margin expansion for 2013 and forecast a mild recovery in the operating margin to 11.5-12.0% for 2H13 (from 9.5-10% for 1H13). We believe TXC could regain its revenue-growth momentum in 2014, given the start of revenue contributions from new clients and its solid i-device orders. Our new six-month target price is TWD41, now based on a one-year forward PER of 12.5x (in line with its past-three-year average). The main upside risk to our view would be faster-than-expected margin recovery, while the main downside risk would be further sharp Yen depreciation.
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Appendix I: Pan-Asia Apple iPhone 5S/5C supply chain Pan-Asia Apple iPhone 5S/5C supply chain Part Ticker Manufacturer iPhone 5S allocation iPhone 5C allocationSemiconductor
Processor 005930 KS Samsung Electronics 100% 100%4G modem QCOM US Qualcomm 100% 100%Wifi module 6981 JP Murata 70% 70% 6762 JP TDK 30% 30%WIFI, Bluetooth, GPS BRCM US Broadcom 100% 100%Nand Flash 6502 JP Toshiba 65% 65% 000660 KS SK Hynix 35% 35%Mobile DRAM 005930 KS Samsung 20% 20% 000660 KS SK Hynix 40% 40% MU US Micron (Elpida) 40% 40%PWM IC DLG GR Dialog Semiconductor 100% 100%AP substrate 009150 KS SEMCO 50% 50% 4062 JP Ibiden 50% 50%Display Incell TFT 6753 JP Sharp 20-25% 20-25% Not listed Japan Display 40% 40% 034220 KS LGD 35-40% 35-40%Polarizer 6988 JP Nitto Denko 40% 40% 4005 JP Sumitomo Chemi 60% 60%Display driver IC 6723 JP Renesas 100% 100%Component
8MP camera module 011070 KS LG Innotek 50% 50% 6753 JP Sharp 50% 50%8MP camera lens 3008 TT Largan 85-90% 60-70% 3406 TT Genius 10-15% 30-40%1.3MP camera lens 3406 TT Genius 40-50% 40-50% 3008 TT Largan 30-40% 30-40% Private Kantatsu 10-20% 10-20%VCM for lens module 6770 JP ALPS 60% 60% 6767 JP Mitsumi 40% 40%1.3 MP CMOS sensor OVT US Omni vision 100% 100%8MP CMOS sensor 6758 JP SONY 100% 100%MLCC 6981 JP Murata 40-45% 40-45%
Acoustic 2018 HK AAC 50% 50% 002241 CH Goertek 35-40% 35-40% Private Knowles 10-15% 10-15%PA TQNT US Triquint 25-50% 25-50% SWKS US Skyworks 25% 25% AVGO US Avago 25-50% 25-50%Metal casing 2317 TT Hon Hai 40% n.a. 2354 TT Foxconn Tech 40% n.a. JBL US Jabil 20% n.a.Plastic casing 2317 TT Hon Hai n.a. 30-40% JBL US Jabil n.a. 30-40% HIP SP Hi-P n.a. 20-30%Fingerprint sensor Private AuthenTec 100% n.a.Fingerprint scanner (module) SYNA US Snaptics 100% n.a.Gyro sensor INVN US Invensense 100% 100%Battery cell 6762 JP TDK/ATL 20-25% 20-25% Private Tianjin Lishen 20-25% 20-25% 006400 KS Samsung SDI 20-25% 20-25% 051910 KS LG Chemical 20-25% 20-25%Battery packaging 6121 TT Simplo 50-60% 50-60% 3211 TT Dynapack 40-50% 40-50%Assembling 2317 TT Hon Hai 100% 25-30% 4938 TT Pagatron 0% 70-75%
Source: Daiwa forecasts
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Appendix II: what’s new in iOS 7
New features and a new look
Arguably the most sweeping redesign of the iOS since it was launched in 2007, iOS 7 is expected to be released in mid-September. We believe the new iPhones will come pre-installed with the new OS, and some older iPhone models will be able to upgrade to it. Judging from the beta versions now in testing, we expect key upgrades in the new OS to include: 1) a new, more modern design, 2) new features such as AirDrop, Control Center, and enhanced multitasking, and 3) new features specifically designed for business users. Visual overhaul With Apple’s hardware design head Jonathan Ive now tasked with overseeing Human Interfaces in the company’s software, too, the icons and home screen in iOS 7 have an all-new look. Bars, buttons and shadows under icons and text on the home screen have been removed, though the underlying mode of interacting with the software is unchanged. We think the stripped-down, refined design of iOS 7 will impress users. iOS 6 (RHS) vs. iOS 7 (LHS): home screen comparison
Source: Company, Daiwa
iOS 6 (LHS) vs. iOS 7 (RHS): icon comparison
Source: Company, Daiwa
iOS 6 (RHS) vs. iOS 7 (LHS):UI comparison
Source: Company, Daiwa
New features Apple has added many new features, but we think AirDrop and Control Center are among the most impressive additions. Others, such as updates to Siri and the Photos app, along with iTunes Radio, may not be eye-catching enough, in our view.
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1) AirDrop With supported iDevices, this feature allows iOS users to share pictures, videos and other items from any app and save them in a convenient, secure way using WiFi and Bluetooth. One of the selling points is that no prior set-up is required. 2) Control Center The new Control Center in iOS 7 gives users a way to access commonly-used features with a simple swipe gesture. The five (non-customisable) rows in the beta software include mode setting (Airplane, Wi-Fi, Bluetooth, Do Not Disturb mode and Rotation Lock), brightness control, multimedia controls with a sound-volume bar, shortcuts for AirDrop and AirPlay, and quick access to the LED flashlight, timer, calculator, and camera. 3) Multitasking Given improved battery management, multitasking allows users to switch between different apps in the background, almost instantly, without draining resources. Similar to HTC’s Sense Task switcher, screenshots of previously opened apps are displayed and applications can be closed with a simple swipe gesture. Among the other new features are an image editor incorporated into the Photos app, clearer, more natural-sounding female or male voices in Siri, and the new iTunes Radio service.
New features in iOS 7: AirDrop (LHS), Control Center (middle) and Multitasking (RHS)
Source: Company, Daiwa
New features for business iOS 7 incorporates several upgrades designed to cater to business users, such as per-app virtual private network (VPN) connections, enterprise single sign on (SSO), and new mobile device management (MDM) configuration options. Overall, iOS 7 appears to offer enhanced security management functions.
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Appendix III: fingerprint scanner
A closer look at the technology
A fingerprint sensor is an electronic device widely used for personal identification and verification, since it can capture the loops, arches and spirals that make every fingerprint unique. Such a system would be useful on mobile devices, as the security of mobile data is a growing concern among many users. There are several fingerprint sensor technologies, but the most commonly used today are optical-based sensors and capacitance-based sensors. Optical-based sensors Similar to digital cameras and camcorders, optical-based fingerprint sensors detect fingerprints by illuminating the surface of the finger. A charge-coupled device (CCD) system is used in the scanner to generate electrical signals in response to a fingerprint, from which a digital image is generated. This is a relatively low-cost solution, but the system’s accuracy can be affected by dirt and the hardware is prone to damage. Capacitance-based sensors Capacitance-based sensors, on the other hand, contain small capacitive plates in which integrated circuits detect very low electrical charges sent from the user’s finger. By sensing the difference in the voltage output of a finger's ridges and valleys, the sensor forms the image of the fingerprint.
AuthenTec: acquired by Apple in 2012 Apple acquired AuthenTec, a developer of fingerprint sensor technology, for USD356m in cash (USD8 a share) on 27 July 2012. AuthenTec has long provided security solutions for global handset makers including Samsung, Nokia, Motorola and LG. On 8 May 2012, it announced that it had developed “its first smart sensor specifically tailored for secure NFC mobile commerce”. AuthenTec’s fingerprint technology is a type of capacitance-based sensor incorporating capacitive and RF technologies in its biometric chips to capture the fingerprint image. We expect Apple to incorporate the fingerprint sensor under a durable, sapphire-covered, convex-shaped home button in the 5S, and to use it to provide secure authentication for various transactions without requiring the user to enter a password. Cross-section of AuthenTec's fingerprint sensor
Source: Company, Daiwa
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Appendix IV: comparison of likely specs of 5S with those of other handsets
iPhone 5S vs. flagship models from global tier-one brands Model iPhone 5S Samsung Galaxy S4 Nokia Lumia 1020 Motorola Moto X Sony Xperia ZL LG G2 HTC One BlackBerry Q10
Photo
Release date Sep-13 Apr-13 Jul-13 13-Aug Mar-13 3Q13 Mar-13 Apr-13 Current unlocked price USD649/749/849 USD619.99 USD759.50 TBD $549.99 TBD USD649.99 (32GB) USD579.99 Dimensions 123.8 x 58.6 x 7.6 mm 136.6 x 69.8 x 7.9 mm 130.4 x 71.4 x 10.4 mm 129.3 x 65.3 x 10.4 mm 131.6 x 69.3 x 9.8 mm 138.5 x 70.9 x 8.9 mm 137.4 x 68.2 x 9.3 mm 119.6 x 66.8 x 10.4 mm Weight: 112 g (3.95 oz) 130 g (4.59 oz) 158 g (5.57 oz) 130 g (4.59 oz) 151 g (5.33 oz) 143 g (5.04 oz) 143 g (5.04 oz) 139 g (4.90 oz) Embedded OS iOS 7 Android 4.2.2 MS Windows Phone 8 Android 4.2.2 Android 4.1.2 Android 4.2.2 Android 4.1.2 BlackBerry 10 OS Display diagonal 4.0" (Retina) 5.0" Super AMOLED 4.5" AMOLED 4.7" AMOLED 5.0'' 5.2'' IPS 4.7" Super LCD3 3.1" Super AMOLED Display resolution 1136 x 640 pixels 1080 x 1920 pixels 768 x 1280 pixels 720 x 1280 pixels 1080 x 1920 pixels 1080 x 1920 pixels 1080 x 1920 pixels 720 x 720 pixels PPI 326 ppi 441 ppi 332 ppi 312 ppi 441 ppi 424 ppi 469 ppi 328 ppi Fingerprint scanner Yes No No No No No No No CPU Apple A7 Dual-core Cortex-A15 & A7 Quad-
Secondary camera 1.2MP 2MP 1.2MP 2MP 2MP 2.1MP 2.1MP 2MP Battery capacity Li-Po 1600mAh Li-Ion 2600 mAh Li-Ion 2000 mAh Li-Ion 2200 mAh Li-Ion 2370 mAh Li-Po 3000 mAh Li-Po 2300 mAh Li-Ion 2100 mAh Loudspeaker Yes Yes Yes Yes Yes Yes Yes Yes
Source: Companies, Daiwa
Note: specs for the iPhone 5S are likely rather than confirmed
iPhone 5S vs. flagship models from China brands Model iPhone 5S Lenovo K900 ZTE GrandS Huawei Ascend D2 Huawei Ascend P2 Oppo Find 5 Nubia Z5 vivo Xplay
Photo
Release date Sep-13 Apr-13 Mar-13 Mar-13 Apr-13 Feb-13 2013 2013 Current unlocked price USD649/749/849 CNY2580 (16GB) CNY2600 CNY2750 CNY2999 CNY2998 CNY2788 CNY2998 Dimensions 123.8 x 58.6 x 7.6 mm 157 x 78 x 6.9 mm 142 x 70 x 6.9mm 140 x 71 x 9.4 mm 136.2 x 66.7 x 8.4 mm 141.8 x 68.8 x 8.9 mm 138 x 68.8 x 7.6mm 153.8 x 79.9 x 8mm Weight: 112 g (3.95 oz) 162 g (5.71 oz) 110 g (3.88 oz) 170 g (6.00 oz) 122 g (4.30 oz) 165 g (5.82 oz) 126 g (4.44 oz) 187 g (6.60 oz) Embedded OS iOS 7 Android 4.2 Android 4.1 Android 4.1 Android 4.1.2 Android 4.1 Android 4.2 Android 4.2 Display diagonal 4.0" (Retina) 5.5" IPS 5.0" IPS 5.0" IPS 4.7" IPS 5.0" IPS 5.0" OGS 5.0" IPS Display resolution 1136 x 640 pixels 1080*1920 pixels 1080*1920 pixels 1080*1920 pixels 720 x 1280 pixels 1080*1920 pixels 1080*1920 pixels 1080*1920 pixels PPI 326 ppi 401 ppi 441 ppi 441 ppi 312 ppi 441 ppi 441 ppi 386 ppi Fingerprint scanner Yes No No No No No No No CPU Apple A7 Dual-core Intel Atom Z2580 Dual-core Qcom APQ8064
Secondary camera 1.2MP 2MP 2MP 1.3MP 1.3MP 1.9MP 2MP 5MP Battery capacity Li-Po 1600mAh Li-Po 2500 mAh Li-Ion 1780 mAh Li-Ion 3000 mAh Li-Ion 2420 mAh Li-Ion 2500 mAh 2300mAh 3400mAh Loudspeaker Yes Yes Yes Yes Yes Yes Yes Yes
Source: Companies, Daiwa
Note: specs for the iPhone 5S are likely rather than confirmed
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Appendix V: comparison of likely specs of 5C with those of other handsets iPhone 5C vs. mid-range models from global tier-one brands Model iPhone 5C Samsun Galaxy S4 mini Nokia Lumia 925 Motorola DROID Mini Sony Xperia ZR LG Optimus L9 II HTC Desire 600 dual sim
Photo
Release date Sep-13 Jul-13 Jul-13 13-Aug Jun-13 3Q13 Jun-13 Current unlocked price USD429-479 (8GB) USD429.99 USD490.00 (16GB) TBD USD479.99 TBD USD449.99 Dimensions 123.8 x 58.6 x 8.2 mm 124.6 x 61.3 x 8.9 mm 129 x 70.6 x 8.5 mm 121.3 x 61.3 x 8.9 mm 131.3 x 67.3 x 10.5 mm TBD 134.8 x 67 x 9.3 mm Weight 125 g (4.41 oz) 107 g (3.77 oz) 139 g (4.90 oz) 130 g (4.59 oz) 138 g (4.87 oz) TBD 130 g (4.59 oz) Embedded OS iOS 7 Android 4.0.4 MS Windows Phone 8 Android 4.2 Android 4.1 Android OS, v4.1 Android 4.1.2 Display diagonal 4.0"(Retina) 4.8" Super AMOLED 4.5" AMOLED 4.3" 4.55" 4.7" True HD-IPS 4.5" Super LCD2 Display resolution 1136 x 640 pixels 720 x 1280 pixels 768 x 1280 pixels 720 x 1280 pixels 720 x 1280 pixels 720 x 1280 pixels 540 x 960 pixels PPI 326 ppi 306 ppi 332 ppi 342 ppi 323 ppi 312 ppi 245 ppi CPU: Apple A6 Dual-core Exynos 4412 Quad-core Qualcomm MSM8960
Secondary camera 1.2MP 1.9MP 1.3MP 2MP VGA 1.3MP 1.6MP Battery capacity Li-Ion 1600 mAh Li-Ion 1900 mAh Li-Ion 2000 mAh Li-Ion 2000 mAh Li-ion 2300 mAh Li-Ion 2150 mAh Li-Ion 1860 mAh Loudspeaker Yes Yes Yes Yes Yes Yes Yes
Source: Companies, Daiwa
Note: specs for the iPhone 5C are likely rather than confirmed
iPhone 5C vs. mid-range models from China brands Model iPhone 5C Xiaomi 2S ZTE U5 (Grand Memo) Huawei Mate Huawei Ascend P6 Oppo R819T Vivo X1St
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Release date Sep-13 Apr-13 Mar-13 Mar-13 Jun-13 3Q13 Aug-13 Current unlocked price USD429-479 (8GB) CNY 2088 (32GB) CNY2120 CNY2400 CNY2400 CNY2298 CNY2498 Dimensions 123.8 x 58.6 x 8.2 mm 126 x 62 x 10.2 mm 159.9 x 82.4 x 8.5mm 163.5 x 85.7 x 9.9 mm 132.7 x 65.5 x 6.2 mm 136.5 x 68 x 7.3mm 136.3 x 68.3 x 6.55mm Weight 125 g (4.41 oz) 145 g (5.11 oz) 189g (6.65 oz) 198 g (6.98 oz) 120g (4.23 oz) 110 g (3.88 oz) 143g (5.03 oz) Embedded OS iOS 7 Android 4.1 Android 4.1.2 Android 4.1 Android 4.2 Android 4.2 Android 4.2 Display diagonal 4.0"(Retina) 4.3" IPS 5.7" IPS 6.1"IPS 4.7" IPS 4.7" IPS 4.7" IPS Display resolution 1136 x 640 pixels 720*1280 pixels 720*1280 pixels 720*1280 pixels 720*1280 pixels 720 x 1280 pixels 720*1280 pixels PPI 326 ppi 342 ppi 258 ppi 241 ppi 312 ppi 312 ppi 312 ppi CPU: Apple A6 Dual-core Qcom APQ8064 Pro Quad-
Note: Specs for the iPhone 5C are likely rather than confirmed
See important disclosures, including any required research certifications, beginning on page 49
■ What's new We like Hon Hai and regard market concerns about competition as overdone. This report marks the transfer of analyst coverage. ■What's the impact We see strong earnings growth in 2H13. We assume Hon Hai will be the sole assembly company for both the iPhone 5S and next iPad, and that it is likely to secure 25-30% of the mid-range iPhone 5C orders. Thanks to its better product mix and increasing operating leverage, we forecast its earnings to grow by 90% HoH for 2H13. The robust 2H13 should enable Hon Hai to post modest earnings growth on a YoY basis for 2013, despite a tough year for its main customer Apple. Concerns about competition seem overdone. We think Hon Hai’s competitive cost structure, quick time to mass production and superior execution capability are hard to duplicate, and that Apple is
unlikely to add a new iPhone assembler until 2H14, if it does at all. We expect Hon Hai to remain Apple’s major EMS partner, and assume a 75-80% order allocation for the iPhone/iPad in 2014. Margin expansion on the way. Thanks to cost savings from the relocation of Hon Hai’s production to inland China, more stable ASP environment, and the favourable trend that we see from its major client’s move to the mid-range iPhone focus, we expect Hon Hai’s operating margin to expand from 2.8% for 2012 to 2.9%/3.1% for 2013/14, respectively. ■ What we recommend Following our transfer of coverage, we lower our 2013-15E EPS by 3-7%. We reaffirm our Buy (1) rating and lower our six-month target price to TWD98 (from TWD105), based on a one-year forward PER of 11x (12x 2013E previously), the stock’s past-three-year average. Its strong 2H13E earnings growth should act as a share-price catalyst and be a positive for active investors. We would also advise long-term investors to gradually accumulate the shares as we think they are underpriced given the market’s overly pessimistic view on Hon Hai’s position in the Apple supply chain. Risk would be slower-than-expected margin expansion.
How we differ We are more positive than the market on the firm’s order allocation for new iPhones and its margin expansion.
Information Technology / Taiwan2317 TT
4 September 2013
Hon Hai Precision Industry
Strong earnings growth in 2H13; margin expansion on the way
• As Apple’s major EMS partner, Hon Hai is well positioned to enjoy shipment growth when the new i-devices are launched
• Market concerns about competition appear overdone. We forecast Hon Hai to account for 75-80% of iPhone/iPad orders
• Reaffirm Buy (1) rating; we expect secular earnings growth in 2H13 to be a near-term share-price catalyst
How do we justify our view?How do we justify our view?
Greater China Smartphone Sector 4 September 2013
- 15 -
Growth outlook Hon Hai: sales growth, EPS growth and ROE trend
After disappointing 1H13 results due to inventory adjusments by Hon Hai’s main client, we expect the company’s revenue growth momentum to resume in late-3Q13 on the back of the launch of new i-devices. We expect Hon Hai to be the sole assembler for both the iPhone 5S and the next iPad, while it should also secure 25-30% of orders for the mid-range iPhone. As a result, we expect the company’s top line to rise by 24.4% HoH for 2H13E and 9.8% YoY for 2014E. On back of the company’s increasing operating leverage, we forecast Hon Hai’s earnings to grow by 90% HoH for 2H13 and 12.6 % YoY in 2014. Source: Company, Daiwa forecasts
Valuation Hon Hai: one-year forward PER bands
Following our transfer of coverage, we are cutting our2013/2014/2015 EPS forecasts by 7%/7%/3% to TWD8.2/TWD9.2/TWD10.5, respectively. We set our new six-month target price at TWD98 (from TWD105), now based on a one-year forward PER of 11x, the stock’s past-three-year average. We believe a PER methodology is the most appropriate way to evaluate downstream tech firms such as Hon Hai. We acknowledge that there are flaws with a PER methodology, such as a lack of insight into the long-term business outlook, a mismatch between earnings/cash flow, etc. But we think it is a more straightforward, intuitive and arguably more accurate way to predict a tech company’s earnings power, at least in the near term.
Source: TEJ, Daiwa forecasts
Earnings revisions Hon Hai: Bloomberg 2013-14E EPS forecast revisions (TWD)
According to the Bloomberg consensus, analysts have been gradually revising down Hon Hai’s 2013-14 EPS forecasts since late 1Q13, given the rising concerns about competition. Although we are cutting our 2013-15 earnings forecasts by 3-7%, we believe the market has been too pessimistic; our 2014 EPS forecast is still 10.3% higher than that of the consensus. We expect Hon Hai’s margin expansion (gross and operating) to continue in 2014 on the back of Apple’s product mix change, production relocation and increasing operating leverage.
Source: Bloomberg
How do we justify our view?
Growth outlook
Valuation
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Greater China Smartphone Sector 4 September 2013
- 16 -
Key assumptions
Profit and loss (TWDm)
Cash flow (TWDm)
Source: FactSet, Daiwa forecasts
Year to 31 Dec 2008 2009 2010 2011 2012 2013E 2014E 2015EConsumer related sales growth 31.1 5.3 11.6 11.5 18.0 20.5 15.1 17.7
Established in 1974, Hon Hai Precision Industry (Hon Hai) started out making plastic products, connector products and cable assemblies. It is now the largest electronics manufacturing service (EMS) provider globally in terms of design, manufacturing, global logistics and after-market service.
We see strong earnings growth in 2H13, margin expansion on the way
We believe Hon Hai has been overly punished by the market’s concerns on competition. We believe Hon Hai’s position in the Apple supply chain is secure and expect strong margin recovery soon.
Likely to be a major beneficiary of the new i-devices
Resume strong earnings growth in 2H13. Apple will host a media event on 10 September, at which we expect it to unveil its new phones, likely the high-end flagship model, the iPhone 5S, and a mid-range phone, the iPhone 5C. Hon Hai, as Apple’s major EMS partner on the iPhone, should be a major beneficiary of the new products, in our view. For the iPhones, our supply chain market research indicates that Hon Hai is likely to be the sole assembler for the iPhone 5S and that it will secure 25-30% of the iPhone 5C order allocation. We do not expect the company to lose all its iPhone 5C business to its competitors like the market does. Regarding the legacy phone, the iPhone 4S, we believe Apple will keep it as its low-end model, at a USD0 price tag (ie free) when bought from a mobile-phone operator with a contract, and that Hon Hai will remain the main assembler. In total, we expect Hon Hai’s iPhone shipments to reach 65-70m in 2H13E, representing 20% HoH growth. In addition to the iPhone, we expect Hon Hai to start mass production of the next iPad in September, 2013. Driven by the likely launches of Apple’s new i-devices, along with the forthcoming peak season, we expect Hon Hai to regain its revenue-growth momentum from late-3Q13. We forecast its revenue to grow QoQ by 9%/18% for 3Q13/4Q13, respectively. Benefiting from its increasing economies of scale and operating leverage, Hon Hai should deliver strong earnings
growth in 2H13, with around 90% HoH growth in EPS, to TWD 5.4 for 2H13E from TWD2.8 in 1H13. Hon Hai: revenue and earnings
Source: Company, Daiwa forecasts
More i-devices to come in 2014 We expect Apple to release the next version of the iPad mini in mid-1Q14 and that Hon Hai is likely to be a major supplier, with an order allocation of 50-60%, based on our forecasts. In addition to the new iPad mini, we expect Apple to release a new flagship iPhone with a larger screen in mid-2014, and that Hon Hai is likely to remain the sole supplier. Based on our analysis of the supply chain, we forecast total iPhone and iPad shipments to increase from 156m and 73m for 2013 to 180m and 84m in 2014, respectively. We forecast Hon Hai to account for 75-80% of both iPhone and iPad production in 2014.
Margin expansion is on the way
Due to the cost savings it has made from relocating its production in-land within China over the past year or so, more stable ASP environment, along with what we see as the favourable trend of its major client expanding its product mix to include mid-range phones, we expect Hon Hai’s operating margin to continue its upward trend for 2013/14. We forecast Hon Hai’s operating margin to expand from 2.8% for 2012 to 2.9%/3.1% in 2013/14, respectively.
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Greater China Smartphone Sector 4 September 2013
- 19 -
Hon Hai: operating margin and net profit margin
Source: Company, Daiwa forecasts
A more stable ASP environment In general, a declining ASP should now be the norm in the EMS industry, but for Hon Hai, we have been seeing a more stable ASP environment since 2012. Our market research shows Hon Hai was even able to raise its ASP (or its manufacturing value added (MVA), as it is called in the assembly business) for its major client, Apple, for the iPhone and iPad in 2Q12. We do not expect this price hike to continue but see this as evidence that Hon Hai has been getting more bargaining power when it comes to pricing. Our recent market research also indicates that the ASP pressure should ease in the coming quarters.
The benefits from moving inland should gradually kick in Hon Hai started to switch production sites in 4Q08, from the south coast of china, where labour costs are high, to inland China, where labour costs are lower. After year of efforts, Hon Hai has almost completed its relocation. The company has gradually ramped up its capacity in the Zhengzhou and Chengdu industrial parks (two major inland China production sites for the iPhone and iPad, respectively) since 2011.
According to our estimates, Hon Hai’s inland China production sites should account for about 50% of its total production output in 2013E, from about 30% in late 2012 and less than 20% in 2011. We expect the trend to continue and estimate that inland production output could reach 70% in 2014E. Although Hon Hai will still face rising labour-cost issues inland, our market research shows that the current inland China labour cost is about 30% lower than on the coast, which should give Hon Hai a further competitive cost edge and the potential for margin expansion, in our view.
In addition to the lower labour costs, Hon Hai will receive tax incentives from the local governments (Zhengzhou and Chengdu). We forecast Hon Hai’s tax rate to fall gradually to 20% for 2015, from 23% in 2012.
Major client’s product mix change could help its margin As Apple is facing the challenge of the high-end smartphone segment becoming saturated, we think Apple’s forthcoming iphone 5C is a clear indication of its strategy change to more mid-range options. We estimate that Apple’s mid-range/legacy models could account for 62% of total iPhones in 2H13 compared with 31% in 2H12. We believe this should benefit Hon Hai in terms of its operating margin, on the back of increasing economies of scale and vertical integration (more in-house components) for its legacy model, and a lower production-yield loss rate for the mid-range model, as this model is likely to have limited changes to the product design. iPhone: production forecasts by model (m units) 1Q13 2Q13 3Q13E 4Q13E 2013EiPhone 4 & 4S 15.5 12.0 10.0 7.5 45.0iPhone 5 20.0 18.5 8.5 - 47.0 iPhone 5C - - 10.0 20.0 30.0 iPhone 5S - - 5.0 29.0 34.0 Total 35.5 30.5 33.5 56.5 156.0
Source: Daiwa forecasts
Note: This table represents Daiwa’s iPhone production forecasts, which will be slightly different to Apple’s iPhone sales figures iPhone: production forecast by model mix
Source: Daiwa forecasts
Note: This table represents Daiwa’s iPhone production forecasts, which will be slightly different to Apple’s iPhone sales figures
Market concerns on competition appear overdone
We believe the market is worrying that Apple might further diversify its assembly outsourcing orders and add new vendors into the supply chain. We think these concerns are overdone. We think Hon Hai’s winning formula is a combination of its competitive cost structure on the back of its larger economies of scale and strong vertical integration, its time to get to mass production, and superior execution capability, all of which would be difficult for newcomers to duplicate in the short term and should secure Hon Hai’s position in the Apple supply chain. According to our market
research, we believe Apple is unlikely to add new iPhone assembly companies until 2H14 or later, if at all. Even if there are newcomers to the supply chain in 2H14, we believe they will start with small orders (highly unlikely to be profitable due to the lack of scale) and, thus, the impact on Hon Hai is likely to be limited for the next 2-3 years. Hon Hai: vertically integrated components
Company Name Ticker Hon Hai's holding Main products
Cheng Uei 2392 TT Related Company Connectors, cable assemblies, and power packs
Source: Companies, TEJ
Valuation and target price
Reiterate our Buy (1) rating Following our transfer of coverage, we are lowering our 2013/2014/2015 EPS forecasts to TWD8.2/TWD9.2/ TWD10.5, respectively. We believe margin expansion will drive Hon Hai’s EPS growth over 2013-15.
We set our new six-month target price at TWD98, which is now based on a one-year forward PER of 11x (2013E PER of 12x previously), which is in line with the stock’s past-three-year trading average.
Catalysts/risks We expect the major share-price catalysts to be: 1) solid revenue growth from 3Q13, and 2) margin expansion from 3Q13.
The key risks to our target price would include: 1) the weaker-than-expected sell-through of new iPhones, 2) the Taiwan Dollar appreciating against the US Dollar by more than we expect, and 3) a higher-than-expected increase in labour/raw material costs.
Note: 1 All listed companies in Taiwan have been required to adopt IFRS since 2013, and one major difference between IFRS and ROC GAAP is the reclassification of some items, such as warranties and provisions from operating expenses to COGS, thus the gross margins since 2013 cannot be directly compared with past numbers.
See important disclosures, including any required research certifications, beginning on page 49
■ What's new We are turning cautious on Largan’s prospects due to rising margin risks from the change in its main client’s product mix. This report marks the transfer of analyst coverage. ■ What's the impact Not immune to change. We expect Apple to shift the focus of its iPhones from solely the high-end segment to the mid-range segment. We expect this to result in greater pricing pressure on Largan, as the mid-range/legacy iPhones will not have upgraded camera lenses. Last piece may still be missing. The market has been optimistic about Largan winning orders from Samsung Electronics (SEC). Investors expect Largan to be a key 8MP/13MP lens vendor for SEC in 2H13 and for SEC to become one of its top-three clients in 2014. We believe there has been a delay in the qualification process, and so expect Largan’s shipments for SEC in 4Q13 to be small. Given this, and
that SEC’s current vendors have sufficient lens supply, there is uncertainty about potential orders from SEC for Largan in 2014. Strong 3Q13 still likely, but 4Q13 could disappoint. We forecast 20% QoQ revenue growth for Largan for 3Q13, driven by the peak season and new-product launches. However, we expect pricing pressure to emerge in 4Q13 following the initial sell-in of new products and forecast its gross margin to fall to 45.4% for 4Q13, below the Bloomberg-consensus forecast of 47-48%. We are cutting our 2014-15 EPS forecasts by 11-14% to factor in the rising margin risk. ■ What we recommend We like Largan for its quality management and leading industry position, but the current 2013E PER of 16x looks unattractive to us. We downgrade the stock to Underperform (4) from Buy (1) and lower our six-month target price to TWD920 (from TWD1,250 [one-year-forward PER of 16x]), now based on a one-year forward PER of 14x, in line with its past-three-year average. The major risk to our call would be better-than-expected orders from new clients. ■ How we differ We are more concerned than the market about margin risk due to the
change in the iPhone product mix and uncertain SEC orders.
Information Technology / Taiwan3008 TT
4 September 2013
Largan Precision
Rising margin risk
• Change in iPhone mix should mean rise in pricing pressure for Largan, with no change in specs for mid-range/legacy models
• Market’s expectations on SEC orders could be overly optimistic: we expect contribution from SEC to remain limited in 2014
• We see the risk of a margin disappointment for 4Q13. Valuation unattractive: down to Underperform
How do we justify our view?How do we justify our view?
Greater China Smartphone Sector 4 September 2013
- 23 -
Growth outlook Largan: sales, EPS, and ROE
Largan has had a strong 2013 so far. This follows a tough 2012 on the back of a disappointing gross margin and reduced revenue growth, driven by weakness in end demand and a low utilisation rate. Although we expect revenue-growth momentum to remain strong for 2H13, we believe the company’s earnings growth will decelerate significantly, to a double-digit YoY percentage for the coming year (3Q13-2Q14), driven by margin pressure from an unfavourable change in the iPhone model mix and limited contributions from new clients. We believe consensus expectations for SEC orders for 2014 are too optimistic and expect an insignificant revenue contribution from SEC in 2014. Source: Company, Daiwa forecasts
Valuation Largan: one-year forward PER bands
Our six-month target price is based on a 14x one-year forward PER, in line with the stock’s past-three-year average. Considering the decelerating earnings growth we expect, we view the risk-reward profile unattractive at the current level, a 2013E PER of 16x. We believe PER is the most appropriate way to evaluate downstream tech companies such as Largan. We recognise the flaws in the methodology, such as a lack of insight into the long-term business outlook, and a mismatch between earnings and cash flow. However, we think it is a more straightforward, intuitive, and accurate way to predict a tech company’s earnings power, at least over the near term.
The 2013-14 Bloomberg-consensus earnings forecasts have been raised gradually since late 4Q12, driven by the market’s anticipation of the announcement of the addition of a new client, the expectation of shipment volume growth from new iPhones, and the company’s strong margin in 1H13. Our 2014 EPS forecast is 8% below that of the consensus, which we expect to be cut on the back of rising margin pressure.
Source: Bloomberg
How do we justify our view?
Growth outlook
Valuation
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Greater China Smartphone Sector 4 September 2013
- 24 -
Key assumptions
Profit and loss (TWDm)
Cash flow (TWDm)
Source: FactSet, Daiwa forecasts
Year to 31 Dec 2008 2009 2010 2011 2012 2013E 2014E 2015EMobile phone lens shipment (K units) 200,491 173,300 215,100 286,554 344,730 478,434 563,891 663,559Blended ASP of handset lens (USD) 1.01 1.12 1.21 1.33 1.34 1.44 1.44 1.43Gross margin of VCM assembly (%) 0.0 5.0 7.3 6.8 5.3 6.0 6.0 5.8
In Asia ex-Japan, Largan Precision (Largan) is the leading lens manufacturer for mobile handsets. Nokia, Motorola, Sony Ericsson, Apple, HTC and RIM are the company’s major customers. It currently has around a 28% share of the global handset lens market.
We like Largan for its quality management and leading industry position. However, we worry it might encounter gross-margin pressure due to Apple’s changes to the iPhone mix and the limited contribution from its possible new client – Samsung.
Not immune to changes in Apple’s iPhone mix
Apple is Largan’s largest customer, accounting for about 50% of its total revenue, based on our estimates. As Apple is facing the challenge of the high-end smartphone segment becoming saturated, we expect it to release two new iPhones in September 2013 – the iPhone 5C and its high-end flagship model, the iPhone 5S. We think the iPhone 5C would mark a clear indication of a change in Apple’s strategy, ie, moving from purely high-end phones to a focus on mid-range ones. We forecast the mid-range/legacy products to account for 62% of total iPhones in 2H13, double from 31% in 2H12. Our market research of the supply chain indicates that the iPhone 5C will use the same lens module as the legacy model (the iPhone 5), which should bring more pricing pressure for Largan this year due to no specs upgrades (to lens modules), in our view. In addition, we estimate Largan’s share of orders for the iPhone 5C and legacy products would be 60-70% for 2H13. For the iPhone 5S, the new high-end model, we expect small upgrades in the lens module, with the aperture ratio increasing from f/2.4 to f/2.0. We believe Largan will remain the major supplier of this module, with an allocation of 85-90% and a 10-20% ASP premium.
iPhone: production forecast by model mix
Source: Daiwa forecasts
Note: This chart represents Daiwa’s iPhone production forecasts, which are slightly different from the iPhone sales figures reported by Apple
Too much hype about the new client
Last piece should remain missing Over the past six months, the market has been optimistic about Largan finding the final missing piece in its client base – ie, new-order wins from SEC. The market seems to be expecting Largan to become a key 8MP/13MP lens vendor for SEC’s mid-range to high-end smartphones and may be thinking that SEC could become one of Largan’s top-three clients in 2014. We hold different view on this. According to our market research, Largan has sent out lens-module samples for SEC’s S4 and Note 3 smartphones. However, the process may have been delayed, and Largan’s lens modules do not yet appear to have been qualified for either model. Considering the life cycles of these products (the S4 was launched nearly six months ago while the Note 3 is due to be launched in early September), we think it is unlikely that Largan will become a major lens vendor for either model this year. We therefore expect SEC’s revenue contribution to Largan to be limited for 4Q13, with only small volume shipments for the S4 or Note 3. In addition, our market research shows there should be sufficient high-end lens module capacity among the Korea lens-module makers (SEC’s current vendors) from 4Q13, which could lead to further uncertainty about SEC’s orders to Largan into 2014. Rising risks from aggressive capacity expansion Our market research also indicates that Largan has been aggressively expanding its capacity for 2H13, which is supported by Largan’s capex rising in 1H13 (up 85% YoY). We forecast Largan’s capacity to
increase by 20-30% HoH for 2H13, and estimate that over 30% of the new capacity is likely to be allocated to SEC. But, we now see rising risks from this aggressive capacity expansion due to uncertainty over the SEC orders. If there are further delays or if SEC cancels orders, Largan might have to cut prices to win orders to fill its capacity, which in turn could result in further margin pressure in 2014. Largan: capex trend
Source: Company
3Q13 outlook looks intact but 4Q13 could disappoint
We forecast Largan to deliver strong 3Q13 revenue growth on a ramp-up in shipments of new products for the peak season. We estimate Largan to deliver 20% QoQ revenue growth for 3Q13, with an EPS of TWD17.4 (up 15% QoQ, 101% YoY). However, we expect more pricing pressure in 4Q13 after the initial sell-in period. Despite greater economies of scale, we forecast Largan’s gross margin to decline to 47.5% in 3Q13 and 45.4% in 4Q13, lower than the Bloomberg-consensus forecast of 47-48%. For the coming year (3Q13-2Q14), we forecast Largan’s earnings growth to be only 11.5% YoY, significantly lower than growth of 78% YoY a year ago (3Q12-2Q13), given the likely unfavourable product mix change for Apple, limited spec upgrades in the new models, and a likely delay in orders from SEC.
Valuation and recommendation
Good company, but risk/reward not attractive We like Largan for its solid management team, superior execution, and its leading industry position. However, we believe the market has priced in most of the positives. Largan’s share price has rallied by about 50% since April 2013, driven by the market’s optimism about the new client (SEC), its strong 2Q13 results, and the expectation of strong revenue-growth momentum in 2H13. The stock is trading at a 16x 2013E PER, at the high end of its past-three-year trading range of 10-20x and at a premium to its past-three-year average of 14x. We view the current risk/reward profile as unattractive and believe it leaves little room for any disappointment. Although we think the near-term revenue-growth momentum remains intact, we see potential downside risks due to margin pressure and a decelerating revenue-growth outlook from 4Q13. Following the transfer of analyst coverage, we are raising our 2013 EPS forecast to TWD65.8 and cutting our 2014/2015 EPS forecasts to TWD71.6/TWD81.1, respectively. We set our new six-month target price at TWD920, which is now based on a 14x one-year forward PER, in line with the stock’s past-three-year average. Catalysts and risks Downside risk would come from: 1) disappointing margin delivery and earnings growth from 4Q13, and 2) further delays or cancellation in orders from SEC. We would turn more positive on Largan if we were to see: 1) better-than-expected orders from new clients, or 2) stronger-than-expected sell-through of the iPhone 5S, leading to what we would see as a favourable shift in Largan’s product mix.
See important disclosures, including any required research certifications, beginning on page 49
■ What's new We have turned cautious on AAC due to the increasingly unfavourable industry trend and its unattractive valuation. This report marks a transfer of analyst coverage. ■ What's the impact Affected by major client’s product mix change. AAC’s largest client, Apple, looks likely to become more focused on mid-range iPhones. We forecast Apple’s mid-range and legacy iPhones to account for 62% of its iPhone production volume in 2H13, from 31% in 2H12. We believe this change would result in more pricing pressure on AAC, due to unlikely spec upgrades on mid-end/legacy models. Upside capped for high-end, uncertainty of being able to tap into mid-to-low end. We are concerned about the business
potential for AAC in the high-end smartphone segment, which we see as saturated with slower volume growth and limited room for further sound-quality enhancements. AAC’s intention to win orders in the mid-to-low-end segment could be a long-term positive if it can deliver solid profitability in this pricing-competitive segment. However, we believe AAC could see its margins decline during this transition period. Valuation premium looks unjustified. Driven by the increasingly unfavourable industry trend, AAC’s EPS growth rate should decelerate to around 12% YoY for 3Q13E-2Q14E, compared with 60-70% for 3Q12-2Q13, on our forecasts. ■ What we recommend Following a transfer of coverage, to factor in the margin risks, we cut our 2013-15E EPS by 7-18% and downgrade AAC to Underperform (4) (from Buy [1]). Our new six-month target price of HKD33.50, based on a 14x one-year forward (ie, 3Q13E-2Q14E) PER, is in line with the stock’s past-3-year average (formerly HKD44.50 on a 16x PER). A better-than-expected margin would be the main risk to our view. ■ How we differ We are more concerned than the market about margin pressure on
AAC due to the increasingly unfavourable product mix for smartphones overall.
Information Technology / China2018 HK
4 September 2013
AAC Technologies
Not immune to the unfavourable product mix shift
• AAC could come under more pricing pressure due to Apple’s product mix shifting to focus more on mid-range iPhones
• Limited upside for high-end/uncertainty of tapping into mid-range phones could lead to decelerating earnings growth
• Premium valuation looks unjustified; downgrade to Underperform
Forecast revisions (%)Year to 31 Dec 13E 14E 15ERevenue change (1.1) (6.3) (4.6)Net profit change (7.4) (17.8) (17.3)Core EPS (FD) change (7.4) (17.8) (17.3)
80
99
118
136
155
25
30
36
41
47
Sep-12 Dec-12 Mar-13 Jun-13 Sep-13
Share price performance
AAC Tech (LHS) Relative to HSI (RHS)
(HKD) (%)
12-month range 25.85-46.40Market cap (USDbn) 5.783m avg daily turnover (USDm) 27.75Shares outstanding (m) 1,228Major shareholder Chun Yuan Wu Ingrid (21.4%)
How do we justify our view?How do we justify our view?
Greater China Smartphone Sector 4 September 2013
- 31 -
Growth outlook AAC: sales growth, EPS growth and ROE trend
We expect AAC’s revenue and earnings growth to decelerate from 3Q13 onwards, driven by: 1) Apple’s product mix shift to mid-range smartphones, 2) limited possibilities for product spec upgrades for AAC’s clients, and 3) a slowdown in demand for high-end smartphones. We forecast AAC’s rate of annual EPS growth to decelerate to 11% YoY for 2014 and 14% YoY for 2015 from the 70% YoY growth the company posted for 2012.
Source: Company, Daiwa forecasts
Valuation AAC: one-year forward PER bands
We have a new six-month target price for AAC of HKD33.50, based on a one-year forward PER of 14x, in line with the stock’s past-3-year average (formerly HKD44.50 on a 16x PER). AAC trades at a 15.4x one-year forward PER, which we view as unattractive based on its past-3-year average, and we see the risk of a derating due to the lukewarm near-term earnings-growth outlook. We believe the PER methodology is more appropriate to evaluate downstream tech companies like AAC. While we recognise flaws with this methodology, such as a lack of insight into the long-term business outlook, a mismatch between earnings/cash flow, etc., we think it is a more straightforward, intuitive and arguably accurate way to predict a tech company’s earnings power, at least in the near term
Following a transfer of coverage, we are cutting our 2013/2014/2015 EPS forecasts for AAC to CNY1.84/ CNY2.05/CNY2.33, respectively, representing cuts of 7%/18%/17%, respectively. We believe the 2013-14 Bloomberg-consensus earnings forecasts for AAC have reached the peak; they have trended down since late 2Q13, due mainly to market concerns about high-end smartphone saturation. Our 2013E EPS is slightly (2.6%) lower than that of the consensus, while our 2014E EPS is around 7% lower.
AAC Technologies designs and manufactures miniature acoustic components, including speakers, receivers, microphones and hands-free headsets, for use in mobile phones and other consumer handheld devices.
We like AAC’s leading position in the acoustic components industry, but are concerned that it could see margin pressure due to the increasingly unfavourable industry trend towards mid to low-end smartphones.
Likely to be adversely impacted by product mix change
Apple is AAC’s largest client, with a 45%+ revenue contribution for 2013, based on our forecasts. Facing the challenge of the high-end smartphone segment moving into the saturated stage, Apple is expected to release two new iPhones this September – a mid-end iPhone 5C, and a high-end flagship model, iPhone 5S. We see the iPhone 5C as a clear indication of Apple’s strategy to shift its focus from being purely high-end to be more mid-range. We forecast Apple’s mid-range and legacy handsets to account for 62% of total iPhone production volume in 2H13, up two-fold from 31% in 2H12 (the following bar chart shows). Our supply chain research indicates that the mid-range iPhone 5C will use the same acoustic components as the legacy model, which would mean more severe pricing pressure for AAC due to the likely lack of spec upgrades. AAC: revenue breakdown by client (2013E)
Source: Daiwa forecasts
Note: Samsung – Samsung Electronics
iPhone: production breakdown by model mix
Source: Daiwa estimates and forecasts
Note: This chart represents Daiwa’s iPhone production forecasts, which will be slightly different from the iPhone sales figures reported by Apple
Upside looks capped for high-end; rising uncertainties from move into mid-low range phones
We are positive about AAC’s leading position in the acoustic components industry through its competitive technology, solid execution, and quality management team. However, we believe the company might enter a transition period due to the changing dynamics in the smartphone industry. For the high-end smartphone segment, in addition to the likelihood that sales-volume growth could slow from 2H13 onwards due to this segment moving into the saturated stage, we are concerned that the room for further upgrades to acoustic components could be limited or proceed at a slower pace. Take Apple for example. To fulfil the sound quality requirement for popular apps like Siri (personal voice assistant) and Facetime (video call), Apple added another MEMS microphone and upgraded the receiver to HD for the iPhone 5 (released in September 2012) to enhance its sound quality. However, we do not expect a similar degree of upgrades for the new forthcoming iPhone 5S. Our market research shows that the iPhone 5S may only have small upgrades to the receiver, and as such, we believe AAC may only post a single-digit rise in its ASPs for its components supplied for this new model for 2H13, compared with a 20-30% ASP increase on average for its components for the iPhone 5 last year. We also view this limited acoustic upgrade on the iPhone 5S as an indication that the sound quality is already good enough for this new high-end smartphone, and that there is no urgency for an immediate further significant improvement.
During the 2Q13 results meeting for analysts held on 16 August, AAC’s management team indicated its intention to gain more shares with customers other than Apple in the mid-to-low end smartphone segment. We have two perspectives on this statement: 1) it may indicate that AAC expects its business to be adversely affected by its major client’s product mix change and that’s why the company is willing to move from the very profitable high-end segment to the mid-to-low end one, or 2) it could broaden AAC’s addressable market given that currently the company has limited exposure to mid-to-low end phones, and if AAC can deliver solid margins and profitability in a lower and more competitive pricing environment, this could be a long-term positive for the company. However, we believe this switch in strategy will take time to bear fruit, and expect AAC’s profit margins to come under more pressure during the transition period, which we expect in coming years.
Decelerated growth outlook
Driven by the unfavourable industry trend and AAC’s major client’s change in its product mix, AAC’s gross margin could be under pressure in the coming year. For 2H13, although we expect AAC to post solid revenue growth (up 20%+ YoY) on the back of new product launches and peak seasonality, we forecast its gross margin to recover only mildly, from 42.8% for 1H13 to 43.5%, lower than the 44-45% in 2H12, despite its greater economies of scale. In all, we forecast AAC’s EPS growth rate to decelerate to 12% YoY in the coming year (3Q13E-2Q14E), compared with 60-70% YoY growth a year ago (3Q12-2Q13).
Valuation and recommendation
Valuation looks unattractive; downgrade to Underperform Following a transfer of coverage, we are reducing our 2013/2014/2015 EPS forecasts for AAC to CNY1.84/CNY2.05/ CNY2.33, respectively, ie, by 7%, 18% and 17% respectively. We set our new six-month target price at HKD33.50, which is based on a one-year forward (ie, 3Q13E-2Q14E) PER of 14x, in line with the stock’s past-three-year average multiple.
The AAC stock is trading at a one-year forward PER of 15.4x, at a premium to its past-3-year average trading multiple of 14x, which we view as unjustified. We see a risk of a de-rating during the next 6-12 months given the lukewarm near-term earnings-growth outlook we see for the company. Thus, we downgrade our rating on the stock to Underperform (4) (from Buy [1]). Catalysts and risks We expect the major downside risks for AAC to be: 1) potentially disappointing profit margins in 2H13E, and 2) a slowdown in earnings growth for 3Q13E onwards. The key upside risk to our Underperform rating would be a better-than-expected margin delivery by the company. We could turn more positive on AAC if we saw: 1) a faster ramp-up in the earnings contribution from its non-acoustic products, or 2) faster-than-expected significant upgrades to acoustic products for high-end smartphones due to new innovative apps or functionality. AAC: one-year forward PER bands
When a report covers six or more subject companies please access important disclosures for Daiwa Capital Markets Hong Kong Limited at http://www.daiwacm.com/hk/research_disclaimer.html or contact your investment representative or Daiwa Capital Markets Hong Kong Limited at Level 26, One Pacific Place, 88 Queensway, Hong Kong.
See important disclosures, including any required research certifications, beginning on page 49
■ What's new Following an unfavourable change in the product mix of a major client and the market’s high earnings expectations, we have become less positive on the stock. This report marks a transfer of the coverage. ■ What's the impact Worst should be over... TXC had weak 1H13 results, due mainly to a market-share loss and pricing competition from Japan peers (weak Yen). We do not expect sharp currency volatility to continue and believe TXC has seen the worst of the impact from the weak Yen. …but market expectations too high and client’s product-mix change should have an impact. The market expects TXC to have a back-loaded year, with 2H13 revenue rising by about 30% HoH and the operating margin recovering to 12.5-13.0% (2Q13: 10.2%). However, the likelihood of pricing pressure in 2H13 is being overlooked. In particular, Apple, (15-
20% of revenue), could switch its focus to mid-range products, thus increasing pricing pressure on TXC given no upgrade in specs to mid-range/legacy models. For 2H13, we forecast TXC’s revenue to rise by 15% HoH with the operating margin recovering to 11.5-12.0%. 2014 should be better. Our research suggests TXC recently won new clients for high-end networking products and two new smartphone-chip vendors. We expect the contribution to ramp up in 2014 and be revenue-growth drivers for TXC. It should also benefit the volume growth of i-devices in 2014 as we expect it to have a stable market share from 2H13. Overall, we expect TXC to see double-digit EPS growth for 2014 from a fall of about 20% YoY for this year. To factor in a slower margin recovery, we cut our respective 2013-14 EPS forecasts. ■ What we recommend We are downgrading our rating to Hold (3) from Buy (1), and lowering our six-month target price to TWD41 (from TWD57), now based on a 12.5x one year forward PER (14x 2013E PER previously), in line with the stock’s past-three-year average. Upside risk would be a faster-than-expected margin recovery, while downside risk would be further sharp Yen depreciation.
■ How we differ We are more cautious than the market on TXC’s 2H13 recovery story given the pricing pressure we expect.
Information Technology / Taiwan3042 TT
4 September 2013
TXC Corp
Market expectations too high
• We believe TXC has come through the worst of pricing competition from Japan peers as a result of Yen depreciation
• Sales growth should resume in 2H13; but the market may be overlooking possible pricing pressure from a major client
• Valuation undemanding but we suggest investors wait for the market to cut earnings expectations. Downgrade to Hold
How do we justify our view?How do we justify our view?
Greater China Smartphone Sector 4 September 2013
- 39 -
Growth outlook TXC: sales, EPS, and ROE
Given that the worst of the impact from Yen depreciation should be over for TXC, we expect the company’s revenue to recover in 2H13. However, we believe that the consensus forecasts of about 30% HoH revenue growth and an operating margin of 12.5-13.0% is too optimistic given the strong likelihood of pricing pressure from one of its major customers. Overall, we expect 2014 to be a better year for TXC. Given the contributions from new clients and solid orders of i-devices, we forecast 2014 EPS to rise by 15.2% YoY, up from a decline of 19.4% YoY for 2013. Source: Company, Daiwa forecasts
Valuation TXC: one-year forward PER bands
We see limited downside to the current PER valuation (12x on a one-year forward basis), which we regard as undemanding, given the improved growth outlook we expect for 2014. At the same time, we see limited upside given what we see as the market’s high 2013-14 expectations. Our new six-month target price of TWD41 is based on a one-year forward PER of 12.5x, in line with the stock’s past-three-year average. We suggest investors revisit the stock after the market revises its expectations.
The share price has fallen by 15% YTD, underperforming the Taiex by 20%, as the consensus 2013-14 earnings forecasts have been cut gradually on the back of the company’s disappointing 1H13 results and increased competition from peers. However, we are still less optimistic on its margin recovery in 2H13 given an unfavourable product-mix change by one of the company’s major customers. Our 2013 EPS forecast is about 15.3% lower than that of the consensus. We expect the consensus forecasts to be cut further over the coming months given the pricing pressure that we expect.
TXC Corporation (TXC) was founded in 1983. The company designs, manufactures, and sells frequency-control crystal components.TXC has two major production sites, one in North Taiwan (Ping-Cheng) and the other in East China (NingBo). Each accounts for roughly 50% of the firm’s total output value, but the Taiwan company is mainly engaged in small crystal production and advanced optical modules.
See important disclosures, including any required research certifications, beginning on page 49
■ What's new We expect Apple to unveil two new phones on 10 September. As a major assembly firm for Apple’s consumer (in addition to Hon Hai), we expect Pegatron to benefit from the sales-volume growth of the new i-devices. ■ What's the impact Should be a major beneficiary of the likely mid-range iPhone 5C. The mid-range 5C should be a lower-spec version of the iPhone 5, with a plastic, coloured casing and less memory. We would expect prices for the 5C to range from USD429 to USD479. We also expect Apple to continue selling the 4S as a low-end model. Our market research suggests that Pegatron began mass production of the iPhone 5C in August. The company should be the major supplier of the 5C, and we would expect it to account for 70-75% of Apple’s order allocation for
this model. Meanwhile, in the PC business, we believe Pegatron is losing its share of Asustek’s outsourcing business and is only seeing modest order gains from other clients. However, we expect the weakness in the PC segment to be offset by solid revenue growth in its non-PC business. Operating margin should rise in 2H13. For 2Q13, Pegatron had a lower-than-expected operating margin of 0.3-0.4%, due to: 1) a less-favourable product mix, 2) higher initial costs/expenses for new products (we believe these were for the new mid-range iPhone), and 3) some notebook-capacity relocation. However, we expect the margin to recover in 2H13 on the back of better operating leverage and rising capacity utilisation, due to revenue-growth momentum from a rise in shipment volumes of new i-devices. ■ What we recommend We reiterate our Buy (1) rating for Pegatron and our six-month target price of TWD62, based on a one-year forward PER of 12x, equivalent to the stock’s past-two-year average. The key risk would be weaker-than-expected shipment volume for the new i-devices. ■ How we differ Our 2014 EPS forecast is 18% higher
than that of the Bloomberg consensus as a result of our more positive view on revenue growth and the operating margin.
Information Technology / Taiwan4938 TT
4 September 2013
Pegatron Corp
A major beneficiary of the likely mid-range iPhone
• New orders from probable iPhone 5C should offset a decline in the PC business
• We expect an operating-margin recovery to drive up the share price
• Reaffirm Pegatron as our top pick in the Taiwan ODM Sector with a Buy (1) rating
How do we justify our view?How do we justify our view?
Greater China Smartphone Sector 4 September 2013
- 43 -
Growth outlook Pegatron: revenue and earnings growth
We expect Pegatron to record strong net-profit growth for both 2013 and 2014, due mainly to it being allocated new orders from Apple’s likely iPhone 5C and a steady improvement in its operating margin on the back of better operating leverage and rising capacity utilisation.
Our six-month target price of TWD62 is based on a PER of 12x applied to our one-year forward EPS forecast. Our PER multiple is equivalent to the stock’s past-two-year average. We reiterate our Buy (1) rating as the current 2013E PER of 10.1x looks attractive to us compared withthe stock’s past-three-year range of 8-14.5x.
The Bloomberg-consensus 2013-14 EPS forecasts have been cut recently to factor in the weak 2Q13 results and a potential delay in the new iPad mini. We believe that a recovery in the operating margin will be the major catalyst for the share price over the coming months. Our 2013 and 2014 EPS forecasts are respectively 7% and 18% higher than those of the consensus.
Founded in January 2008, Pegatron is a subsidiary of Asustek and an electronic and computing DMS (design and manufacturing service) company with extensive experience in product development. It also has vertically integrated capabilities. Pegatron’s product line includes motherboards, desktop PCs, notebooks, smartphones, tablets, broadband, wireless systems, game consoles, networking equipment, set-top boxes, multimedia, and LCD TVs.
Jonas KAN (852) 2848 4439 [email protected] Head of Hong Kong Research; Head of Hong Kong and China Property; Regional Property Coordinator; Property Developers (Hong Kong)
Jeff CHUNG (852) 2773 8783 [email protected] Automobiles and Components (China)
Grace WU (852) 2532 4383 [email protected] Head of Greater China FIG; Banking (Hong Kong, China)
Jerry YANG (852) 2773 8842 [email protected] Banking (Taiwan)/Diversified Financials (Taiwan and China)
Joseph HO (852) 2848 4443 [email protected] Head of Industrials and Machineries (Hong Kong, China); Capital Goods –Electronics Equipments and Machinery (Hong Kong, China)
Winston CAO (852) 2848 4469 [email protected] Capital Goods – Machinery (China)
Eric CHEN (852) 2773 8702 [email protected] Pan-Asia/Regional Head of IT/Electronics; Semiconductor/IC Design (Regional)
Felix LAM (852) 2532 4341 [email protected] Head of Materials (Hong Kong, China); Cement and Building Materials (China, Taiwan); Property (China)
Dennis IP (852) 2848 4068 [email protected] Power; Utilities; Renewables and Environment (Hong Kong/China)
John CHOI (852) 2773 8730 [email protected] Regional Head of Small/Medium Cap; Small/Mid Cap (Regional); Head of Multi-Industries (Hong Kong, China); Internet (China)
Kelvin LAU (852) 2848 4467 [email protected] Head of Transportation (Hong Kong, China); Hong Kong and China Research Coordinator; Transportation (Regional)
Jibo MA (852) 2848 4489 [email protected] Head of Custom Products Group; Custom Products Group
Adrian LOH (65) 6499 6548 [email protected] Head of Singapore Research, Regional Head of Oil and Gas; Oil and Gas (ASEAN and China); Capital Goods (Singapore)
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Greater China Smartphone Sector 4 September 2013
- 49 -
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