03.19.2001
Compal moves into upstream components

• Compal Electronics (2324 'Ren Bao') is to invest in the production of touch panels. The company recently moved into the production of Low Temperature Poly-Silicon (LTPS) TFT-LCD panels.

• Touch panels and LTPS panels are used mainly in handheld devices. Compal sees these products as having significant growth potential on strong demand for handheld devices. Compal predicts IA shipment this year to jump to 400k from 11k in 2000 on the back of a large order for pocket PC.

• Compal estimates 2001 revenue will reach NT$95b on shipment of 2.6m NB PC. The company has lowered its handset shipment target this year to 3m units from 5m units.

• NB PC is expected to account for 72% of total revenue in 2001, from over 80% last year. Increased handset sales and sales in the monitor sector, especially LCD monitor, are behind the decline in NB PC's share of sales. We maintain our sales projection in 2001 of NT$92b on shipment of 2.3m NB PC and 3m handset units.

• Compared to other first-tier NB PC makers, Compal's current stock price is relatively cheap at 12.3x our 2001 EPS forecast. We upgrade our recommendation to ACCUMULATE from Hold.

MarthaChen@Primasia.com +886-[0]2-2547-8878