05.07.2001
CMC and Ritek revenues pretty flat in April

• First-tier CD-R maker CMC (2323 'Zhong Huan') forecasts April revenue of NT$1.31b, 8% growth MoM. The company reports that the utilization rate on CD-R increased to 60% from 50% in March, meaning the CD-R selling price did not improve in April.

• Another first-tier CD-R maker, Ritek (2349 'Lai De'), expects April revenue to come in at around NT$1.7b, versus NT$1.66b in March. This result indicates that CD-R price recovery is happening much slower than the figures provided by local CD-R firms suggest.

• The share prices of CD-R companies on the local bourse have been falling recently, reflecting to some degree the significant decline in 1Q01 earnings and lower than expected 2001 earnings forecasts. We believe prices have still not fully discounted weak sentiment on CD-R and suggest a close watch on market movements.

• Last Friday, CMC's shareholders meeting approved a 28% dividend (25% stock dividend and 3% cash dividend) and capital addition through a GDR or rights issue this year.

• The company announced that royalty expenses to Philips have been cut to US$0.035 per CD-R piece from US$0.045. Total royalty expenses per piece, including those to Japanese firms, are estimated to be around US$0.05 per unit, a relatively high figure among Taiwan CD-R makers.

• We remain NEUTRAL on CMC and Ritek.

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