05.11.2001
MTI posts disappointing results in April

• Microelectronics Technology Inc. (MTI, 2314 'Tai Yang') reported April revenue of NT$0.32b, down 3.6% YoY and the lowest monthly figure for the last 13 months. The poor result is mainly due to slow shipment of Base Stations and Local Mutli-point Distribution Systems (LMDS).

• MTI ships Base Stations to Lucent (US) and LMDS to Netro (US), which also ships to Lucent. A slowdown in Lucent's business has impacted MTI's revenue. Lucent contributes 15-20% of MTI's total revenue. We estimate that revenue in 2Q01 will miss the company's target of NT$1.73b by 25-30%.

• MTI has obtained 3G equipment orders from Japanese clients including NEC. Although MTI's 3G equipment is not a mature product, we are confident the company's strong R&D team can see it through any technical problems. Trial shipment starts in 2Q01. We expect shipment proper to come in 3Q01 or 4Q01, although volume may be very modest in the initial stages.

• Lucent recently won a US$5.0b, 3-year contract from Verizon Wireless (US) to provide 3G equipment including IP software, base stations and switches for head-end equipment. We also expect MTI to indirectly benefit from Verizon Wireless' plan to launch 3G services in early 2002.

• VB Primasia Opinion: We would recommend investors watch for an opportunity to accumulate this stock at around the low NT$40-42 level.

BennyLo@Primasia.com +886-[0]2-2547-8869