05.14.2001
Dell increases outsourcing to Quanta and Compal

• Quanta (2382 'Guang Da') and Compal (2324 'Ren Bao') will benefit from more notebook (NB) PC outsourcing orders from Dell this year, according to the general manager of Dell's Purchasing Management Dept. for the Asia Pacific Region.

• Thanks to the success of its low price strategy, in 1Q01 Dell surpassed Compaq as the world's largest brand name PC maker in terms of market share. Dell forecasts NB PC shipment of around 3.5m to 4.5m units in 2001, and will raise its Taiwan outsourcing ratio to 70%-80%. Quanta and Compal are currently Dell's only NB PC OEM partners. Quanta's 1Q01 NB PC shipment of 0.88m units, up 66% YoY, reflects this. 2Q01 NB PC shipment for both companies posted sequential growth on the back of Dell's orders for its new NB PC model.

• Meanwhile, Compal has quashed market rumours that the price of its coming GDR issue will be NT$40. The story saw Compal's share price go limit-down last Friday before rising again to close at NT$44.4 for a 3% decline. The company says the final GDR price will be decided tomorrow as it winds up its overseas roadshow. Proceeds from the issue will be used to repay short-term bank loans and to purchase raw material.

• VB Primasia Investment Opinion: Given quarterly sequential growth and healthy fundamentals, we continue to recommend ACCUMULATE Quanta and Compal.

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