05.18.2001
Cheng Uei ready to benefit from November launch of Xbox

• Microsoft's Xbox is slated for a November 8 launch in North America and Japan. The price tag is US$299, the same price as the Play Station 2. Cheng Uei Precision (2392 'Cheng Uei') is the supplier of Xbox's internal and external connectors, power supply packs and cable assemblies for signal transformation.

• Cheng Uei has informed us that Microsoft's yearly target is 5-6m units and that it expects shipment from 2H01. We stick to our assumption that 60% (3.0-3.6m units) of annual target will ship in 2001, and expect Xbox to generate NT$0.6b in 2001 and NT$0.5b in 2002.

• VB Primasia Investment Opinion: Cheng Uei is currently trading at a P/E of 25x forecast 2001 EPS of NT$3.45. We see this as a fair price. We reiterate our BUY ON WEAKNESS recommendation based on the company's attractive future prospects.

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