05.24.2001
Looking at recovery in 2H01

• A report by Murata (Japan), the world's largest maker of passive components for handsets, estimates that inventory backlog in the handset market could be cleared out by 3Q01. The company expects handset shipment to surge in 2H01, with GPRS handsets a main driver this year.

• We also expect shipment from major handset makers in 2H01 to come in stronger than in 1H01 as inventory correction starts to impact the market. However, we have some doubts as to whether GPRS handset will see shipment before early next year. Consequently, we expect the handset upgrading market to be on a par with the new buyer market in 2001.

• VB Primasia Investment Opinion: We reiterate our forecast that Acer Communications and Multimedia (ACM, 2352 'Ming Dian') will ship 5.5-6m handsets this year, with around 2.3m units in 1H01. We see a share price trading range of NT$35-45 emerging and recommend a TRADING BUY within this range in the short term. We are bullish on the handset market through 2002 and recommend a LONG TERM BUY on ACM.

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