06.05.2001
Faraday feeling the pressure

• Faraday Technology (5404 'Yuan Zhi') expects May sales to come in around NT$195m, slightly lower than market expectation of NT$200m. This represents a MoM increase of 8.3%, when compared to NT$180m in April. Shipments of SOC (System on Chip) products will begin this month, and the company expects to post a MoM increase of 20% or NT$230m.

• Gross margin for the month is expected to be around 48%, a slight decrease from last month's 51% or 1Q's average of 50%. Pre-tax earnings until May amounted to NT$265m, representing only 31% of the company's financial forecast of NT$850m.

• VB Primasia Investment Opinion: We are concerned over Faraday's revenue in 2H01. In order to reach this year's forecast, the company will need to see a timely and quick recovery. As we do not anticipate a sharp recovery in the near term, we believe the stock price of Faraday will be under pressure with little likelihood of meeting its 2001 forecast. Therefore, we will assign WEAK HOLD to this counter pending any signs of an improved market outlook.

AngelLo@Primasia.com +886-[0]2-2547-8865