06.08.2001
Ambit still going places

• Communication giant Alcatel has reportedly signed a memorandum to sell off DSL modem business to Thomson Multimedia (TMM) for US$386m. The affect on long time DSL modem partner Ambit (2386 'Guo Dian') should be minimal in the short term.

• We feel the existing Chunghwa Telecom (2412 ‘Zhong Hua Dian’) ADSL contract won by both Alcatel and Ambit will continue. Ambit should continue to supply 1.26m units of ADSL modems to Chunghwa in 2001 and 2002 in accordance with the contract. Further, Alcatel recently signed a contract with China Telecom to provide DSL equipment in efforts to expand broadband service. The management at Alcatel indicated that there was preference to outsource the DSL modems for the deal to Taiwanese manufacturers, and we see Ambit as a strong candidate to receive the order.

• VB Primasia Investment Opinion: Ambit is the front-runner in DSL production, which has been reflected in its relatively strong share price. We continue to reiterate our optimism on Ambit and recommend HOLD.

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