06.11.2001
Compal remains strong amid gloom in NB PC sector

• May revenue for first tier Notebook PC makers with the exception of Arima (2381 ‘Hua Yu’) showed negative growth MoM due to lower than expected NB PC shipments. Arima recorded 28% increase MoM due mainly to new orders from NEC and a low base of comparison with April, but still booked 29% down YoY. In yearly sales growth, only Quanta (2382 'Guang Da') reported positive figures, reflecting a 36% increase YoY. Compal (2324 'Ren Bao') and Inventec (2356 'Ying Ye Da') both recorded yearly declines of 9% and 47%, respectively.

• Compal's May revenue closed at NT$ 5.04b, a 16% slide MoM and 9% down YoY. Accumulated sales in the first five months was down only 0.2% YoY. However, NB PC shipment came in low, at 155k in May, below our expectation. The stock price declined last Friday, reflecting the weak May sales results. According to our company visit, Compal confirmed that they had locked in orders from Dell on two new models and expected to start shipping in June and August. Compal has also won orders from Legend, with 100k units expected this year, versus 20k total shipment last year. Sales from non-NB PC sector is expected to increase largely in 2H01, boosted by the new pocket PC business from HP as well as increased handset shipments from Motorola.

• VB Primasia Investment Opinion: We believe Compal monthly sales can resume an upward trend in 2H01. We continue to hold an ACCUMULATE rating on the back of otherwise respectable financial performance of late and a positive sales growth outlook.

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