06.11.2001
CD-R sector reports sequentially higher May revenue

• Due to improving demand, the five TAIEX listed CD-R makers all report sequentially higher May revenue. CMC (2323 'Zhong Huan') revenue was up 8% MoM to reach an 18-month high, and Ritek's (2349 'Lai De') 8% for a nine-month high. Prodisc's (2396 'Jing Die') revenue in May rose 7.6% to a five-month high.

• For second tier CD-R makers, Lead Data (2443 'Li Die') earnings hit a 12-month high, up 15% MoM, while Gigastorage (2406 'Guo Shuo') saw a 97% MoM upswing. May is a traditionally strong month for CD-R makers.

• VB Primasia Opinion: We expect CD-R companies to continue to show sequential revenue improvement throughout 3Q01. Starting from 2H01, new non-CD-R products will be the focus of growth for 2002. Ritek will begin shipment of DWDM Thin-Film-Filters (TFF) in June, and continue to turn out more portable storage media (PSM). Ritek and Prodisc have the potential to become world leaders in TFF. Ritek is already an industry leader in PSM and will benefit most as the market grows. We maintain a BUY recommendation on Ritek with 12-month target price of NT$128.

VincentChen@Primasia.com +886-[0]2-2547-8868