06.13.2001
Sunplus: Brightened prospects

• Sunplus (2401 'Ling Yang') held its AGM and approved a dividend of NT$3.50 in stock and NT$1 in cash. In the meeting, the company indicated that 2Q01 revenue is likely to miss the forecasted target of NT$1.65b. This is in line with our expectations of NT$1.6b. However, Sunplus expects to meet its pre-tax profit target of NT$441m on the back of gross margin improvement and gains on exchange spreads. Further to the AGM, shareholders approved a proposal to invest in Mainland China, where strong opportunities have been identified.

• The current economic gloom and negative consumer sentiment has dragged down Sunplus's performance in 2Q01. Looking forward, we remain confident that the seasonal up-tick will begin in 3Q01 and expect a substantial sequential improvement in 2H01. We expect this improvement to be backed by contributions from the multimedia segment; for example, ICs for video game consoles and DVD players. We believe the company's strategic investment in various firms combined with an increase in non-operating income will reap extra profitability in 2001.

• VB Primasia Investment Opinion: Although the investment in Mainland China has a long way to go, we believe this opportunity will prove itself in the long run. We recommend LONG TERM BUY on this counter.

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