09.14.2001
Limited downside risk for Accton

• Development: Accton reported that its distribution subsidiary, SMC, posted breakeven from June to August. Firm expects to continue benefiting from outsourcing while the economy may recover more slowly than anticipated.

• Analysis: Looking at 1H01, over 50% of revenues are generated from switches, targeting SOHO and SME markets. As a result, we believe the expected loss of consumer confidence is unlikely to hinder company’s performance in 2H01.

• Primasia View: Accton currently trades at P/E of 13.5x with adjusted FY01 EPS of NT$2.77. We maintain our Buy recommendation on this counter.