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Shares of MediaTek jump on positive shipment target revision

2012/08/01 11:47:37

Taipei, Aug. 1 (CNA) Shares of MediaTek Inc., one of Taiwan's leading integrated circuit designers, moved sharply higher Wednesday morning after the company raised its target for smartphone chip shipments in 2012, dealers said.

The buying also reflected MediaTek's strong second quarter earnings, which beat market expectations on the back of solid growth in smartphone chip sales, they said.

As of 11:15 a.m., shares of MediaTek had added 6.67 percent to NT$272.00 (US$9.07), off an early high of NT$272.50, with 23.82 million shares changing hands. The benchmark weighted index was down 0.03 percent at 7,268.44.

"The upgrade of the smartphone chip shipment forecast by MediaTek did cheer many investors, whose buying helped the stock briefly hit the 7 percent daily maximum increase before mild profit-taking set in," Grand Cathay Securities analyst Meissen Chang said.

MediaTek announced Tuesday at an investor conference that it had raised its target for smartphone chip shipments to 95 million units, from a previous estimate of 75 million units, mainly because of strong demand from China.

In the second quarter, the IC designer shipped 21 million smartphone chips, higher than the 18 million to 20 million previously forecast. The company said it would ship at least 30 million smartphone chips in the third quarter.

"Judging from the second quarter results and the third quarter guidance, I think MediaTek is moving toward an upward trend in shipments as it has benefited from rising demand from China," Chang said.

With rival Qualcomm putting plans to launch new mobile chips on hold, Chang said MediaTek had a good opportunity to grab a higher share of China's smartphone chip market.

"MediaTek is very likely to hit its target of shipping 95 million units by the end of this year," Chang said. "High-end chips, in particular duo core ones, are expected to improve the company's profitability."

In the second quarter, MediaTek posted NT$3.36 billion in consolidated net profit, up 34.3 percent from a quarter earlier, and had earnings per share of NT$2.95, compared with NT$2.19 in the first quarter.

"The second quarter's EPS was higher than my earlier estimate of NT$2.83, so I have raised my 2012 EPS forecast to NT$12.38 from NT$12.10," Chang said. "To my knowledge, some foreign brokerages are even anticipating MediaTek's EPS to reach NT$16 in 2013."

MediaTek said it expects its gross margin will improve to 41-43 percent for the third quarter from 40.8 percent in the second quarter. Chang said the improvement simply reflected the sales of high-end smartphone chips.

(By Jackson Chang and Frances Huang)