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Foreign brokerage cuts target price on Catcher shares after sales data

2019/02/16 17:20:15

Taipei, Feb. 16 (CNA) A Hong Kong-based brokerage has cut its target prices on shares in Taiwan-based Catcher Technology Co., a metal casing supplier to Apple, after the manufacturer reported disappointing sales for January, pointing to a 40 percent year-on-year drop.

In a research note, the Hong Kong securities house said the ugly sales figures indicated Catcher could have a poor business outlook in the short-term in the wake of weaker than expected shipments of the latest iPhones unveiled in September 2018.

As a result, the brokerage lowered its target price on Catcher shares from NT$195 (US$6.32) to NT$185, while also downgrading its recommendation on the stock from "hold" to "underweight."

In a statement released on Tuesday, Catcher said the company posted NT$4.91 billion in consolidated sales in January, down 26.7 percent from a month earlier and 40 percent from the previous year.

Data compiled by Catcher showed the January figure was the lowest since February 2017, when sales stood at NT$4.74 billion.

Catcher said the decline largely reflected weakening global demand for smartphones, which presented more evidence as to the unsatisfactory sales of the newest iPhones.

In addition, an ongoing shortage of central processing units used in notebook computers also affected shipments of Catcher's metal casings during the month, the company said.

The January sales figures came after Catcher entered the traditional slow season for the global consumer electronics industry in the first quarter of the year, the company added.

Echoing Catcher, the Hong Kong brokerage said it expects the company to face rising competition and its share of global iPhone casing shipments is forecast to stop growing and stay at around 20 percent in the near term.

The brokerage said Catcher is expected to encounter downside risks on its bottom line, and added it has cut its forecast for the metal casing maker's earnings per share by 5 percent and 3 percent in 2019 and 2020, respectively, to NT$26.39 and NT$28.70.

In the first nine months of last year, Catcher's EPS stood at NT$27.33, compared with NT$17.45 over the same period in 2017.

Another Asian-based brokerage was more downbeat about Catcher, leaving a target price of NT$150 and a "underperform" rating on its shares unchanged.

The Asian securities house said Catcher has developed a heavy dependence on Apple by concentrating its production on metal casings to cater to the U.S. firm.

As other international smartphone brands are adopting glass casings, the brokerage said, Catcher needs to speed up its development of glass casings or competition in the market will escalate, further squeezing the Taiwanese firm's profitability.

CNA cannot identify the brokerages because media outlets in Taiwan are not allowed to report the names of foreign brokerages when they give price-moving forecasts for specific stocks or the wider market.

(By Jeffrey Wu and Frances Huang)