Analyst Research Report Snapshot


Cheng Uei Precision (2392 TT, NT$63.4, N): Maintain Neutral




KGI Greater China


01 Apr 2014





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Fresh momentum lacking 4Q13 sales were NT$34.4bn, up 40% QoQ & down 0.3% YoY; QoQ growth due to huge shipments of Lightning cable in new Apple models & camera module for Xbox One; EPS of NT$1.4 in line with our forecast of NT$1.5 Shipments of 4Q13 key ramping products Lightning cable & Xbox One camera module to lose steam in 1Q14 slow season; Apple retail business to disappoint with lower-than-expected contribution; we cut 1Q14F sales by 10% to NT$25bn, up 27% QoQ & down 7% YoY; on increased exposure to low-margin retail sales & lower scale economies, 1Q14F EPS cut from NT$0.97 to NT$0.67 In 2014, Cheng Uei looking to move into new businesses for growth (e.g. wearable device) and seeking more lucrative orders to avoid price competition with Hon Hai & Luxshare-ICT in Lightning cable; thus, we expect market share to contract from 50% to 20-30%; we revise down 2014F sales by 3.7% to NT$113bn & EPS by 5.8% to NT$4.7; on 13x 2014F EPS, we cut our 12M target price from NT$66 to NT$62 given no significant new growth catalysts; maintain Neutral rating We cut our 12M target price from NT$66 to NT$62, on 13x 2014F EPS. Given falling ASP of Lightning cable, the key item supplied to Apple in the past two years, new entrants in the market and no new growth drivers in the foreseeable future, we maintain our Neutral rating on Cheng Uei.

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