Still in transition
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We like Chicony’s efforts on ramping up new businesses and expanding its non-PC client portfolio; however, given that Chicony has 50% exposure to PC and the momentum of GoPro remains slow, we believe the transition will take time. We maintain our HOLD rating on Chicony and reiterate our view that 2016 is a transitional year for the company. To mitigate PC/GoPro weakness, mgmt highlights its strategic directions/drivers in 2016/2017, namely networking, gaming keyboard, IP cam & automotive. However, given uncertainties over execution and timing, earnings forecast risks are high, in our view. Chicony shares have outperformed the market by 4% in the past month. With no excitement from results and guidance, we suggest investors switch to Primax (4915 TT BUY), which provides stronger earnings growth but a cheaper valuation.
Chicony Electronics is engaged in the manufacture, process, purchase and sale of computer keyboard, and other computer information related peripheral equipment, software, and spare parts.
Yuanta is a Taiwan-headquartered brokerage with a growing presence in Asia, especially across Greater China. Our team of 140+ provides cutting-edge analysis on key sectors, spread across offices in Taiwan, Hong Kong, Shanghai (A-Share), Seoul and Jakarta. With an ever-expanding coverage universe of 400+ companies, we provide in depth analysis with unique local color to investors. Consistently being voted the Best Investment Consulting Firm in Taiwan in the AsiaMoney broker poll is evidence of our strength. We target providing an extensive range of research, from small, to mid-sized, to large cap. We bring you the big, well-covered names, as well as going off the beaten track to research the less-familiar companies.
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