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Wintek shares soar on Xiaomi hopes
Central News Agency
2014-07-15 12:10 PM
Taipei, July 15 (CNA) Shares of Taiwan-based touch panel maker Wintek Corp. jumped Tuesday morning on news that it is the exclusive supplier for panels used in the new 4G smartphone model that will soon be launched by Xiaomi Corp. in China, dealers said. Because Xiaomi has become a major source of sales for Wintek, the market expects Xiaomi's rise to help the Taiwanese touch panel supplier turn a corner and become profitable in 2014, they said. As of 11:53 a.m., shares of Wintek had added 7 percent, the maximum daily increase, to NT$11.65 (US$0.39), with 54.50 million shares changing hands. The weighted index on the Taiwan Stock Exchange was up 0.30 percent at 9,548.98. "Buying in Wintek shares was sparked largely by a local media report that said the touch panel maker has become the sole supplier for Xiaomi's next generation smartphone, the Xiaomi 4, which is scheduled to be launched later this month," Asia Securities Investment Consultant analyst Chang Chih-cheng said. According to the Commercial Times, Wintek started shipping touch panels for Xiaomi 4 production in June. The paper said touch panels for the new model and for existing Xiaomi 3 and Hongmi models are expected to account for 60 percent of Wintek's total sales this year. "Judging from Wintek's June sales data, there were signs that Xiaomi made a great contribution to the company, and with the popularity of Xiaomi's smartphones on the rise, Wintek is expected to continue to ride the wave," Chang said. Wintek posted NT$6.89 billion in consolidated sales for June, up 56.96 percent from a year earlier. Its second-quarter consolidated sales rose 27.57 percent from the first quarter to NT$20.80 billion. In the first half of the year, Xiaomi shipped 26 million smartphones in China, more than triple the 7.03 million units it shipped over the same period of last year and the 18.70 million units shipped in 2013 as a whole. "Xiaomi's smartphones uses one glass solution (OGS) panels Wintek specializes at rolling out. The presence of Xiaomi's gadgets has given a boost to the Taiwanese company," Chang said. "With the market anticipating Xiaomi's total shipments for 2014 to hit 60 million units or even more, optimism over its suppliers, like Wintek, is growing," Chang said. "Many investors expect Wintek to take advantage of Xiaomi to emerge from losses seen over the past few years." In 2013, Wintek incurred a loss per share of NT$5.55, after posting losses per share of NT$1.64 in 2012 and NT$1.16 in 2011, respectively. It last reported a full-year profit in 2010, when it had earnings per share of NT$1.67. Chang said the big loss in 2013 reflected Wintek's write-off of inventory and intangible asset losses in the fourth quarter. "As a result, it only posted NT$0.81 in loss per share in the first quarter. I expect the bottom line will continued to strengthen in the second quarter," Chang said. "With the Xiaomi 4 to hit the market later this year to go after a share of China's 4G services market, Wintek is expected to turn a profit this year," Chang said. "I think Wintek shares will continue to move higher in the short term amid such optimism." Chang cautioned, however, that the stock could face some technical resistance at around NT$13. (By Frances Huang)
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