September 12, 2013, 12:12 am TWN
TAIPEI — Barclays Capital said yesterday that it has removed Taiwan-based Kinsus Interconnect Technology Corp. from its top pick semiconductor stock list amid worries that its major customers are cutting their orders to the company.
In a research note, Barclays said China-based integrated circuit designer Spreadtrum Communications Inc. is scaling back its orders to the Taiwanese manufacturer, which specializes in developing ball grid array (BGA) substrates.
The brokerage said it is also afraid that Apple Inc. will postpone its plan to place large orders with Kinsus by one quarter to the second quarter of 2014.
Under such unfavorable circumstances, Kinsus could witness its bottom line being squeezed and was therefore removed from the top-pick IC stock list, Barclays said.
The brokerage, however, maintained its “overweight” recommendation for the stock and its target price of NT$ 145 (US$ 4.86).
Shares of Kinsus fell 4.44 percent to close at NT$ 107.50 on the Taiwan Stock Exchange Wednesday, when the weighted index ended up 0.22 points at 8,208.99.
Kinsus has been dubbed one of the “Apple concept stocks,” which took a beating Wednesday after the U.S. consumer electronics giant failed to deliver a surprise during its unveiling of the new iPhone overnight.
Andrew Lu, an analyst with Barclays, said he has cut his forecast of sales growth of Kinsus for the third and fourth quarters.
Lu revised his estimate for the company’s third-quarter consolidated sales growth to 5-7 percent quarter on-quarter, down from a previous estimate of a 10-percent increase.
He also projected its fourth quarter sales to fall 5 percent from the third quarter, after previously estimating that sales would remain flat quarter-to-quarter.
The analyst pegged Kinsus’ operating margin for the July September period at 14.5-15 percent, down from an earlier forecast of 16.5-17 percent, and lowered his third quarter earnings per share (EPS) estimate for the company to NT$ 2.05, from an earlier forecast of NT$ 2.43.
Barclays said it has cut its forecasts of Kinsus’ EPS by 3 percent, 6 percent and 8 percent for 2013, 2014 and 2015, respectively, to NT$ 7.55, NT$ 9.97 and NT$ 11.90. Kinsus had EPS of NT$ 6.27 in 2012.
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