I’ve got some spare cash in Taiwan and was thinking about buying some stock with it. Traditionally the second half of the year is supposed to be good for the electronics industry, with companies announcing increased monthly and quarterly sales sales as they fill Christmas orders.
Anyone got any ideas on good companies to watch?
I am searching for feedback as my record on stock picking in Taiwan is crap. I’m still sitting on a bit of TSMC and UMC from 2001 that has basically remained unchanged all that time (sold most of it back in 2001 but still got about 1000 shares in each).
I was thinking maybe picking up a notebook maker. I remember they used to do well in the 2H. Maybe Compal (Guangda 2382) or Asustek (Huashuo 2356?). I realize its a saturated market and all. Was looking at it more like a cyclical play, not expecting massive gains or anything.
I am kind of stumped for ideas. . . Foundry doesn’t look like it is picking up anytime soon, so forget more TSMC and UMC.
What about companies involved in LCD? I can’t think of any Taiwanese companies involved in this, though there must be some.
PDAs? They seem to still be growing. But again which companies are the ones to watch?
Apologies for a post with so many questions and so little from myself. Was originally meaning to do some more research on possible companies before posting here, but then I figured I’d be lazy, post here first and see what ideas are out there.
Have to be a few cyclical stocks in the electronics industry worth picking up this second half!
My bet is on ICs this 2H. The big inventories that gathered up earlier this year are disappearing, although it has lowered the prices of these shares, and with new mainland chinese foundries starting up, we’ll have a pricewar among foundries going on for the rest of the year. This should ensure cheap supply of wafer. (If you’re sitting on TSMC or UMC, I’d say get rid of them). Even though UMC is running at high capacity these days, I think their profit margins are suffering.
For more long-term than 2H, I like LCDs. There’s a battle between Plasma screens and LCDs. I think LCDs will win. AUO is the leader, but CPT got better P/E ratio.
Notebooks have been hot for a while, but their suppliers are hotter. I got some Catcher shares in February at 100.5. It’s 286 now. (Cather makes the magnesium-alloy casing for notebooks and the Ipod). Notebook assemblers like Asus just don’t have the same margins as their suppliers.
IC stocks have had a pretty good run over the last few weeks, so might not be great value anymore
hon hai is overvalued
my top notebook picks are Compal (2324) and Wistron (3231). Wistron should have a very strong 2H with peak notebook season coming and xbox 360 expected to sell like hot cakes this xmas. wistron will be manufacturing a large portion of the xbox 360. i’m not so optimistic on quanta (2382)
lcd shares may perform well in 2H after some correction earlier this year. i prefer auo (2409) and cmo (3009) - defintitely not cpt, which has poor fundamentals. cmo may be better value after a recent price correction follwing its disappointing 2Q results. but Q3 and Q4 should be much better.
Thanks for the feedback people. I have been busy over the last few weeks and still haven’t started looking seriously at any of these companies.
Like I said before I like LCD, but I’m still looking for targets. Will take a close look at those people have suggested here.
And yeah, maybe Compal for a notebook producer.
Skullboy mentioned Yuanta. Much to my shame I used to work there. Should me making more of a contribution here in terms of ideas since I used to work for a brokerage myself! Hmm. . . I would be wary of buying their stock just based on how amateurish the company was back in 1999-2001. Their International Dept. was a bit of a joke in those days. I believe they closed that part of their business down though. And obviously they are doing something right to be such a big force in Taiwan.
My advice about Yuanda wasn’t the kind that was based upon fact, new improvements, products or business fundamentals. Purely about information most people weren’t privy to that this person felt would make a significant enough difference to the share price.
That’s not quite enough to convince me. Especially when I hear from people who used to work there that the company isn’t quite up to scratch. Thanks for the advice Kiwi! (And damn it feels good to beat Australia after that embarrassment to SA last week eh?)
I had a similar experience recently - my stockbroker advised me to buy a stock (I won’t say which one it’s so embarrassing) and seeing as it was fairly cheap I thought I’d give it a go - to see whether this guy’s advice was worth listening to or not. I went in to the company to last month to pick up my dividends for the past year and took a look around - fans, no AC, three shitty computers and hundreds of, I’m not kidding, Dewey decimal system type filing drawers, and a 24 year old in a t-shirt and jeans helped me with my paper work. Walked out and sold my shares the next day - lost a few thousand but learnt a lesson worth a lot more I feel.
as per your experience skull boy, my feeling about stock ‘tips’ here in taiwan is that they are best avoided. i know a few stories of people that got burned.
kiwi - interesting that you used to work at yuanta. i have a fairly good knowledge of their intl business now, and its doing ok. they made some major changes 2 or 3 yrs ago and brought in some new people. although they are behind the big wall street names, they are no.1 among the local banks for intl business and getting better.
regarding LCDs and the prediction that only a fool could lose money selling them, well you’d be surprised. competition is ruthless (everyone wants a piece of this pie) and prices are plummeting. they all lost money in the first half of this year, although the second half should be profitable for most. notebooks are still a better bet for margins i think.