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Bnp 2498
1. TARGET TWD1,310.00
HTC Corp 2498 TT PRIOR TP
CLOSE
TWD1,500.00
TWD870.00
BUY
TAIWAN / TECHNOLOGY HARDWARE & EQUIPMENT UP/DOWNSIDE +50.6% UNCHANGED
HOW WE DIFFER FROM THE STREET INDUSTRY OUTLOOK CHANGE IN NUMBERS
BNP Consensus % Diff
Target Price (TWD)
EPS 2011 (TWD)
1,310.00
81.65
1381.52
86.38
(5.2)
(5.5)
Uncertainties priced in
EPS 2012 (TWD) 104 107.77 (3.9) Retain BUY with a new TP of TWD1,310
Positive Neutral Negative Apple lawsuit: first ruling likely on 15 July, limited downside potential
Market Recs. 26 7 2 Growth outlook for the Android camp remains intact
KEY STOCK DATA Negatives appear priced in
YE Dec (TWD m) 2011E 2012E 2013E BUY with TP of TWD1310
Revenue 512,254 685,874 922,749 HTC’s share price corrected about 16% in
Rec. net profit 66,834 84,735 104,198 the recent week on concerns about its S3
Recurring EPS (TWD) 81.65 104 127
deal and a possible patent infringement
ruling this Friday, 15 July. To factor in the
Prior rec. EPS (TWD) 87.09 114 129
rising uncertainties and increasing
Chg. In EPS est. (%) (6.2) (9.1) (1.5) competition, we trim our earning forecasts
EPS growth (%) 69.1 26.8 23.0 6% for 2011 and 9% for 2012. While we
Recurring P/E (x) 10.7 8.4 6.8 think most of the negatives are priced in,
Dividend yield (%) 6.9 7.4 9.0
we retain BUY with a new TP of
TWD1,310 (TWD1,500 previously), based Laura Chen
EV/EBITDA (x) 8.3 6.3 4.9 +886 2 8729 7052
on 14x 12-month forward P/E. laura.chen@asia.bnpparibas.com
Price/book (x) 8.0 6.5 4.8
Net debt/Equity (106.5) (102.8) (100.8) Apple lawsuit: limited downside Yifan Lai
+886 2 8729 7056
ROE (%)
For the possible first ruling this Friday, yifan.lai@asia.bnpparibas.com
80.9 83.9 79.3
even in the worst-case scenario that HTC
(TWD) HTC Corp is found having infringed some of Apple's patents, we assume royalty fee
(%)
Rel to MSCI Taiwan of about USD2 per handset (on benchmark touch screen controller IC
1,400 153 pricing), implying a total of USD100m for 50m units shipment in 2011E.
103 Our patent expense estimate of USD1.5b-2b should cover most of the
900 potential upcoming expenses. Apple seems to be keen to rule out all the
53 competitors by suing almost everyone, including Samsung Electronics,
400 3
Nokia, etc. However, the number of related parties involved (Google,
Verizon, AT&T, etc) makes it unlikely that Apple will win all the cases
Jul-10 Oct-10 Jan-11 Apr-11 Jul-11
related to patent infringements. So, we see room for negotiation. We
Share price performance 1 Month 3 Month 12 Month appreciate concerns about corporate governance with HTC’s acquisition
Absolute (%) (21.5) (22.1) 72.8 of S3 Graphics, but we are positive about the merger as it should
Relative to country (%) (16.8) (16.9) 62.7 strengthen HTC’s bargaining power in patent-related issues.
Next results August 2011 Growth outlook remains intact for the Android camp
Mkt cap (USD m) 24,895 The positive growth outlook for Android remains intact, as the penetration
3m avg daily turnover (USD m) 230.6 rate of Android and iOS smartphones in the US is still below 40%.
Free float (%) 73 Smartphones generate higher profit and sales contributions, thus we
Major shareholder Fidelity (7%) believe telecom operators will continue to market smartphones
12m high/low (TWD) 1,300.00/519.05 aggressively to boost data revenue. Google is seeing 500K Android
3m historic vol. (%) 55.1
phone activations per day currently and it is growing 4.4% every week,
implying at least 200m Android phones in 2011. We believe HTC’s
ADR ticker -
growth outlook is intact given its leadership in the rising Android camp.
ADR closing price (USD) -
Sources : Bloomberg consensus; BNP Paribas estimates Negatives appear priced in
Given the recent sharp correction in HTC’s share price, we believe most
RECENT COMPANY & SECTOR RESEARCH uncertainties, such as the potential losing of the Apple lawsuit and rising
Upbeat outlook on track ........................................ 6 Jul 2011 competition, are largely priced in. We expect the volatility in the share
Fundamentals remain solid................................20 Jun 2011 price to reduce after the initial ruling is announced, possibly on 15 July.
We maintain BUY on improved visibility into 2H11. We also expect the
Semicon West SPE wrap up................................ 13 Jul 2011
share price to be supported by 80%+ ROE through 2012E, 6-7%
Outlook remains uncertain.................................. 13 Jul 2011 prospective dividend yields, and attractive valuations as the stock trades
at just 7x 2012E P/E, excluding cash on hand.
BNP Paribas Securities Asia research is available on Thomson One, Bloomberg, TheMarkets.com, Factset and on http://equities.bnpparibas.com. Please contact your
salesperson for authorisation. Please see the important notice on the back page.
PREPARED BY BNP PARIBAS SECURITIES ASIA 14 July 2011
THIS MATERIAL HAS BEEN APPROVED FOR U.S DISTRIBUTION. IMPORTANT DISCLOSURES CAN BE FOUND IN THE DISCLOSURES APPENDIX.
2. LAURA CHEN HTC CORP 14 JULY 2011
—— Base —— —— Best —— —— Worst —— Key Earnings Drivers & Sensitivity
Year-end 31 Dec 2011E 2012E 2011E 2012E 2011E 2012E Key earning drivers are handset shipment growth and
Sales (TWD b) 512 686 522 705 502 666 operating margin. We estimate a 4ppt increase in handset
Change (%) 1.97 2.86 (1.97) (2.86) shipment growth alone would increase EPS by about 2.0%
Handset spmt gwth (%) 102.7 40.0 106.7 44.0 98.7 36.0
and 2.8% and sales by about 2.0% and 2.9% in 2011 and
2012, respectively.
Change (%) 4.0 4.0 (4.0) (4.0)
OPM (%) 14.7 14.0 15.7 15.0 13.7 113.0 Changes in operating margin have a significant impact on
EPS (TWD) 81.65 103.52 88.85 114.04 74.67 93.42 EPS. We estimate a 1% increase/decrease in operating
Change (%) 8.8 10.2 (8.5) (9.8) margin, all else being equal, would increase/decrease EPS
by about 6.7% in 2011 and 7.1% in 2012.
Sources: BNP Paribas estimates
HTC Corp and MediaTek (3M and 6M realised-Vol) Regression – HTC Corp to MXTW Index
(%) 24.00%
80
70 14.00%
60
50 4.00%
HTC Corp
40 -12.00% -7.00% -2.00% 3.00% 8.00%
-6.00%
30
20
-16.00%
10
0 -26.00%
Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 MSCI Taiwan
HTC Corp - 3M Realised - Vol HTC Corp - 6M Realised - Vol
HTC Corp = 138 + 1.2226 * MXTW Index
MediaTek - 3M Realised - Vol MediaTek - 6M Realised - Vol R Square = 0.3131
Regression based on 261 observations of 5 years weekly data.
Sources: Bloomberg; BNP Paribas
Sources: Bloomberg; BNP Paribas
Taiwan sector correlation matrix at 31 March 2011
Banks PetroChem Hardware Semiconductors Building materials Telecoms
Banks 1.00 0.57 0.67 0.63 0.73 0.41
PetroChem 1.00 0.53 0.55 0.60 0.43
Hardware 1.00 0.75 0.65 0.36
Semiconductors 1.00 0.61 0.35
Building materials 1.00 0.36
Telecoms 1.00
Source: BNP Paribas Sector Strategy
Long/short chart The risk experts
(x) The Risk Experts
• Our starting point for this page is a recognition of the
4.14
3.64 macro factors that can have a significant impact on stock-
+2s
3.14 price performance, sometimes independently of bottom-up
2.64 +1s factors.
2.14
1.64 Mean
1.14 • With our Risk Expert page, we identify the key macro risks
-1s
0.64 that can impact stock performance.
0.14
-2s
-0.36
Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 • This analysis enhances the fundamental work laid out in
HTC Corp - MediaTek the rest of this report, giving investors yet another resource
to use in their decision-making process.
Sources: Bloomberg, BNP Paribas
2 BNP PARIBAS
3. LAURA CHEN HTC CORP 14 JULY 2011
Reiterate BUY with a lower TP of TWD1,310.00
While a preliminary ruling of Apple’s first patent lawsuit against HTC may be announced
on 15 July, Apple filed another lawsuit on 8 July, claiming patent infringement on HTC’s
portable electronic devices and related software. HTC responded with a statement
saying that it denies all of Apple’s past and present claims against it and that it will
continue to protect and defend its own intellectual property (IP).
HTC’s share price has corrected about 16% in the recent week on concerns about the
S3 deal and a possible patent infringement ruling this Friday. To factor in the rising
uncertainties, we trim our earning forecasts 6% for 2011 and 9% for 2012. We also
prune our handset shipment estimates to 13m units (from 15m) for 3Q11 and to 15m
(from 16.5m) for 4Q11 on rising uncertainties on soft tech demand. But we believe
HTC’s growth outlook remains intact given its leadership in the rising Android camp. We
retain our BUY rating. We cut our TP to TWD1310 (from TWD1,500) to reflect the
earnings revision. Our TP is based on 14x 12-month forward P/E, which is the high-end
of the stock’s historical trading band to reflect the strong earnings growth momentum.
Key downside risks to our TP are margin pressure from an increase in competition,
which will likely lead to price wars, and slower-than-assumed smartphone growth.
Exhibit 1: Earnings revision
Year-end Dec-31 –————— Prior –————— –————— Revised –————— –————— Change –—————
2011E 2012E 2011E 2012E 2011E 2012E
(TWD m) (TWD m) (TWD m) (TWD m) (%) (%)
Revenue 547,858 754,479 512,254 685,874 (6.5) (9.1)
Gross Profit 157,487 210,188 147,309 191,077 (6.5) (9.1)
Operating Profit 80,332 105,637 75,272 96,029 (6.3) (9.1)
Pre-tax Profit 81,202 106,025 76,142 96,417 (6.2) (9.1)
Net Profit 71,287 93,187 66,834 84,735 (6.2) (9.1)
EPS (TWD) 87.09 113.85 81.65 103.52 (6.2) (9.1)
GM (%) 28.7 27.9 28.8 27.9
OPM (%) 14.7 14.0 14.7 14.0
Net margin (%) 13.0 12.4 13.0 12.4
Source: BNP Paribas estimates
Exhibit 2: Peer valuation
Name BBG code Rating TP Price — P/E — —— EPS —— — Div yeld — —— ROE —— EPS growth Mkt cap
‘11E ‘12E ‘11E ‘12E ‘11E ‘12E ‘11E ‘12E ‘11E ‘12E
(LC) (LC) (x) (x) (LC) (LC) (%) (%) (%) (%) (%) (%) (USD m)
Asian Handset
HTC 2498 TT BUY 1310.00 870.0 10.7 8.4 81.7 103.5 6.6 7.0 80.9 83.9 69.1 26.8 24,620
ZTE 763 HK HOLD 31.00 27.1 25.7 22.7 1.1 1.2 1.0 1.1 13.5 13.5 (0.9) 13.1 12,262
SEC 005930 KS BUY 1160000.0 843,000.0 10.1 7.3 83,220.2 115,137.5 1.0 1.0 15.4 18.2 (12.3) 38.4 116,990
LGE 066570 KS BUY 103000.00 81,000.0 24.5 7.6 3,305.1 10,692.9 0.3 0.3 4.2 12.4 (58.3) 223.5 11,039
AAC Acoustic 2018 HK NR NA 18.1 13.4 10.8 1.4 1.7 3.0 3.8 29.6 31.0 40.0 24.1 2,853
Silitech 3311 TT BUY 88.00 67.2 8.4 7.8 8.0 8.6 8.3 8.9 23.5 23.4 (2.9) 7.4 417
Mediatek 2454 TT REDUCE 245.00 247.0 18.2 15.1 13.6 16.4 6.9 3.3 13.8 16.5 (51.9) 20.3 9,403
Largan 3008 TT NR NA 940.0 19.7 15.1 47.8 62.1 2.2 3.0 33.8 35.5 58.5 29.9 4,364
FIH 2038 HK REDUCE 2.70 3.5 NA 110.7 (0.0) 0.0 - - (0.9) 0.8 NA NA 3,216
Global brands
NOKIA NOK US NR NA 5.8 9.2 7.5 0.6 0.8 9.6 9.9 6.3 8.4 (16.5) 23.3 21,721
APPLE AAPL US NR NA 353.8 14.2 12.2 25.0 29.1 - - 36.7 30.3 62.2 16.4 327,132
RIM RIMM US NR NA 28.5 5.4 5.3 5.2 5.4 - - 27.4 23.3 (17.8) 3.4 14,927
Motorola MMI US NR NA 21.0 29.5 13.4 0.7 1.6 - - 3.2 6.6 NA 119.3 6,206
Price close of 13 July 2011
Sources: Bloomberg consensus for NR (not rated) companies; BNP Paribas estimates for others
3 BNP PARIBAS
4. LAURA CHEN HTC CORP 14 JULY 2011
Exhibit 3: P/E band chart
(TWD)
18x
1,400
14x
1,200
1,000 10x
800
600 6x
400
200
0
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Sources: TEJ; BNP Paribas estimates
Limited potential for extra payment if ruled patent infringement
Based on our estimate of 50m unit shipment this year, we estimate HTC will have to
pay USD1.5b-2b in royalties and license fee to essential IP owners like Nokia and Sony
Ericsson (6758 JP; not rated) and software companies like Microsoft (MSFT US; not
rated). For essential IP, the payment is 5-10% of transaction price. Assuming ASP of
around USD350 with 50m unit shipments in 2011, HTC might need to pay as high as
USD1.75b for essential IP. For Microsoft license fee, HTC needs to pay USD400m-
750m in 2011, based on 50m unit shipment and USD8-15 per unit, even for Android
phone.
HTC recently announced to pay USD300m in cash (about 9% of its cash on hand) to
acquire S3 Graphics from Via (2388 TT, Not rated). S3 focuses on innovative graphics
visualisation technologies. We appreciate the market’s concerns about corporate
governance regarding the deal, but we view the acquisition positively as it should
strengthen HTC’s bargaining power on patent-related issues, as not only Microsoft,
Sony and Nintendo (7974 JP, not rated) are S3’s licensees, but also the US
International Trade Commission (ITC) has ruled favourably that Apple has infringed two
of S3’s patents.
Even in the worst case that HTC needs to make a settlement with Apple, we assume it
would have to pay about USD2 per handset (if benchmark touch screen controller IC
pricing), implying a total payment of USD100m for 50m units shipment this year. Our
patent expense estimate of USD1.5b-2b (or USD30-40 per handset) should cover most
of the potential upcoming expenses.
4 BNP PARIBAS
5. LAURA CHEN HTC CORP 14 JULY 2011
Exhibit 4: HTC’s patent contracts
Patent authorisation contracts Contents
IV International Licensing Netherlands, B.V. Patents authorised for wireless-telecom-related products. Royalty is paid according to the contract.
ALCATEL LUCENT Specialised technology and patents for 2G (GSM/GPRS/EDGE/CDMA), 3G (CDMA2000/WCDMA), HTML,
MPEG and AMR. Royalty is paid according to the contract.
Microsoft Patents authorised for embedded operating system software. Royalty is paid according to the contract.
Telefonaktiebolaget LM Ericsson Essential patents authorised for manufacturing, applying, and selling GSM products. Royalty is paid according to
the contract.
Siemens Aktiengesellschaft Specialised technology and patents for GSM/GPRS/EDGE products. Royalty is paid according to the contract.
KONINKLIJKE PHILIPS ELECTRONICS N.V. Essential patents authorised for manufacturing GSM or DCS 1800/1900 standard telecom devices. Royalty is
paid according to the contract.
InterDigital Technology Corporation Patents authorised for digital-telecom-related products based on TDMA and CDMA. Royalty is paid according to
the contract.
MOTOROLA, Inc. Essential patents authorised for TDMA, NARROWBAND CDMA, WIDEBAND CDMA standard. Royalty is paid
according to the contract.
Ericsson Mobile Platform AB Patents authorised for wireless telecom technologies including EDGE, etc. Royalty is paid according to the
contract.
Nokia Corporation Patents authorised for wireless telecom technologies including GSM, etc. Royalty is paid based on quantity
manufactured and the amount is according to the contract.
Qualcomm Incorporated. Patents authorised for R&D, manufacturing and selling CDMA products. Royalty is paid according to the contract.
Source: Company data
Growth outlook remains intact for the Android camp
The positive growth outlook for Android remains intact, as the penetration rate of
Android and iOS smartphones in the US is still below 40%. According to latest reports
by AT&T (T US, not rated) and Verizon (VZ US, not rated), the share of smartphones in
their total postpaid base is 46.2% and 32%, respectively. Smartphones generate higher
profit and sales contribution, thus we believe telecom operators will continue to market
smartphones aggressively to boost data revenue. One piece of hard evidence to see is
that Verizon is offering two-year contract price for HTC Thunderbolt LTE for USD250,
which is lower than even the component cost of USD260, according to iSuppli.
On the other hand, Google (GOOG US, Not rated) recently announced that there are
currently 500K Android phone activations per day, up from 400K about one month ago,
and the activation is growing 4.4% every week, implying at least 200m Android phones
in 2011, compared to Gartner’s earlier forecast of 180m. HTC has a 25% market share
in Android phones currently, and we believe the company’s growth outlook remains
strong given its leadership in the rising Android camp.
Negatives appear priced in
Given the recent sharp correction in HTC’s share price, we believe most uncertainties,
such as the potential losing of the Apple lawsuit and rising competition, are largely
priced in. We expect the volatility in the share price to reduce after the initial ruling is
announced, possibly on 15 July. We maintain BUY on improved visibility into 2H11. We
also expect the share price to be supported by 80%+ ROE through 2012E, 6-7%
prospective dividend yields, and attractive valuations as the stock trades at just 7x
2012E P/E excluding cash on hand.
5 BNP PARIBAS
8. LAURA CHEN HTC CORP 14 JULY 2011
HTC Corp
Cash Flow (TWD m)
Year Ending Dec 2009A 2010A 2011E 2012E 2013E
Recurring net profit 22,609 39,534 66,834 84,735 104,198
Depreciation 974 1,003 1,402 1,662 1,896
Associates & minorities 6 (19) 0 0 0
Other non-cash items 2,516 (1,623) 0 0 0
Recurring cash flow 26,104 38,894 68,237 86,397 106,094
Change in working capital 1,883 (16,580) (19,209) (14,105) (18,117)
Capex - maintenance 0 0 0 0 0
Capex – new investment (1,840) (4,971) (4,000) (4,000) (4,000)
Free cash flow to equity 26,147 17,343 45,028 68,292 83,977
Net acquisitions & disposals 0 0 0 0 0
Dividends paid (20,126) (29,891) (51,199) (62,632) (64,617)
Non recurring cash flows (663) 23,292 31,714 17,124 23,064
Net cash flow 5,359 10,744 25,543 22,784 42,424
Equity finance 0 0 0 0 0
Debt finance (2,444) (1,985) (4,500) (4,500) (4,500)
Movement in cash 2,915 8,758 21,043 18,284 37,924
Per share (TWD)
Recurring cash flow per share 31.58 47.52 83.37 106 130
FCF to equity per share 31.63 21.19 55.01 83.43 103
Balance Sheet (TWD m)
Year Ending Dec 2009A 2010A 2011E 2012E 2013E
Working capital assets 37,269 93,284 165,716 214,353 279,969
Working capital liabilities (53,155) (115,629) (200,853) (252,795) (323,645)
Net working capital (15,887) (22,344) (35,137) (38,442) (43,676)
Tangible fixed assets 9,900 14,024 16,622 18,960 21,064
Operating invested capital (5,987) (8,320) (18,515) (19,482) (22,612)
Goodwill 0 0 0 0 0
Other intangible assets 240 936 936 936 936
Investments 810 1,232 1,516 1,799 2,082
Other assets 3,577 5,550 10,199 13,656 18,372
Invested capital (1,359) (602) (5,864) (3,092) (1,223)
Cash & equivalents (67,154) (75,355) (96,398) (114,682) (152,606)
Short term debt 95 12 12 12 12
Long term debt * 24 12 12 12 12
Net debt (67,035) (75,331) (96,374) (114,657) (152,581)
Deferred tax 0 0 0 0 0
Other liabilities 1 14 14 14 14
Total equity 65,640 74,714 90,495 111,551 151,344
Minority interests 34 0 0 0 0
Invested capital (1,359) (602) (5,864) (3,092) (1,223)
* includes convertibles and preferred stock which is being treated as debt
Per share (TWD)
Book value per share 79.24 90.19 109 135 183
Tangible book value per share 78.95 89.06 108 134 182 Strong net cash position
Financial strength
Net debt/equity (%) (102.1) (100.8) (106.5) (102.8) (100.8)
Net debt/total assets (%) (56.4) (39.6) (33.1) (31.5) (32.1)
Current ratio (x) 2.0 1.5 1.3 1.3 1.3
CF interest cover (x) - - - - -
Valuation 2009A 2010A 2011E 2012E 2013E
Recurring P/E (x) * 31.8 18.0 10.7 8.4 6.8
Recurring P/E @ target price (x) * 47.9 27.1 16.0 12.7 10.3
Reported P/E (x) 31.8 18.0 10.7 8.4 6.8
Dividend yield (%) 2.8 4.4 6.9 7.4 9.0
P/CF (x) 27.6 18.3 10.4 8.2 6.7
P/FCF (x) 27.5 41.1 15.8 10.4 8.5
Price/book (x) 11.0 9.6 8.0 6.5 4.8
Price/tangible book (x) 11.0 9.8 8.0 6.5 4.8
EV/EBITDA (x) ** 25.8 14.2 8.3 6.3 4.9
EV/EBITDA @ target price (x) ** 40.2 22.1 13.1 10.0 7.9
EV/invested capital (x) (481.1) (1,071.6) (106.5) (196.0) (464.5)
* Pre exceptional, pre-goodwill and fully diluted
** EBITDA includes associate income and recurring non-operating income
Sources: HTC Corp; BNP Paribas estimates
8 BNP PARIBAS
9. LAURA CHEN HTC CORP 14 JULY 2011
BNP Paribas Technology Research Team
WEIYEE IN CHARLES CHENG, CFA SZEHO NG, CFA
Telecoms, Media & Technology Strategy Technology Strategy Packaging & Testing, Foundry, Displays
BNP Paribas Securities (Asia) Ltd BNP Paribas Securities (Asia) Ltd BNP Paribas Securities (Asia) Ltd
+852 2825 1813 +852 2825 1825 +852 2825 1167
weiyee.in@asia.bnpparibas.com charles.cheng@asia.bnpparibas.com szeho.ng@asia.bnpparibas.com
PETER YU, CFA ALEN LIN JOYCE ZHOU
Semiconductors, Displays, Handsets Telecom Services and Equipment Telecom Services and Equipment
BNP Paribas Securities Korea Co Ltd BNP Paribas Securities (Asia) Ltd BNP Paribas Securities (Asia) Ltd
+822 2125 0535 +852 2825 1801 +852 2825 1120
peter.yu@asia.bnpparibas.com alen.lin@asia.bnpparibas.com joyce.zhou@asia.bnpparibas.com
AVINASH SINGH ABHIRAM ELESWARAPU KEI RAMEAU
Tech - IT (Associate) Software & Services Technology
BNP Paribas Securities India Pvt Ltd BNP Paribas Securities India Pvt Ltd BNP Paribas Securities (Japan) Ltd
+91 22 3370 4350 +91 22 3370 4311 +81 3 6377 2232
avinash.singh@asia.bnpparibas.com abhiram.eleswarapu@asia.bnpparibas.com kei.rameau@japan.bnpparibas.com
CHARLES HSU LAURA CHEN HENRY AI
Displays, Touch Panels, LED Handset/Hardware IT services
BNP Paribas Securities (Taiwan) Co Ltd BNP Paribas Securities (Taiwan) Co Ltd BNP Paribas Equities (Asia) Ltd
+886 2 8729 7055 +886 2 8729 7052 Shanghai Representative Office
charles.hsu@asia.bnpparibas.com laura.chen@asia.bnpparibas.com +8621 6096 9037
henry.ai@asia.bnpparibas.com
KYNA WONG YIFAN LAI YOUNG SHIN
Research Associate Research Associate Research Associate
BNP Paribas Securities (Asia) Ltd BNP Paribas Securities (Taiwan) Co Ltd BNP Paribas Securities Korea Co Ltd
+852 2825 1823 +886 2 8729 7056 +822 2125 0546
kyna.wong@asia.bnpparibas.com yifan.lai@asia.bnpparibas.com young.shin@asia.bnpparibas.com
9 BNP PARIBAS
10. LAURA CHEN HTC CORP 14 JULY 2011
HISTORY OF CHANGE IN INVESTMENT RATING AND/OR TARGET PRICE
HTC Corporation (2498 TT)
(TWD) Date Reco TP
HTC Corp Target Price
1-Jul-07 BUY 611
1,600
2-Aug-07 HOLD 636
1,400 2-Jan-08 BUY 719
1,200 30-Jul-09 REDUCE 371
4-Feb-10 HOLD 286
1,000
31-Mar-10 BUY 410
800 13-Sep-10 HOLD 710
600 31-May-11 BUY 1,500
400
200
Jul-07 Jul-08 Jul-09 Jul-10 Jul-11
Laura Chen started covering this stock from 31 May 2011
Price and TP are in local currency
Valuation and risks: Key downside risk to our P/E-based TP would be margin pressure from an increase in competition, which will likely lead to price wars. However, we believe strong segment
growth, increased product promotional activities by operators, and several planned launches could mitigate such pressure. Slower-than-assumed smartphone segment growth is another risk.
Sources: Bloomberg, BNP Paribas
10 BNP PARIBAS
11. LAURA CHEN HTC CORP 14 JULY 2011
DISCLAIMERS & DISCLOSURES
ANALYST(S) CERTIFICATION
*Laura Chen, BNP Paribas Securities (Taiwan) Ltd, +886 2 8729 7052, laura.chen@asia.bnpparibas.com.
*Yifan Lai, BNP Paribas Securities (Taiwan) Co Ltd, +886 2 8729 7056, yifan.lai@asia.bnpparibas.com.
The analyst(s) or strategist(s) herein each referred to as analyst(s) named in this report certifies that (i) all views expressed in this report accurately
reflect the personal view of the analyst(s) with regard to any and all of the subject securities, companies, or issuers mentioned in this report; (ii) no
part of the compensation of the analyst(s) was, is, or will be, directly or indirectly, relate to the specific recommendation or views expressed herein;
and (iii) is not aware of any other actual or material conflicts of interest concerning any of the subject securities companies, or issuers referenced
herein as of the time of this certification.
* Employed by non-US affiliate of BNP Paribas Securities Corp., and is not registered/ qualified pursuant to NYSE and/ or FINRA regulations.
GENERAL DISCLAIMER
This report was produced by BNP Paribas Securities (Taiwan) Ltd, a member company of the BNP Paribas Group. "BNP Paribas” is the
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11 BNP PARIBAS
