EQUITY RESEARCH 6 October 2011 INITIATING COVERAGE ASIA EX-JAPAN IT HARDWARE Asia ex-Japan IT Hardware Initiating coverage: Ultrabooks and tablets 2-NEUTRAL Unchanged creating opportunities for some suppliers For a full list of our ratings, price targets and We initiate on three IT hardware suppliers – Foxconn Tech (FTC), Shin Zu Shing (SZS) earnings in this report, please see table on page 2 and Ju Teng – all No. 1 in their sub-segments of notebook casings and hinges: We expect FTC (2354 TT, 1-OW, PT NT$120) to benefit from a 3-year upcycle for metal Asia ex-Japan IT Hardware casings and SZS (3376 TT, 2-EW, PT NT$58) to profit on the likely adoption of hollow- Allen Chang type hinges in ultra-thin NBs. However, we believe Ju Teng (3336 HK, 3-UW, PT HK$1.20) +8862 663 84695 will suffer near term from the cannibalization of NBs with plastic casings until it can fully
[email protected] offer metal casings. We maintain our 2-Neutral view on the Asia ex-Japan IT Hardware BCSTW, Taiwan sector with FTC, Simplo, Cheng Uei, Acer and Lenovo our top picks. Kirk Yang Tablets/ultrabooks appear the way forward: Most importantly, we view FTC, SZS and Ju +852 290 34635 Teng as important winners and losers – along with polymer battery makers Simplo
[email protected] (1-OW, PT NT$290) and Dynapack (2-EW, NT$130) – in the current migration from Barclays Bank, Hong Kong conventional NBs with plastic casings to tablet/ultrabooks with metal casings.