(Recasts, adding Compal results)
By Sheena Lee
TAOYUAN, Taiwan, April 29 (Reuters) - The world’s top two makers of contract laptop PCs, Quanta Computer Inc (2382.TW) and Compal Electronics (2324.TW), posted quarterly profit gains of around a fifth, and sector leader Quanta raised its 2008 sales forecast by 11 percent on strong emerging market demand.
Taiwan’s Quanta Computer lifted its 2008 sales target to 40 million units from a previous 36 million, and said it expects to ship about 10 percent more notebook PCs in the second quarter from the first. It shipped around 30 million units in 2007.
“Notebook growth is coming in faster than we expected,” said Vice Chairman C.C. Leung said on Tuesday. “There’s some slowdown from the U.S., but Asia and emerging markets are still seeing growth. So far things look positive for overall notebook demand.”
Analysts had warned that Quanta’s growth could slow in the second quarter due to weaker sales momentum in the U.S. market, and a recent fire at South Korea’s LG Chem (051910.KS) battery plant that was affecting some notebook orders.
But Leung said the impact from the battery issue had been limited, and there should be a recovery after the summer.
“Quanta’s first-quarter and 2008 full-year forecasts on its laptop shipments indicate that global notebook PC demand has not been hit as hard as previously expected by the U.S. subprime crisis,” said Alex Huang, assistant vice president of Mega International Securities.
He added that Intel (INTC.O), the world’s biggest maker of PC central processing chips, had said it was cautiously optimistic about the second quarter, and Acer (2353.TW), the world’s No.3 PC seller, said there was no reason to be pessimistic about the second quarter.
Research firm IDC estimates that this year’s global notebook market will grow 26 percent to 139 million units.
Quanta, which supplies top PC vendors such as Dell DELL.O, Hewlett-Packard (HPQ.N) and Apple (AAPL.O), posted January-March net profit of T$4.0 billion ($131 million), up from T$3.402 billion a year ago.
The first-quarter result was in line with expectations for a T$4.085 billion profit, according to forecasts from five analysts surveyed by Reuters Estimates.
Quanta posted fourth-quarter net profit of T$5.565 billion, higher than T$4.19 billion a year earlier, and beating a market forecast of T$4.89 billion.
Gross profit margin for the first quarter improved to 5.5 percent from 5.2 percent for all of 2007.
“The first-quarter numbers are really good,” said JP Morgan analyst Alvin Kwock, adding that strong sales for Apple computers may have helped, and that Quanta also seems to be managing its currency risk well despite a 6 percent run-up in the Taiwan dollar this year against the U.S. dollar.
Quanta and smaller local rival Compal, the world’s No.2 contract laptop producer, make about 60 percent of the world’s notebook computers.
Compal posted a first-quarter net profit of T$3.209 billion, up 23 percent from a year ago and ahead of a consensus forecast of T$2.87 billion by Reuters Estimates.
The industry’s third-largest player Wistron (3231.TW) also raised its 2008 shipment forecast to 20 million units from a previous 18 million, and reported its first-quarter profit grew 53 percent.
Shares of Quanta lost 9 percent in the first quarter, while Compal dropped 18 percent, against the main TAIEX’s .TWII 0.8 percent gain in the same period.
Quanta shares fell 1.8 percent on Tuesday before the results, roughly in line with a 2.1 percent drop on the TAIEX .TWII.
Quanta trades at 13.3 times price to earnings, while Compal trades at 15.4 times, according to Reuters data. (US$1=T$30.4) (Additional reporting by Faith Hung and Baker Li) (Writing by Doug Young; Editing by Louise Heavens)