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UBS Investment Research
Asia Tech Strategy
Life after Nokia’s strategy shift
„ Remaining cautious near term on Asia Tech; affirm O/W Wireless
We make several changes to our portfolio to reflect how the Asia OEMs and
supply chain could be influenced by Nokia’s change of smartphone’s strategy, and
after our meetings at the Mobile World Congress. We keep a positive bias towards
Wireless, LCD and Memory. However, we also continue to call for a near term
correction in Asia Tech as valuation (15.1x ‘11E PE) still not fully compelling
despite recent underperformance (-1.5% relative to Asia MSCI over past 2 weeks).
„ Samsung and HTC to benefit from Nokia’s transition phase
This year’s MWC (feedback for Asia cos in this report) focused a lot on assessing
the aftermaths of Nokia’s move to Microsoft OS. This will be a difficult transition
phase, with competitors offering compelling alternatives. We came back most
impressed by Samsung’s Galaxy S2 and HTC’s multiple iterations and cleverlybranded Facebook phones. We see both vendors, alongside Apple as the likely
main beneficiaries from Nokia’s transition phase.
„ We add HTC to Most Pref and FIH to Least Pref list
We add back HTC to our Most Preferred list post the stock’s in-line performance
since December, despite improving fundamentals (strong and differentiated
products line up; disruption at a key competitor). We also re-instate FIH in Least
Preferred as exposure to Nokia (c. 49% of revenues) will likely prove problematic.
„ Most and Least Preferred
Most Preferred include Catcher, Lenovo, LGD, Realtek, Samsung and now HTC;
Least Preferred: ASMPT, HCL, LGI, Mediatek, Quanta and now FIH.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Asia Tech Strategy
Life after Nokia’s strategy shift
„ Remaining cautious near term on Asia Tech; affirm O/W Wireless
We make several changes to our portfolio to reflect how the Asia OEMs and
supply chain could be influenced by Nokia’s change of smartphone’s strategy, and
after our meetings at the Mobile World Congress. We keep a positive bias towards
Wireless, LCD and Memory. However, we also continue to call for a near term
correction in Asia Tech as valuation (15.1x ‘11E PE) still not fully compelling
despite recent underperformance (-1.5% relative to Asia MSCI over past 2 weeks).
„ Samsung and HTC to benefit from Nokia’s transition phase
This year’s MWC (feedback for Asia cos in this report) focused a lot on assessing
the aftermaths of Nokia’s move to Microsoft OS. This will be a difficult transition
phase, with competitors offering compelling alternatives. We came back most
impressed by Samsung’s Galaxy S2 and HTC’s multiple iterations and cleverlybranded Facebook phones. We see both vendors, alongside Apple as the likely
main beneficiaries from Nokia’s transition phase.
„ We add HTC to Most Pref and FIH to Least Pref list
We add back HTC to our Most Preferred list post the stock’s in-line performance
since December, despite improving fundamentals (strong and differentiated
products line up; disruption at a key competitor). We also re-instate FIH in Least
Preferred as exposure to Nokia (c. 49% of revenues) will likely prove problematic.
„ Most and Least Preferred
Most Preferred include Catcher, Lenovo, LGD, Realtek, Samsung and now HTC;
Least Preferred: ASMPT, HCL, LGI, Mediatek, Quanta and now FIH.
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