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Thailand's Cal-Comp Electronic (CCET): Additional order of 9mm handsets from Indian client(Thai Press Reports Via Thomson Dialog NewsEdge) Section: Stocks - CCET management confirmed yesterday (June 27) that the company has received additional orders of 9mn mobile handsets from the existing Indian client. This client is the second largest CDMA mobile operator in India and has been a handset customer of CCET since the end of last year. This client placed new orders for 2mn more units last month and has just placed an additional order for 9mn units for a total of 12mn units. This is very good news for CCET as India is as one of the world fastest growing mobile markets. The mobile subscriber base rose 76% in 2006 to 149.5mn. The website, iSupply, has projected the Indian subscriber base to reach 484mn by 2011 with a compound annual growth rate (CAGR) of 26.5% during 2006-2011. CCET has just raised handset production capacity to 1-1.2mn units/month. The new 9mn-handset order is expected to contribute revenue in 2H07-1H08. Continual orders from this large market are projected in the future. Based on Digitimes, CCET is considering setting up a joint venture with the client to manufacture handsets in India with the expectation of strong domestic sales growth in the future. Based on this additional order and the expectation of continue orders next year, 2007 and 2008 earnings forecast are upgraded by 6% and 10%, respectively. The CCET 2007 normalised profit is expected to grow impressively by 27% from last year to Bt3.1bn or Bt0.66/share (fully diluted) not only from these new handset orders, but also from the continual growth of the printer, set-top box and PCBA businesses. Based on earnings upgrade and the brighter outlook, fair value is also revised up from Bt6.28/share to Bt7.30/share based on a 2007 PER of 11x. At this new fair value, CCET shares will be traded on a 2008 PER of 9.6x. Although CCET in the past was traded at a P/E range of 7-8x, the stock deserves a re-rating due to the larger size of the business and the estimated CAGR earnings growth of 21% during 2006-2008. A BUY rating on CCET stock is reiterated. In addition, the share price this year is expected to be driven from the estimated Bt0.20/share interim dividend and the 17-22% yoy earnings growth coming in 3Q-4Q07. (Kim Eng Securities (Thailand): 28 June 2007) Copyright 2007 Thai News Service, Source: The Financial Times Limited |