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НТЕ Message Board

  • smkros smkros Jan 24, 2013 9:03 AM Flag

    NTE, Please drop today

    Does anyone remember when NTE dropped 10% the Friday before last quarter's earnings release? I don't know if the drop was because of something Apple related or the overly cautious Seeking Alpha article, but I do know the stock went up 40% the Monday when they released earnings.

    I don't think we'll see 40% again since much of the gain was due to the doubling of the dividend, but I would be shocked to not see a significant move up. Any company that posts 250% YoY revenue growth and $0.60 to $0.70 EPS (around $1.20 for the full year) is going to attract new buyers.

    NTE does not have any analyst coverage and does not provide specific quarterly guidance so I don't think they will say much about Q1 that will put pressure on the stock. If anything, I suspect they will give some general guidance about the overall year that should indicate 2013 will provide substantial growth over 2012. I think they can easliy earn between $2.00 and $2.50 for 2013 and perhaps a lot more. Even at only $2.00 EPS, earnings growth would be 67% growth over 2012.

    During the last call, NTE said that they may fill capacity by the end of the 2013. Based on info on their website, the capacity is $300m per month, which is $900m per quarter. I believe they have some tablet headwinds for Q1, but the much more important information is whether or not they can count on tablet order growth after Q1. If they can get to $900m a quarter, quarterly EPS would be around $1.00.

    We'll see how it plays out over the year, but I'm convinced this is a $20 per share stock with substantial upside. If they can fill capacity and generate $900m in quarterly revenue, then this might be a $30 to $40 stock. Any strong reaction to Apple two days before the earnings release is a chance to make some easy money. It's like holding an 11 while the dealer is showing 16 and you know the next card is a 10. Time to double down!

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    • I agree with most of what you say. However, the $300m per quarter is the capacity they *will* have when they finish building their new plant, probably in 2016. Capacity now is probably in the $200m a month range.

      • 3 Replies to gnrlowners
      • It says this on their Website about Shenzhen: "When fully utilized the current facility has a turnover production capacity of up to US$150 million per month." - please not the use of the word "CURRENT"
        In regards to Wuxi the website say "When fully utilized the current facility has a turnover production capacity of up to US$150 million per month." - again, please note the word "CURRENT"
        Also, it says $300 million per month in the corporate video. Why don't people just learn to read?

        Anyhow, certainly a LOT of room for business to get bigger. Am buying more today too!

        Sentiment: Strong Buy

      • gnrlowners, no, $300M/month should be capacity now (although I think that's probably a rough estimate on the part of Nam Tai). Capacity will continue to grow from a number of things:

        FPCB is being discontinued by the end of the current quarter. Something more useful, such as more LCM equipment, could be put in its place.

        New buildings are being built on the adjoining land on the Wuxi property. They should all be done sometime next year, but some of them should be done sooner. Some of them don't add capacity such as dormitories and cafeteria, but there is an SMT plant that will add production. There's also a warehouse, and that could free up space in the current Wuxi factory.

        The new Shenzhen property admittedly won't be ready for some time -- somewhere in 2015. It will add still more capacity though.

        Sentiment: Strong Buy

      • 2016? By that time we may all be wearing google glasses. Imagine if Kodak began building a new factory for film in 1995 with a 4 yr completion date.

    • NTE is hooked up with Sharp and Japan Display, and have been for quite some time. Sharp and Japan Display have the best displays on this planet. The key driver for the desire of buying a smartphone is the display. Companies (other than Apple) have, and will buy from them. And NTE will be a part of that. And don't forget that a 5 to 10% cut in 10's of billions of $$ isn't much of a factor when it comes to filling NTE's production lines. Product shifts, supplier shifts are more of a factor. NTE has proven to be a top notch supplier. They will get their fair share.

      • 1 Reply to wonkko
      • Agreed, wonkko and smkros. I expect strong non-Apple business in the first quarter (although of course there will be post-Christmas seasonality working against it). I also expect weak Apple business in the first quarter, but very strong in the second and later quarters as new generations of products emerge. Every indication is that Sharp is gearing up to do the next generation of ipad AND ipad mini (IGZO panels), and when NTE talked about upcoming products, that's most likely what they were referring to.

        I got a little extra shortly after open. Thanks, short-sighted market!

        Sentiment: Strong Buy

    • but might recover later in the session as Apple might very well bounce back. Mediocre earnings and a dismal outlook (although not of this magnitude) were widely expected so this should be largely priced into the stock already. Tim Cook also adressed supplier rumours on the call.

      As for NTE I wouldn't chase the stock here going into earnings as any comment on weak order trends would lead to another sell off in the shares.

      To be honest this kind of advice was quite wrong three months ago as the stock skyrocketed 40% on earnings the next day. But for my part I was able to get back in in pre-market at a very reasonable price then and enjoyed a good run that day. So there will be time to jump back aboard if NTE shows ongoing business momentum.