Caution over 2019 outlook puts pressure on Catcher shares

Disappointing sales for December 2018 also dampened investor sentiment toward Catcher Technology Co. which underperformed the broader market Tuesday, dealers said. (NOWnews)

TAIPEI (CNA) — A cautious outlook toward demand for 2019 on Jan. 8 pushed down shares of Catcher Technology Co., a metal casing supplier to Apple Inc., although they recovered somewhat by the end of the session on bargain hunting, dealers said.

Disappointing sales for December 2018 also dampened investor sentiment toward Catcher, which underperformed the broader market Tuesday, dealers said.

Shares of Catcher fell 2.60 percent to close at NT$206.00 (US$6.69) with 8.85 million shares changing hands on the Taiwan Stock Exchange, while the benchmark weighted index ended down 0.28 percent at 9,563.60 on a mild technical correction after a surge of 2.21 percent in the previous session.

The stock opened sharply lower and soon dipped to the day’s low of NT$199.00 as investors took cues from its December sales report and cautious guidance for the first quarter of 2019 and the whole year.

In a statement released Monday, Catcher reported NT$6.698 billion in consolidated sales for December, down 30.4 percent from a month earlier and 28 percent lower than a year earlier.

Its consolidated sales for the fourth quarter of last year totaled NT$29.17 billion, which was a quarterly increase of 16.2 percent but a drop of 11.1 percent from a year earlier.

However, Catcher reported record high consolidated sales of NT$95.42 billion for the whole 2018, which was a 2.3 percent annual increase.

In its guidance for 2019, the company said the weak demand in the fourth quarter of 2018 is expected to continue into the current quarter and its outlook for the year was cautious as product prices might drop.

Amid the uncertainty over 2019 demand and prices, Catcher said, it will continue to seek new clients, roll out new products, employ automation and rein in operating costs to improve its bottom line.

Mega International Investment Services Corp. analyst Alex Huang said Catcher and other major suppliers to Apple have become cautious because Apple has lowered its first-quarter forecast.

Last week, Apple dropped its first-quarter sales estimate from US$93 billion to US$84, citing weaker-than-expected demand in China.

Huang said it was therefore no surprise that Catcher shares dropped Tuesday.

“Judging from the movement of its share price, however, it seemed that the stock, which had been hammered recently by lower-than-expected iPhone sales, attracted some bargain hunting, which helped it to recover from the day’s low,” Huang said.

“Catcher shares are likely to move in consolidation mode and are not expected to make a breakthrough soon in light of the worry over its fundamentals.”

Before Catcher released its December sales report, a U.S.-based brokerage had already cut its target price on the company’s shares to NT$175 from NT$230 and downgraded its recommendation to “sell” from “neutral”, citing worry over the downside risks of Catcher’s profit margin for 2019.

By Jeffrey Wu and Frances Huang