Morgan Stanley Stays Bullish On Parts Makers Into September iPhone Launch
Share prices of Apple Inc. (NASDAQ: AAPL) and companies in the PC/Notebook supply chain have appreciated over the past three months in anticipation of restocking strength. The launch of the new iPhone in September, and subsequent sell-through strength, would be the next key event, Morgan Stanley’s Jasmine Lu said in a report.
Stu mentioned, “We expect YoY trends to be quite encouraging heading into 4Q16, but think it's a bit early to take profits on outperformers.”
Strength In NB Shipments
The NB shipments of the top 5 NB ODMs were 3 percent higher than expected. The Q3 NB shipment estimate for these 5 ODMs has been raised to 9 percent sequential growth, driven by upside mainly from Dell, HP Inc (NYSE: HPQ) and Lenovo Group Limited (OTC: LNVGY).
The Q3 NB shipment estimate implies 12 percent month-over-month growth in August and a significant acceleration to 22 percent month-over-month growth in September.
“The ODM data appear to be consistent with what we observed from Greater China PC brands - that the strength mainly came from the US, whereas China remained soft. Lenovo seems to be kicking off another inventory replenishment cycle. However, we still need to monitor whether the inventory build can translate into sell-through given its high gearing to China, where PC demand remained soft,” Stu wrote.
iPhone And iPad In 2H
The iPhone build rate estimates for Q3 and Q4 remain at 44 million, representing 10 percent quarter-over-quarter growth, and at 72 million, representing 64 percent quarter-over-quarter growth, respectively. “For the new SKU, we keep our 2H16 total shipment at 83mn units, flat YoY vs. the iPhone 6S cycle,” the Morgan Stanley report noted.
The iPad shipment estimates for Q3 and Q4 remain at 9 million, representing 5 percent quarter-over-quarter growth, and at 12 million, representing 33 percent quart-over-quarter growth, respectively. Most component suppliers expect the ramp up to commence in August, slightly later than the previous cycle, the analyst stated.
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