COM7-SPVI-SYNEX Rejoice as Apple Reports an Outstanding Performance in the Quarter!

Apple Inc. on Tuesday reported its financial results for the first quarter of 2020, covering the period between October 1 to December 28, 2019, at $91.8 billion in revenue, beating all expectations from analysts.

 

The report of $91.8 billion in revenue for 1Q20 has beaten the estimation of $88.5 billion from analysts while earnings per share were at $4.99, compared with an estimation of $4.55 per share.

As for the next quarter, Apple believes the company could perform well with the sale of its phones and other devices, expecting $63.0 billion to $67.0 billion, higher than an estimate of $62.4 billion from analysts due to what is often a slow season of the year.

Apple reported that iPhone sales were $55.96 billion, beating estimates of $51.6 billion and year-before sales of $52 billion. Meanwhile, Apple’s wearables segment such as Airpods, Apple Watch, etc. posted revenue of $10.0 billion, beating estimates of $9.5 billion and increased from $7.3 billion the year before.

Tim Cook, Apple’s CEO, said that sales of iPhone 11 and iPhone 11 Pro was a major drive in the company’s growing revenue and called the devices “the strongest iPhone lineup we’ve ever had”.

 

As for listed-companies in the Stock Exchange of Thailand (SET) related to Apple’s products namely; Com7 Public Company Limited (COM7), S P V I Public Company Limited (SPVI) and SYNNEX (Thailand) Public Company Limited (SYNEX) are expected to benefit from Apple’s growth in the quarter as well.

 

COM7 would benefit the most due to its variety of businesses. The company owns BaNANA, BKK and  KingKong Phone, which sells mobile phones and electronic devices while having Studio 7 and iCare specifically for Apple products.

Kasikorn Securities (KS) expects COM7 to post a record-high in 4Q19 net profit at Bt339mn, up 28% YoY and 18% QoQ. The YoY growth should be driven by strong sales of iPhone 11 phones and a better operating margin on higher economies of scale. The QoQ growth should be driven by COM7’s high season in Q4 when smartphone brands normally launch new flagship models, especially COM7’s key brand, Apple.

Moreover, KS forecasts strong earnings growth in 2020 of 15% YoY driven by 1) sales of 5G smartphone models fueled by a continued replacement of 4G models by consumers; 2) expected strong sales of Apple products as the smartphone maker is likely to focus on phones with more affordable prices; and 3) COM7’s continuous expansion plan.

KS gives COM7 an “Outperform” rating and a target price at ฿31.50/share (20% upside), expecting COM7 to deliver stronger earnings growth in 2020 than the sector.

 

SPVI, as an authorized reseller of Apple products, showed a strong performance in the past year with an increase of 149.56% in the share price from ฿1.13/share on 29 Jan. 2019 to ฿2.82/share in 29 Jan. 2020 morning session with a simple moving average (SMAVG) (50) at ฿2.90/share, (100) at ฿2.52/share and (200) at ฿2.02/share.

On the other hand, SYNEX, who sells computers, software, phone accessories, had the opposite performance when compared to SPVI. The company posted a decline of the share price in one year from ฿11.64/share to ฿6.70/share with an SMAVG (50) at ฿7.16/share, (100) at ฿7.72/share and (200) at ฿9.14/share.

The decline might due to SYNEX’s poor performance in the first three quarters in 2019, but analysts expect 4Q to perform better, benefiting from iPhone 11.