20131101 mtk credit s
DESCRIPTION
Mediatek Analysis reportTRANSCRIPT
DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON US ANALYSTS. FOR OTHER IMPORTANT DISCLOSURES, visit https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683 US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
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Client-Driven Solutions, Insights, and Access
01 November 2013
Asia Pacific/Taiwan
Equity Research
Semiconductor Devices
MediaTek Inc.
(2454.TW / 2454 TT) INCREASE TARGET PRICE
China position continues to strengthen
■ 3Q13 upside to sales and profitability. Mediatek 3Q13 sales were already
reported at NT$39 bn, +17.2% QoQ, above CS +14.5% QoQ and +5-13%
QoQ guidance due to quad/dual core smartphone upside and feature phone
share recovery. GMs reached 43.9% vs. our 43.7% and 42.5-44.5%
guidance due to competitive cost structure on the new chips.
■ 4Q13 upside strength continues. Mediatek guided flat to down 5% QoQ,
better than our recent upward revision to -12% QoQ off a higher 3Q13
estimate in our preview last Monday. As noted in our recent supply chain
updates, Mediatek's dual core is replacing competitor's dual core solutions
and 3G tablets encroaching Chinese players, with optimism for octa-core for
5-7" phablets following a higher profile Nov 20th Shenzhen launch.
Downstream smartphone makers and component suppliers are witnessing
more than normal product launches tied to 4Q13 than the past and driving
double digit 4Q unit growth for some China brands.
■ Margins still improving. GMs were guided to 43-45% guidance for 4Q13,
+10bp at the midpoint. The company has more cost competitive quad core
(MT6582) ramping in 4Q13, a lower cost dual core (MT6571) in 2Q14 and
mix benefit from octa-core (MT6592), with initial LTE volumes for 1H14 with
2-chip solution and SoC by year-end. Better mix and good competitive
position is keeping ASPs only flat to down 5% vs. early -10% expectation.
■ Maintain OUTPERFORM. On better pricing and margins, we raise
2013/14E EPS from NT$19.00/NT$22 to NT$20/NT$24 and our TP from
NT$440 to NT$480, 19% further upside. We see upside driven by its leading
position in the high-growth emerging market smartphone space, growth into
TD-SCDMA and tablets, catalyst from LTE and octacore launching in the
next month, and operating leverage from growth and improving GMs.
Share price performance
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500
600
Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13
Price (LHS) Rebased Rel (RHS)
The price relative chart measures performance against the
TAIWAN SE WEIGHTED INDEX which closed at 8388.18 on
01/11/13
On 01/11/13 the spot exchange rate was NT$29.39/US$1
Performance over 1M 3M 12M Absolute (%) 9.9 11.4 23.9 Relative (%) 7.8 7.9 7.1
Financial and valuation metrics
Year 12/12A 12/13E 12/14E 12/15E Revenue (NT$ mn) 99,263.2 134,332.0 190,941.6 213,214.0 EBITDA (NT$ mn) 16,100.1 27,173.8 41,506.3 47,167.2 EBIT (NT$ mn) 12,403.6 24,240.2 38,482.7 44,101.6 Net profit (NT$ mn) 15,473.8 26,835.7 37,051.5 42,170.9 EPS (CS adj.) (NT$) 12.76 20.00 24.00 27.00 Change from previous EPS (%) n.a. 5.3 9.1 4.9 Consensus EPS (NT$) n.a. 18.8 23.6 26.7 EPS growth (%) 1.9 56.8 20.0 12.5 P/E (x) 31.7 20.2 16.9 15.0 Dividend yield (%) 2.1 2.2 3.2 4.4 EV/EBITDA (x) 28.9 16.6 10.6 9.2 P/B (x) 2.8 2.8 3.0 2.9 ROE (%) 10.6 14.5 18.5 20.0 Net debt/equity (%) net cash net cash net cash net cash
Source: Company data, Thomson Reuters, Credit Suisse estimates.
Rating OUTPERFORM* Price (01 Nov 13, NT$) 404.50 Target price (NT$) (from 440.00) 480.00¹ Upside/downside (%) 18.7 Mkt cap (NT$ mn) 545,859 (US$ 18,571) Enterprise value (NT$ mn) 450,913 Number of shares (mn) 1,349.47 Free float (%) 89.1 52-week price range 404.5 - 301.5 ADTO - 6M (US$ mn) 85.5
*Stock ratings are relative to the coverage universe in each
analyst's or each team's respective sector.
¹Target price is for 12 months.
Research Analysts
Randy Abrams, CFA
886 2 2715 6366
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 2
Focus charts and tables Figure 1: Summary of our 3Q13/4Q13/1Q14 and 2013/2014 estimates for MediaTek
3Q13 4Q13 1Q14 2013 2014 2015
(NT$ mn) Actual CS(old) Street CS CS(old) Street Guidance CS CS(old) Street CS CS(old) Street CS CS(old) Street
Sales $39,008 $39,008 $37,869 $38,074 $34,331 $34,144 NT$37.1-$39.0bn $39,720 $38,116 $33,132 $134,332 $130,589 $129,298 $190,942 $183,046 $162,084
Chg 17.2% 17.2% 13.8% -2.4% -12.0% -12.5% Flat to -5% 4.3% 11.0% -3.0% 35.3% 31.6% 30.3% 42.1% 40.2% 25.4%
GM% 43.9% 43.7% 43.7% 44.1% 43.6% 43.5% 43-45% 44.2% 43.8% 43.6% 43.5% 43.2% 43.1% 44.7% 43.8% 43.5%
R&D 7,075 7,005 7,217 7,019 22.5-26.5% Opex 7,347 7,941 26,299 26,031 35,609 34,698
SG&A 2,200 2,130 2,178 2,108 2,501 2,450 7,870 7,730 11,197 10,740
OpM% 20.2% 20.3% 19.5% 19.4% 17.0% 18.4% 16.5-22.5% 19.4% 16.5% 16.1% 18.0% 17.4% 17.5% 20.2% 19.0% 20.0%
Net Inc. 8,428 8,526 8,019 7,943 6,499 6,900 7,674 6,443 6,568 26,836 25,489 25,418 37,051 33,970 33,869
EPS (NT$) $6.28 $6.35 $5.98 $5.92 $4.84 $5.05 $5.15 $4.33 $4.67 $20.00 $19.00 $18.81 $24.00 $22.00 $24.15 Source: Company data, Bloomberg consensus estimates, Credit Suisse estimates
Figure 2: More Android smartphone launches targeted after the October Golden Week helping 4Q13 seasonality Company Lenovo Lenovo TCL Huawei Huawei Oppo Micromax Coolpad Coolpad
Model name Vibe X S960 S5000 Y910 G610 G700 R819 Canvas Doodle 2 SII 8750 9970
Image
Technology HSDPA HSDPA WCDMA WCDMA WCDMA TD-WCDMA WCDMA TD-WCDMA CDMA
Operating System Android 4.2 Android 4.2 Android 4.2 Android 4.2 Android 4.2 Android 4.2 Android 4.2 Android 4.2 Android 4.2
Pixels 1920 x 1080 1280 x 800 1920 x 1080 960 x 540 1280 x 720 1280 x 720 1280 x 720 1920 x 1080 1920 x 1080
RAM 2GB 1GB 2GB 1GB 2GB 1GB 1GB 1GB 2GB
ROM 16GB 16GB 32GB 4GB 8GB 16GB 16GB 16GB 16GB
Display 5.0" 7.0" 6.0" 5.0" 5.0" 4.7" 5.7" 5.5" 5.9"
Camera 13MP+5MP 5MP+1.6MP 13MP+2.1MP 5MP+0.3MP 8MP+1.3MP 8MP+2MP 5MP+12NP 8MP+2MP 13mp
Battery 2,000mAh 3,450mAh 3,400mAh 2,150mAh 2,150mAh 2,000mAh 2,600mAh 2,500mAh 3,000mAh
CPU Speed 1.5GHz 1.2GHz 1.5GHz 1.2GHz 1.2GHz 1.2GHz 1.2GHz 1.2GHz 1.8GHz
Processor Chip MT6589T MT8389 MT6589T MT6589M MT6589 MT6589 MT6589 Marvell PXA1088 Nvidia Tegra 4
Price NA $260 NA $232 $330 2,298Rmb $315 1,999Rmb NA
Source: Company data, Credit Suisse estimates
Figure 3: Operating leverage returns as GMs improve Figure 4: Mediatek Inventory stays low in 4Q13
0%
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0
5,000
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1Q05
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1Q10
3Q10
1Q11
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1Q12
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1Q14
E
3Q14
E
Mediatek GM (%)
Revenue (NT$mn)
Feature phone sales Smartphone sales
Total GM% Op Margins
0
20
40
60
80
100
120
-
2,000
4,000
6,000
8,000
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10
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11
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12
1Q
13
Inventory DaysInventory (NT$mn)
Inventory Inventory Days
Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse research
Figure 5: Mediatek multi-core chipsets ramping Figure 6: Blended ASPs supported by improving mix
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Single Units Dual Units Quad UnitsOcta Units Single ASPs Dual ASPsQuad ASPs Octa ASPs Blended ASPs
Units (mn) ASPs (US$)
$0
$3
$6
$9
$12
$15
$18
$21
$24
$27
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3Q11 1Q12 3Q12 1Q13 3Q13 1Q14E 3Q14ESingle Units Dual Units Quad Units
Octa Units Single ASPs Dual ASPs
Quad ASPs Octa ASPs Blended ASPs
Units (mn) ASPs (US$)
Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 3
3Q13 results: China position continues to strengthen Following another solid quarter, we stay OUTPERFORM on Mediatek and raise our target
price from NT$440 to NT$480 with guidance for above seasonal strength continuing into
4Q13. Our positive thesis on the stock is based on (1) a strong product cycle in the
emerging smartphone market and tablets that are only in the second year of a four-five
year growth cycle, (2) market leadership continuing to sustain in the face of tough
competition due to fast product innovation both on lower cost and higher performance
solutions, and (3) additional drivers from shift to multi-core/big.LITTLE, tablets and TD-
SCDMA this year and LTE over the next few years. Our NT$480 target price sets
Mediatek at 20x our revised 2014E EPS of NT$24.
3Q13 results top street, 4Q13 above seasonal
■ 3Q13 upside to sales and profitability. Mediatek 3Q13 sales were already reported
at NT$39 bn,+17.2% QoQ, above CS +14.5% QoQ and +5-13% QoQ guidance due to
quad/dual core smartphone upside and feature phone market share recovery. GMs
also reached the upper end of guidance at 43.9% versus our 43.7% and 42.5-44.5%
guidance as pricing has been reasonable and cost structure on the new chips
competitive. Product mix continues to improve with 55-60% smartphone, 20-25%
digital home, 10-15% Wifi and 15-20% from feature phones. Export ratio is rising to
30% but note in feature phones, China brands eventually reached 80% export mix, so
still a lot of growth is ahead for the export channel.
Figure 7: Mediatek 3Q13 in-line with CS, above street; 4Q13 guidance above CS/street in millions, unless otherwise stated
3Q13 4Q13 1Q14 2013
(NT$ mn) Actual CS(old) Street Guidance CS CS(old) Street Guidance CS CS(old) Street
Sales $39,008 $39,008 $37,869 NT$34.9-37.6bn $38,074 $34,331 $34,144 NT$37.1-$39.0bn $39,720 $38,116 $33,132
Chg 17.2% 17.2% 13.8% Up 5-13% -2.4% -12.0% -12.5% Flat to -5% 4.3% 11.0% -3.0%
GM% 43.9% 43.7% 43.7% 42.5-44.5% 44.1% 43.6% 43.5% 43-45% 44.2% 43.8% 43.6%
R&D 7,075 7,005 23-27% opex 7,217 7,019 22.5-26.5% Opex 7,347 7,941
SG&A 2,200 2,130 2,178 2,108 2,501 2,450
OpM% 20.2% 20.3% 19.5% 16.0-22.5% 19.4% 17.0% 18.4% 16.5-22.5% 19.4% 16.5% 16.1%
Net Inc. 8,428 8,526 8,019 7,943 6,499 6,900 7,674 6,443 6,568
EPS (NT$) $6.28 $6.35 $5.98 $5.92 $4.84 $5.05 $5.15 $4.33 $4.67 Source: Bloomberg, Company data, Credit Suisse estimates
■ 4Q13 upside strength continues. Mediatek guided sales flat to down 5% QoQ to
NT$37.1-$39.0 bn, better than our recent upward revision to -12% QoQ off a higher
3Q13 estimate in our preview on Monday this week. We noted in our Golden Week
preview that 4Q13 China handset sales is likely to be better than normal
seasonal, largely due to new smartphone product launches post October holidays.
Downstream smartphone makers and component suppliers are noting more than
normal product launches tied to 4Q13 than the past. The exhibit below shows new
smartphone models announced by Chinese / emerging market brands in the last
few weeks, including the recent IFA show in Berlin, slated for product launch in
4Q13. Lenovo and TCL Communications both target double-digit QoQ sales
growth in 4Q13 and Sunny Optical notes HCM orders are tracking flat-to-up in
4Q13, Lenovo, mainly due to new smartphone product launches by Huawei,
Oppo, and Coolpad.
Raising target price from
NT$440 to NT$480 based
on 20x our revised 2014
EPS
3Q13 sales upside +17%
QoQ, GMs reach the higher
end of guidance
4Q13 sales guided flat to
down 5% QoQ, better than
the normal double digit
decline
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 4
Figure 8: More Android smartphone launches targeted after the October Golden Week holiday this year Company Lenovo Lenovo TCL Huawei Huawei Oppo Micromax Coolpad Coolpad
Model name Vibe X S960 S5000 Y910 G610 G700 R819 Canvas Doodle 2 SII 8750 9970
Image
Technology HSDPA HSDPA WCDMA WCDMA WCDMA TD-WCDMA WCDMA TD-WCDMA CDMA
Operating System Android 4.2 Android 4.2 Android 4.2 Android 4.2 Android 4.2 Android 4.2 Android 4.2 Android 4.2 Android 4.2
Pixels 1920 x 1080 1280 x 800 1920 x 1080 960 x 540 1280 x 720 1280 x 720 1280 x 720 1920 x 1080 1920 x 1080
RAM 2GB 1GB 2GB 1GB 2GB 1GB 1GB 1GB 2GB
ROM 16GB 16GB 32GB 4GB 8GB 16GB 16GB 16GB 16GB
Display 5.0" 7.0" 6.0" 5.0" 5.0" 4.7" 5.7" 5.5" 5.9"
Camera 13MP+5MP 5MP+1.6MP 13MP+2.1MP 5MP+0.3MP 8MP+1.3MP 8MP+2MP 5MP+12NP 8MP+2MP 13mp
Battery 2,000mAh 3,450mAh 3,400mAh 2,150mAh 2,150mAh 2,000mAh 2,600mAh 2,500mAh 3,000mAh
CPU Speed 1.5GHz 1.2GHz 1.5GHz 1.2GHz 1.2GHz 1.2GHz 1.2GHz 1.2GHz 1.8GHz
Processor Chip MT6589T MT8389 MT6589T MT6589M MT6589 MT6589 MT6589 Marvell PXA1088 Nvidia Tegra 4
Price NA $260 NA $232 $330 2,298Rmb $315 1,999Rmb NA
Source: Company data, Credit Suisse estimates
Margin improvement continues
GMs were guided to further improvement, with 43-45% guidance for 4Q13 suggesting 10
bp further improvement at the midpoint. The company has more cost competitive quad
core (MT6582) seeing broad adoption in 4Q13, a lower cost dual core (MT6571) in 2Q14
and some positive mix benefit from octa-core (MT6592) and more advanced quad core
refresh (MT6588), with initial LTE volumes for 1H14 with two-chip solution and SoC by
year-end. We are not seeing meaningful dual core or WCDMA competition yet from
Spreadtrum and still see local support, time to market, and aggressive roadmap keeping
Mediatek ahead of Qualcomm in the local channels.
Figure 9: Smartphones continue to improve Mediatek's margins in NT$millions, unless otherwise stated
0%
10%
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50%
60%
0
5,000
10,000
15,000
20,000
25,000
30,000
1Q05
3Q05
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E
3Q14
E
Mediatek GM (%)
Revenue (NT$mn)
Feature phone sales Smartphone sales
Total GM% Op Margins Source: Company data, Credit Suisse estimates
A 20/16nm push puts Mediatek into the first-tier of
technology adopters and should benefit TSMC
The company has also moved away from a lagging edge low cost strategy on feature
phones to now push to 28nm to optimize die size and improve power/performance on its
smartphone chipsets. The company's octa-core will move to 28nm HPM and by next year
the company will introduce its first 20nm product, bringing it in-line with the leaders
launching in the first year of a new technology generation at TSMC.
Mediatek noted on its call its plans to make heavy use of 20nm/16nm for its performance
products, a key positive for TSMC as an aggressive Mediatek will prompt overseas fabless
suppliers to also push on the technology curve to remain competitive with Intel on one side
pushing to 14nm and Mediatek making its three top priorities of focusing on (1) getting
GMs improving with the
rapid introduction of new
smartphone solutions
Mediatek planning to shift its
performance products to
20/16nm in the next couple
years to improve
competitiveness in the
premium category
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 5
LTE working, (2) improving high-end and premium products, and (3) pushing leading edge
geometries to be more competitive on power and performance.
Product roadmap enhancing Mediatek’s smartphone
and tablet competitiveness
Mediatek has accelerated its development cycle relative to feature phones to remain
competitive with global competitors Qualcomm, Broadcom and Marvell and stay ahead of
emerging Chinese competitors RDA and Spreadtrum. We estimate the company's market
share is moving up from 44% in 2012 to 48% in 2015 even in a high growth market with
multiple competitors.
Figure 10: Mediatek gaining shares among local brands
Smartphone chipsets 2011 2012 2013 2014 2015
Mediatek 10.0 109.8 220.4 315.5 447.0
Mediatek share (%) 14% 44% 45% 46% 48%
Spreadtrum 0.2 32.0 115.7 145.7 208.3
RDA - - - 24.3 49.8
Leadcore 3.0 5.0 15.0 22.5 30.0
Asian suppliers 13.2 146.8 351.1 508.0 735.1
YoY Growth 1009% 139% 45% 45%
Share 19% 59% 71% 75% 79%
Qualcomm 35.2 81.0 120.6 150.3 174.5
Broadcom 1.5 2.5 7.0 10.0 15.0
Marvell 12.0 15.0 13.0 12.0 10.0
ST-Ericsson 8.0 3.5 0.5 - -
Overseas suppliers 56.7 102.0 141.1 172.3 199.5
YoY Growth 80% 38% 22% 16%
Share 81% 41% 29% 25% 21%
Total 70.0 248.8 492.1 680.3 934.7
YoY Growth 256% 98% 38% 37%
Source: Gartner, Company data, Credit Suisse estimates
Mediatek’s market segmentation consists of the following chipsets and features:
■ Lower cost chipsets. Mediatek launched 2nd
generation dual (MT6572/MT6572M)
and quad core chipsets (6589M/6582M) in late 2Q13 to optimize cost structure of its
mainstream products. The new products offer slightly lower clock speeds, lower image
sensor and resolution capability but remain competitive with rival dual/quad cores on
the market from Qualcomm and Spreadtrum. Mediatek’s MT6572 ramped from 10%
to over 40% of its volume in a quarter by hitting the sweet spot of factory pricing
spanning from US$50 entry smartphones to US$120 mid-tier models. The company
moved dual core to 28nm with Cortex-A7 clocked at 1.2GHz, allowing support for 5MP
camera, QHD resolution (960x540) and HSPA+ release 8 plus TD-SCDMA and 30
FPS 720p video. The scaled down 6582M quad core drops in with 1.3GHz processor,
QHD resolution (960x540) and support for 8MP camera.
In dual core, we believe Mediatek will launch an even lower cost dual core chipset
(MT6571) in 2Q14 to address the low cost 3.5” FWVGA smartphone market to
compete with Spreadtrum and RDA’s single core solutions.
■ Higher performance products protecting ASPs. Mediatek's roadmap offers multiple
areas for innovation including (1) modem and connectivity (802.11ac, LTE), (2) power
and performance pushing leading geometries (28nm HPM in 4Q13 and 20nm in
2H14), (3) more advanced cores (octa-core, big.LITTLE), (4) higher clock rates for
CPU and GPU with turbo versions for better multimedia and graphics, and (5) improve
modem and connectivity (802.11ac, LTE).
Blended pricing only flat to
down 5% in 3Q/4Q
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 6
Figure 11: Mediatek octa-core and quad-core chipset specifications
MT6592 MT6589 MT6588 MT6582 MT6572 MT6571
Status NEW in 4Q13 Available (1Q13) NEW in 4Q13 NEW in 4Q13 Available (2Q13) New in 2Q14
Multi-core Octa-core Quad-core Quad-core Dual-core Dual-core Dual-core
CPU ARM Cortex-A7 ARM Cortex-A7 ARM Cortex-A7 ARM Cortex-A7 ARM Cortex-A7 ARM Cortex-A7
Clock speed 1.7-2.0GHz 1.2GHz 1.7GHz 1.3GHz 1.3GHz 1.0GHz
GraphicsARM Mali-450
700MHz
ARM Mali-400
500MHz
ARM Mali-450
600MHz
ARM Mali-400
500MHz
ARM Mali-400
500MHzARM Mali-400
MemoryLPDDR2 533MHz
LPDDR3 666MHz
32-bit 400Mbps LP-
DDR / 32-bit 1066
Mbps LP-DDR2
LPDDR2 533MHz
LPDDR3 666MHzLPDDR2 533MHz LPDDR2 266MHz LPDDR2 266MHz
Camera 13MP 13MP 13MP 13MP 5MP 5MP
Video Decode1080p 30fps
HEVC/VPS
1080p 30fps
HEVC/VP9
1080p 30fps
720p 30fps
HEVC/VPS
1080p 30fps 720p 30fps 720p 30fps
Video Encode 1080p 30fps 1080p 30fps 1080p 30fps 1080p 30fps 720p 30fps 720p 30fps
DisplayHD1080
1920 x 1080
HD1080
1920 x 1080
HD1080
1920 x 1080HD720 1280x720 qHD 960 x 540 qHD 960 x 540
ModemHSPA+ Rel. 8
21Mbps/5.76Mbps
HSPA+ Rel. 8
21Mbps/5.76Mbps
HSPA+ Rel. 8
21Mbps/5.76Mbps
HSPA+ Rel. 8
21Mbps/5.76Mbps
HSPA+ Rel. 8
21Mbps/5.76Mbps
HSPA+ Rel. 8
21Mbps/5.76Mbps
ConnectivityIntegrated Wifi
abgn/BT/FM/GPS
Integrated Wifi
bgn/BT/FM/GPS
Integrated Wifi
abgn/BT/FM/GPS
Integrated Wifi
bgn/BT/FM/GPS
Integrated Wifi
bgn/BT/FM/GPS
Integrated Wifi
bgn/BT/FM/GPS
Process node 28nm HPM 28nm 28nm HPM 28nm 28nm 28nm
Foundry TSMC TSMC TSMC TSMC TSMC GlobalFoundries Source: Company data, Credit Suisse estimates
■ High resolution phablets proliferating and moving toward octa-core. The Chinese
brands are proliferating a wide array of 5.7-6.5” phablet models with full HD 1920x1080
resolution for US$180-220 FOB prices and high specs including 5MP + 13 MP camera,
1-2GB DRAM and 8-16GB NAND. Most of these solutions use Mediatek’s MT6589 but
are providing a pin for pin compatible option between the new quad and octa-core
MT6592 for fast roll-out of new models on the new chipset once available late in the
year. Multiple customers are sampling the Octa-core in November and should launch
products after Mediatek's high profile launch event in Shenzhen on 20 November.
Figure 12: Mediatek octa-core MT6592 design wins
Company UMI ThL OKAL ZOPO G Five Goophone Mlais
Model name X2S ThL II N6592 Zopo II Kivu S4 Max MX69
Image
Technology WCDMA + TD WCDMA + TD WCDMA WCDMA WCDMA WCDMA WCDMA
Operating System Android 4.2 Android 4.2 Android 4.2 Android 4.2 Android 4.2 Android 4.2 Android 4.2
Pixels 1920 x 1080 1920 x 1080 1920 x 1080 1920 x 1080 1920 x 1080 1920 x 1080 1920 x 1080
RAM 2GB 2GB 2GB 2GB 2GB 2GB 2GB
ROM 32GB 16GB 16GB 16GB 16GB 32GB 32GB
Display 5.0" NA 5.5" NA 6.0" 6.44" 5.7"
Camera 13MP NA 5MP + 12MP NA 1.9MP+13MP 13MP+5MP NA
Battery NA NA NA NA NA NA NA
CPU Speed 1.5GHz 2GHz 2GHz 2GHz 2GHz 2GHz 2GHz
Processor Chip MT6592 MT6592 MT6592 MT6592 MT6592 MT6592 MT6592
Price $250 NA $150 NA NA $400 $350
Source: Company data, Credit Suisse estimates
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 7
Figure 13: Mediatek’s Octocore enables advanced tasks Figure 14: Octocore could improve power/performance
Source: Company data, Credit Suisse research Source: Company data, Credit Suisse estimates
■ New LTE chipsets on the roadmap for late 2013 sampling, with integration in
2014. Qualcomm is well ahead of the market and dominating tier-one business with its
integrated LTE Snapdragon chipsets. In this area, Mediatek is behind but should still
be in time to catch the growth in emerging markets. Mediatek’s first LTE modem
(MT6590) is sampling for 4Q13 to support both versions of LTE, TD-SCDMA, WCDMA
and TD-SCDMA. The company will also plan an integrated solution pairing its LTE
baseband to both its quad core and Octa-Core for sampling in 2Q/3Q and
launching by year-end.
Figure 15: Mediatek multi-core chipsets ramping Figure 16: Blended ASPs supported by improving mix
0.0
5.0
10.0
15.0
20.0
25.0
30.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
3Q
11
4Q
11
1Q
12
2Q
12
3Q
12
4Q
12
1Q
13
2Q
13
3Q
13
4Q
13E
1Q
14E
2Q
14E
3Q
14E
4Q
14E
Single Units Dual Units Quad UnitsOcta Units Single ASPs Dual ASPsQuad ASPs Octa ASPs Blended ASPs
Units (mn) ASPs (US$)
$0
$3
$6
$9
$12
$15
$18
$21
$24
$27
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
3Q11 1Q12 3Q12 1Q13 3Q13 1Q14E 3Q14ESingle Units Dual Units Quad Units
Octa Units Single ASPs Dual ASPs
Quad ASPs Octa ASPs Blended ASPs
Units (mn) ASPs (US$)
Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates
■ Tablets enhanced with new chipsets. Mediatek has created an extension of its
popular MT6589 quad core for smartphone chipset with its MT8125/MT8389/MT8382 for
tablets. The tablet chipset offers 1.5GHz speed, 1080p video playback, up to 13MP
support and DTV video technology and also is bundled with 3G HSPA+ modem and 4-
in-1 connectivity (Wifi, Bluetooth 4.0, GPS, FM) for a voice and always connected data
tablet. The product has secured designs with Asus for its Memo Pad HD7, Acer Iconia
family, Lenovo A-series and recently introduced Lenovo YogaPad 8" and 10" models.
The company also introduced its big.LITTLE chipset combining dual ARM Cortex A15
and dual Cortex A7 with Imagination PowerVR Series 6 graphics optimized by
Mediatek’s internal GPU team to allow branded tablet customers to be more competitive
with multi-core GPUs. We project Mediatek has grown share from less than 5% in 2012
to 20% share in 2013 and model doubling to 40 mn units and 25-30% market share in
2014, with potential for further upside as it rolls out lower cost dual/quad core chipsets
and higher end solutions using its octa-core and LTE connectivity.
Branded tablets including
the new Lenovo Yoga Pad
adopting Mediatek's
bundled solution
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 8
Figure 17: Mediatek branded tablets launching
Company Asus Acer Acer Lenovo Lenovo Lenovo Lenovo (NEW)
Model nameMeMo Pad
HD7
Iconia Tab
A1-810Iconia B1 A71 IdeaTab A1000 IdeaTab A3000 IdeaTab S6000 Yoga Tablet
Processor MT8125 MT8125 MT8317 MT8317 MT8125 MT8125 MT8125
Retail price US$129 US$200 US$150 US$160 US$229 US$255 US$249 / $299
Display size 7.0" 7.9" 7.0" 7.0" 7.0" 10.1" 8.0" / 10.0"
Display resolution 1280 x 800 768 x 1024 1024 x 600 1024 x 600 1024 x 600 1280 x 800 1280 x 800
OS Android 4.2 Android 4.2 Android 4.1 Android 4.1 Android 4.2 Android 4.1 Android 4.2.2
Camera 5MP + 1.2MP 5MP +0.2MP 0.3MP NA + 0.3MP 5MP + 0.3MP 5MP + 0.3MP 5MP + 1.6MP
CPU speed 1.2GHz 1.2GHz 1.2GHz 1.2GHz 1.2GHz 1.2GHz 1.2GHz
Battery 4,720mAh 3,240mAh 2,710mAh 8hrs 8hrs 9hrs 16-18hrs Source: Company data, Credit Suisse estimates
Wearables including Android sport watches very early – but could add another potential driver
Several vendors (2G Pax, GBD) have creatively adopted Mediatek’s dual core MT6572
and MT6577 for a smart watch. The solutions offer a compact Android smartphone
experience in the watch for under US$100 FOB prices and include 3G calling, Bluetooth
connectivity for headsets, email/ browsing, and watch and calendar functions. The
wearable space is still in its infancy but we expect to see an emerging range of whitebox
and China built products using the Asian supply chain. The wearable is a bit like tablets
where some tablet makers were adopting Mediatek's existing smartphone chipsets for
tablets even before Mediatek was setting up a separate product line and team to
specifically address that market. We expect baseband, RF and connectivity suppliers
including Mediatek, RDA, Spreadtrum and Realtek could see an adjacent market emerge
here, joining a broad base of overseas MCU, connectivity and sensor manufacturers.
Rockchip also announced it will offer solutions for wearables in 2014 by seeing its partners
with reference designs and boards.
Figure 18: Mediatek powered watch interface Figure 19: Whitebox wearables emerging
Source: Company data, Credit Suisse research Source: Company data, Credit Suisse research
Key risk will still come from competition
Mediatek's competitive landscape remains fierce, with competitive chipsets from local
suppliers Spreadtrum, Leadcore, Hi-Silicon and RDA still emerging and from overseas
competitors Qualcomm, Broadcom, Marvell, Samsung and Intel and Chinese application
processor vendors Allwinner, Rockchip, Actions, AMLogic, Ingenic. The landscape shows
multiple solutions addressing the major single, dual, quad and octa-core areas with similar
Some whitebox watches
using Mediatek's dual core
chipset
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 9
variations of ARM cores, processing speed, GPU and modem. Mediatek is still standing
out for the turnkey support, integration, fast product refreshes and time to market with new
designs. Mediatek should be able to spin a new version of Android within a quarter for
commercial production and roll out pin for pin compatible chipsets to its customer base for
finished products during the launch quarter of a new platform.
Figure 20: Competitive landscape has multiple vendors targeting solutions for emerging markets
Quad Core LTE
Single Core Dual Core
MediaTekMT6589/MT6582,
28nm, 1 GHz, 4 A7,
TD/HSPA+
Qualcomm
MSM8226, 28nm,
1.5GHz, 4 A7,
HSPA+
NVIDIA
Tegra 4, 28nm HPL,
4 A15, LTE Cat 4
MediaTek
MT6572, 28nm, 1-
1.5 GHz, 2 A7,
Power VR, TD+W
Spreadtrum
SC6825/8825, 40nm,
1.2GHz, 2 A5, TD /
EDGE
Qualcomm
MSM8926, 28nm,
1.2-1.4GHz, 4 A7,
LTE Cat 4
Qualcomm
MSM8210, 28nm,
1.2GHz, 2 A7,
TD+W
Marvell
PXA1088, 28nm,
1.0 GHz, 4 A7,
TD/HSPA+
Spreadtrum
SC6820/8820,
40nm, 1GHz, 1 A5,
TD / EDGE
MediaTek
MT6575, 40nm,
1GHz, 1 A9,
HSPA/EDGE
Intel
XMM7160, 28nm,
1.3GHz, 4 A7,
LTE/HSPA+ Cat 3
MediaTek
MT6290, 28nm,
1.4GHz, 4 A7, Mali
400, LTE Cat 3
Leadcore
LC1813, 40nm, 4
A7, TD
Hisilicon
Balong 710, 28nm,
1.5GHz, 4 A9, LTE
Cat 4
Qualcomm
MSM7227A, 45nm,
1GHz, 1 A5,
HSPA/EDGE
MarvellPXA 986(TD)/988(W),
1.2Ghz, 2 A9, Vivante
GC1000
Marvell
PXA1088 LTE,
28nm 1.2GHz, 4 A7,
LTE
Broadcom
BCM23550, 1.2GHz,
4 A7, TD/HSPA+
Broadcom
BCM21892, 40nm,
LTE Cat 4 modem
Broadcom
BCM28145, 1.2
GHz, 2 A9, HSPA+
RDA
RDA8810, 55nm,
1GHz, 1 A5, EDGE
Source: Company data, Credit Suisse estimates
We highlight a few recent developments in the landscape to monitor:
Intel engaging the local tablet suppliers more closely. Intel is putting more energy on
penetrating the low cost tablet market and now has reference models from design houses
such as Emdoor and smaller branded companies including Ramos and Vido. The
company is offering a thin and light reference design based on Clover Trail now with Bay
Trail rolling out in the next 45 days. Factory price for 10” with keyboard ranges from $250-
300 for Android and $300-$350 for Android + Wintel. 7.85” tablets are from Intel are now
appearing at US$150 factory price, the high-end of the US$50-135 range for tablets based
on Mediatek or the Chinese chipset suppliers. We are seeing more efforts from Intel to
penetrate several of these design houses on tablets, though presence is still very limited at
the local smartphone suppliers and threat to Mediatek still limited.
Figure 21: Intel Atom Z2580 design wins Company Ramos Ramos Ramos Ramos Breaconton Emdoor
Model name i8 i9 i10 i12 Breaconton EM-I8011
Image
Technology Wifi Wifi WCDMA + Wifi WCDMA + Wifi WCDMA + TD WCDMA
Operating System Android 4.2.2 Android 4.2.2 Android 4.2.2 Android 4.2.2 Windows 8Android 4.2.2 &
Win8 OS
Pixels 1280 x 800 1920 x 1200 1920 x 1200 1920 x 1080 1440 x 990 1280 x 800
RAM 1GB 2GB 2GB 2GB 2GB NA
ROM 16GB 16GB 16GB 16GB 32GB NA
Display 8.0" 8.9" 10.1" 11.6" 11.6" 10.1"
Camera 2MP + 5MP 2MP + 5MP 2MP + 5MP 2MP + 5MP 1.3MP + 5MP 2MP + 2MP
Battery 4500mAh 6500mAh 8000mAh 10,000mAh 8400mAh 7500mAh
CPU Speed 2 GHz 2 GHz 2 GHz 2 GHz 1.1-1.8GHz 1.8GHz
Processor Chip Atom Z2580 Atom Z2580 Atom Z2580 Atom Z2580 Atom Z2580 Bay Trail - T
Factory Price $147 $176 $209 $222 $300 $280 Source: Company data, Credit Suisse estimates
Intel is supplying Bay Trail
to some of its new whitebox
partners
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 10
Samsung will have fab capacity to push Exynos Octa-core – but more in tablets
over smartphones. Samsung has used its first to market timing with an Octa-core CPU in
its Exynos 5410 to secure design wins with tablet makers including Skyworth, Meizu, ASA,
Migo, Allfine, GBD and design house Emdoor among others. We believe Samsung will use
its fab capacity post Apple moving to TSMC to aggressively supply Exynos into its own
smartphones and also push it out to more Chinese suppliers. Feedback from suppliers
was the solution was good for more advanced whitebox tablets but viewed Mediatek's
upcoming Octacore as competitive on price/performance using 8 Cortex A7 cores rather
than big.LITTLE and added 3G modem capability could help it secure more connected 5-
7" phablets. Allwinner also is previewing it will have its A80 Octa-core solution in 2014
though still too early to see any tangible product or specification.
Figure 22: Samsung Octa-core Exynos 5410 design wins
Company Meizu ZDX Teamgee Seabright Connectme Tomato
Model name MX3 ZDX X6 TG Seabright Connectme T2
Image
Technology WCDMA WCDMA / LTE WCDMA WCDMA WCDMA WCDMA
Operating System Android 4.2.2 Android 4.2.2 Android 4.2 Android 4.2 Android 4.0 Android 4.2
Pixels 1800 x 1080 1920 x 1080 1280 x 800 1280 x 800 1280 x 800 1024 x 768
RAM 2GB 2GB 2GB 2GB 2GB 2GB
ROM 16GB 16GB 16GB 16GB 16GB 8GB
Display 5.1" 5.85" 8.0" 8.0" 8.0" 9.0"
Camera 2MP + 8 MP 2MP + 13 MP 2MP + 8 MP 2MP + 8 MP 2MP + 5 MP 2MP + 5 MP
Battery 2400mAh 3200mAh 4400mAh 4400mAh 4000mAh 4800mAh
CPU Speed 1638MHz 1.6GHz 1.8GHz 1638MHz 1.8GHz 1.6GHz
Processor Chip Exynos 5410 Exynos 5410 Exynos 5410 Exynos 5410 Exynos 5410 Exynos 5410
Price RMB 2499 $300 $500 $249 NA $316
Source: Company data, Credit Suisse estimates
Chinese tablet suppliers adapting their solutions for performance, cost and 4G
connectivity. Allwinner, Rockchip, Am Logic and Actions have adjusted their offerings to
stay competitive on price/performance due to more competition from Mediatek, Intel and
Samsung and also from branded OEMs (Amazon, Acer, Asus, Lenovo, HP) putting
pressure on local brands.
Figure 23: China whitebox Quad core chipsets Figure 24: China whitebox Dual core chipsets Allwinner Allwinner Rockchip Rockchip Actions
A31 A31s RK3188 RK3066 ATM7039
Technology 40nm 40nm 28HKMG 40nm NA
CPUQuad-core
Cortex A7
Quad-core
Cortex A7Quad-core A9 Quad-core A9 Quad-core A9
Frequency 1.3GHz 1.2GHz 1.6GHz 1.6GHz 1.6GHz
GPU SGX544MP2 SGX544MP2 Mali-400 MP4 Mali-400 MP4 PowerVR
Video Playback 4Kx2K 2160p 1080p NA 4Kx2K
Video captureH.264 HP
1080p@60fps
H.264 HP
1080p@30fps
720p@60fps
H.264 HP
1080p@60fpsNA
HVEC/H.265
video
Applications Tablet
Smart TVPhablet Tablet Tablet Tablet
Allwinner Allwinner Rockchip Actions
A23 A20 RK3026 ATM7021
Technology 40nm 40nm 40nm NA
CPUDual-core
Cortex A7Dual-core Dual-core A9 Dual-core A9
Frequency 1.5GHz 1.2GHz 1.0GHz 1.3GHz
GPU Mali400MP2 Mali400MP2 Mali-400 MP2 PowerVR
Video Playback 1080p 2160p NA 1080p
Video captureH.264 HP
1080p@60fps
H.264 HP
1080p@30fps
720p@60fps
NA HVEC/H.265
Applications TabletTablet
Smart TVTablet Entry-level tablet
Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates
Notably, Rockchip is focusing on integrating its quad core with LTE module from Sequans
and Altair for a 4G add on card for about US$40, upgrading from 3G add-on modules
currently from Huawei/Hi-Silicon. AM Logic is focused on a higher end solution with quad
core CPU + 8 core graphics manufactured on TSMC’s 28nm HPM process. Allwinner,
Rockchip and Allwinner are also all introducing lower cost dual core solutions, with
Rockchip, Actions, and
Allwinner all have refreshed
lower cost dual core
solutions; Rockchip
partnering with Sequans
and Altair for a LTE add on
module
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 11
Allwinner introducing an A23 (lower cost from A20), Rockchip RK3026 (lower cost from
RK3066/RK3188) and Actions and ATM 7021 (lower cost than ATM 7023).
Raising 2013/2014 estimates
Following the better pricing and margins, we raise 2013/2014E EPS from
NT$19.00/$22.00 to NT$20.00/$24.00 versus street of NT$18.81/NT$24.15.
Figure 25: Raising MediaTek estimates 2013 2014 2015
(NT$ mn) CS CS(old) Street CS CS(old) Street CS CS(old) Street
Sales $134,332 $130,589 $129,298 $190,942 $183,046 $162,084 $213,214 $203,706 $180,692
Chg 35.3% 31.6% 30.3% 42.1% 40.2% 25.4% 11.7% 11.3% 11.5%
GM% 43.5% 43.2% 43.1% 44.7% 43.8% 43.5% 44.9% 44.0% 43.7%
R&D 26,299 26,031 35,609 34,698 39,647 36,671
SG&A 7,870 7,730 11,197 10,740 12,019 11,422
OpM% 18.0% 17.4% 17.5% 20.2% 19.0% 20.0% 20.7% 20.4% 21.8%
Net Inc. 26,836 25,489 25,418 37,051 33,970 33,869 42,172 40,220 37,785
EPS (NT$) $20.00 $19.00 $18.81 $24.00 $22.00 $24.15 $27.00 $25.75 $26.48 Source: Company data, Bloomberg consensus estimates, Credit Suisse estimates
Our key assumptions for Mediatek include:
■ Smartphones seeing a fast ramp: We model smartphones ramping from 110mn in
2012 to 220mn in 2013. We assume blended ASPs dropped from NT$10.82 in 2012 to
NT$9.75 in 2013 and NT$9.06 in 2014.
■ Tablets maintained. We maintain tablets at 23mn on whitebox and branded OEM
traction and launch of new stand-alone processors for this channel in 2H13.
■ Non-handsets roughly unchanged. We make small upward revisions to WLAN
(connectivity ramp and more to tablets and DTV (more smart TV).
Figure 26: Mediatek operating assumptions in millions, unless otherwise stated
Quarters Years
NT$mn unless noted 1Q13 2Q13 3Q13 4Q13E 2011 2012 2013F Prior 2014F 2015F
Feature phones (mn) 72.2 81.5 92.0 82.8 530.2 391.9 328.5 323.9 283.3 232.5
ASPs (US$) $1.95 $1.91 $1.87 $1.84 $3.58 $2.26 $1.89 $1.89 $1.66 $1.41
Smartphones (mn) 35.0 52.6 66.5 66.3 10.0 109.8 220.4 221.2 315.5 447.0
ASPs (US$) $9.71 $10.00 $9.75 $9.56 $13.33 $10.82 $9.75 $9.38 $9.06 $8.22
Tablets (mn) 2.0 6.0 7.5 7.5 0.0 0.0 23.0 22.6 40.2 61.4
ASPs (US$) $14.00 $12.60 $12.10 $11.73 $0.00 $0.00 $12.29 $12.03 $10.23 $8.33
Handset/Tablet Sales 15,003 22,501 27,163 25,945 59,512 61,419 90,612 87,905 111,466 134,579
DTV 3,435 4,087 4,646 4,789 10,722 13,490 16,957 16,515 42,272 41,653
PC Optical 2,403 2,701 2,790 2,628 10,596 11,489 10,523 10,526 8,719 6,994
Consumer DVD 782 888 995 877 4,160 3,515 3,542 3,545 3,181 2,944
WLAN (Ralink) 2,363 3,100 3,414 3,835 1,867 9,365 12,712 12,110 16,840 17,626
Total Sales 23,986 33,276 39,008 38,074 86,858 99,278 134,345 130,602 190,942 213,214
GM % 42.1% 43.2% 43.7% 44.1% 45.3% 41.4% 43.4% 43.2% 44.7% 44.9%
Op M% 12.9% 17.7% 20.2% 19.4% 14.2% 12.5% 18.0% 17.4% 20.2% 20.7%
EPS $2.79 $5.01 $6.28 $5.92 $12.52 $12.85 $20.00 $19.00 $24.00 $27.00 Source: Company data, Credit Suisse estimates
Smartphones growing from
110mn to 220 units in 2013,
tablets at 23 mn in 2013
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 12
Balance sheet remains solid, inventory drops
MediaTek retains a strong balance sheet with NT$93 bn net cash and investments
(NT$69/share). Inventory also stayed below average, growing NT$1.9 bn to NT$12.9 bn
but only up 1 day to 54 days, still below the long-term 67 day average. The company
should have some restocking demand into Chinese New Year and also for its upcoming
launch of octa-core and cost down MT6582 quad core.
Figure 27: Balance sheet summary
Balance Sheet (NT$ mn) 3Q13A 2Q13 Diff % 7 Yr Avg +/- Avg
Cash and Investments 113,192 112,748 0% 74,232 38,960
Total Debt 19,869 16,223 2,515 17,354
Net Cash and investments 93,323 96,525 -3% 71,718 21,605
Net Cash/Share 69.54 71.93 -2.39 60.72 8.82
Accts. Receivable 11,059 10,389 6% 6,871 4,188
Receivable Days 26 28 -3 28 -2
Inventory 12,938 10,956 18% 8,399 4,539
Inventory Days 54 53 1.1 67 -13
Accounts Payable Days 52 53 0 66 -14
Cash Conversion Cycle 28 29 -1 29 -2
SH Equity 185,057 178,315 4% 102,131 82,926
Book Value / Share 137.90 132.87 5.02 86.08 51.82 Source: Company data, Credit Suisse estimates
Figure 28: MediaTek inventory depletes following the strong 3Q13 shipments
0
20
40
60
80
100
120
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2Q
00
1Q
01
4Q
01
3Q
02
2Q
03
1Q
04
4Q
04
3Q
05
2Q
06
1Q
07
4Q
07
3Q
08
2Q
09
1Q
10
4Q
10
3Q
11
2Q
12
1Q
13
Inventory DaysInventory (NT$mn)
Inventory Inventory Days
Source: Company data, Credit Suisse estimates
Free cash flow rebounding
MediaTek historically has generated strong free cash flow due to its high operating
margins and small requirements for capex only on buildings and engineering tools. The
company generated NT$14 bn free cash flow in 2011 and NT$9.0bn in 2012, down from
peak NT$54bn levels in 2009 due to the sharp drop those two years in feature phone
volumes. On the strong ramp of smartphone and tablet volumes, we project rebound to
NT$18.0bn in 2013 and NT$35bn in 2014.
MediaTek has 15% of its
market cap in cash and
investments
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 13
Figure 29: Cash flow summary for MediaTek—2003-12, FY13E/14E
Annual (NT$mn) CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13E CY14E CY03-12 Avg
Revenue 38,064 40,054 46,491 52,942 74,779 90,402 115,512 113,522 86,857 99,263 134,332 190,942 75,789
Capital spending -292 -1,003 -1,823 -1,987 -1,127 -1,705 -1,574 -2,122 -2,585 -2,268 -2,049 -2,198 -1,648
Capex/Revenue (%) 0.8 2.5 3.9 3.8 1.5 1.9 1.4 1.9 3.0 2.3 1.5 1.2 2.3
Dep and amort 310 502 946 1,473 1,830 3,295 3,245 2,978 2,729 3,696 2,167 3,024 2,101
Depr/Revenue (%) 0.82 1.25 2.04 2.78 2.45 3.64 2.81 2.62 3.14 3.72 1.61 1.58 2.53
Operating cash flow 15,943 11,851 23,061 23,343 27,498 35,614 55,250 29,433 16,715 11,338 20,126 34,208 25,005
Free cash flow 15,651 10,848 21,239 21,356 26,371 33,910 53,677 27,310 14,130 9,069 18,077 32,009 23,356 Source: Company data, Credit Suisse estimates
The company’s free cash flow to enterprise value (based on the current stock price) is
projected at 5% in 2013 and 8% in 2014. The company paid an NT$9 dividend in 2013,
representing a 2.2% yield. Higher earnings at similar 75% payout range would support a
rising the dividend to NT$13 and raise yield to 3% in 2014.
Figure 30: Free cash flow and dividend yields for MediaTek, 2003-12, FY13E /FY14E FCF and Dividend Yields CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13E CY14E CY03-12 Avg
FCF / Share (NT$) 16.49 11.12 21.42 21.10 25.52 32.06 49.86 25.11 12.99 7.48 13.48 20.73 22.31
FCF Yield (%) 4.1 2.7 5.3 5.2 6.3 7.9 12.3 6.2 3.2 1.8 3.3 5.1 5.5
FCF / EV (%) 4.1 2.9 5.6 5.6 7.0 9.0 14.2 7.2 3.7 2.4 4.8 8.4 6.2
Dividend per share (NT$) 8.00 8.50 10.00 11.00 15.00 18.86 13.90 26.00 20.22 8.33 9.00 12.88 13.98
Dividend Yield (%) 3.2 5.1 3.4 4.1 2.5 6.6 3.1 6.4 5.0 2.1 2.2 3.2 4.1 Source: Company data, Credit Suisse estimates
Maintain OUTPERFORM
Following another solid quarter, we stay OUTPERFORM on Mediatek and raise our target
price from NT$440 to NT$480 with guidance for above seasonal strength continuing into
4Q13. Our positive thesis on the stock is based on (1) a strong product cycle in emerging
market smartphone and tablets that is only in the 2nd
year of a 4-5 year growth cycle, (2)
market leadership continuing to sustain in the face of tough competition due to fast product
innovation both on lower cost and higher performance solutions, and 3) additional drivers
from shift to multi-core/big.LITTLE, tablets and TD-SCDMA this year and LTE over the
next few years. Our NT$480 TP sets Mediatek at 20x our revised 2014E EPS of NT$24.
Figure 31: Mediatek trading at 18.0x 2014E EPS (14x ex-cash and interest on the cash)
10x
15x
20x
50
150
250
350
450
550
650
Jul/01 Jul/02 Jul/03 Jul/04 Jul/05 Jul/06 Jul/07 Jul/08 Jul/09 Jul/10 Jul/11 Jul/12 Jul/13
NT$ Mediatek US GAAP PE Band
ccccccccccccccccccccccc
25x
Source: Company data, Credit Suisse Research
Free cash rebounding,
dividend could rise from
NT$9 to NT$13 in 2014
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 14
Figure 32: Asian fabless comparisons—MediaTek trading at the high-end of its peer group
Price Mkt Cap EV/Sales (x) P/E Multiple (x) P/B Multiple (x) ROE Trough/Peak (EV/Sales)
Company Ticker 10/31/2013 (US$mn) 2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014
Select Asian fabless semiconductors
MediaTek 2454.TW $402.00 $17,521 4.4 3.2 2.2 30.6 21.6 18.3 2.7 2.7 3.0 8.8 12.8 16.3
Spreadtrum SPRD $30.41 $1,515 2.0 1.5 1.4 13.3 14.3 17.3 n.a. 3.9 3.6 n.a. 27.2 20.6
MStar 3697.TW $303.50 $5,214 3.4 2.9 NA 25.2 21.8 NA 4.7 4.4 NA 18.7 20.2 NA
Realtek 2379.TW $68.40 $1,189 1.0 0.9 0.8 15.2 12.6 11.5 1.9 1.9 1.8 12.4 15.0 15.5
Median 2.0 1.5 1.1 15.2 14.3 14.4 3.3 3.9 2.7 15.6 20.2 18.1
Mean 2.1 1.8 1.1 17.9 16.2 14.4 3.3 3.4 2.7 15.6 20.8 18.1
Fabless semiconductors
Qualcomm QCOM $69.47 $113,819 4.5 3.5 2.7 18.7 15.3 13.7 3.6 3.5 2.8 19.3 22.7 20.2
Xilinx XLNX $45.42 $12,148 5.3 5.5 4.8 22.8 26.1 20.0 4.4 4.0 3.8 19.9 16.1 20.3
Altera ALTR $33.60 $11,527 5.1 5.1 4.3 20.5 25.5 20.2 3.3 3.0 2.6 16.0 11.7 13.0
PMCS PMCS $5.87 $1,310 2.1 2.2 2.0 15.4 16.2 12.2 1.8 1.8 1.4 n.a. 10.6 13.0
Nvidia NVDA $15.18 $8,945 1.3 1.2 1.3 16.1 16.9 21.3 2.2 NA NA 15.9 12.5 10.0
Broadcom BRCM $26.72 $13,796 1.7 1.5 1.2 9.1 9.7 9.5 2.0 1.7 1.3 22.5 18.2 15.0
Marvell MRVL $12.00 $5,396 1.4 1.5 1.4 9.5 13.9 13.4 1.5 1.5 1.4 15.9 11.1 10.3
Silicon Labs SLAB $40.22 $1,809 2.9 2.8 2.5 18.6 20.0 17.9 2.6 2.5 2.4 14.9 11.4 11.2
Median 2.5 2.5 2.3 17.4 16.5 15.8 2.4 2.5 2.4 16.0 12.1 13.0
Mean 3.0 2.9 2.5 16.4 18.0 16.0 2.7 2.6 2.2 17.7 14.3 14.1
RF Semiconductor Peers
Skyworks SWKS $25.78 $4,669 2.8 2.4 2.2 13.6 11.8 10.1 2.6 2.4 2.1 20.8 17.0 16.7
RFMD RFMD $5.25 $1,654 1.8 1.6 1.3 27.6 29.2 12.2 2.2 2.3 2.1 7.7 7.3 11.3
RDA RDA $14.85 $729 1.7 1.6 1.4 11.1 12.9 11.4 4.5 3.9 2.9 n.a. 54.0 43.3
Median 1.8 1.6 1.4 13.6 12.9 11.4 2.6 2.4 2.1 14.3 17.0 16.7
Mean 2.1 1.9 1.6 17.4 17.9 11.2 3.1 2.9 2.4 14.3 26.1 23.8
Median 2.1 1.9 1.4 15.8 15.7 13.4 2.6 2.5 2.2 16.0 15.5 15.0
Mean 2.6 2.4 2.1 16.9 17.6 14.7 2.9 2.8 2.3 16.7 18.2 17.0 Source: Company data, Bloomberg estimates for not covered companies, Credit Suisse estimates
Mediatek financials and operating metrics
Figure 33: Mediatek income statement in millions, unless otherwise stated Summary Income Statement 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13E 2011 2012 2013F 2014F 2015F
Net Sales 19,615 23,440 29,471 26,737 23,974 33,276 39,008 38,074 86,857 99,263 134,332 190,942 213,214
Sequential Change -13.3 19.5 25.7 -9.3 -10.3 38.8 17.2 -2.4
Y/Y Change -1.3 11.7 26.1 18.1 22.2 42.0 32.4 42.4 -23.5 14.3 35.3 42.1 11.7
Cost of Goods Sold 11,361 13,882 17,320 15,640 13,884 18,891 21,867 21,280 47,513 58,203 75,923 105,653 117,446
Gross Profits 8,254 9,558 12,151 11,097 10,090 14,385 17,141 16,793 39,344 41,060 58,409 85,289 95,768
Gross Margin 42.1 40.8 41.2 41.5 42.1 43.2 43.9 44.1 45.3 41.4 43.5 44.7 44.9
Operating Exp. Promotion 589 757 911 858 849 1,101 1,205 1,193 2,861 3,115 4,348 5,942 6,341
% of Sales 3.0 3.2 3.1 3.2 3.5 3.3 3.1 3.1 3.3 3.1 3.2 3.1 3.0
Operating Exp. Administrative 691 726 684 811 662 880 995 985 2,955 2,912 3,522 5,255 5,678
% of Sales 3.5 3.1 2.3 3.0 2.8 2.6 2.6 2.6 3.4 2.9 2.6 2.8 2.7
Operating Expense R&D 5,055 5,324 6,324 5,927 5,491 6,516 7,075 7,217 21,184 22,630 26,299 35,609 39,647
% of Sales 25.8 22.7 21.5 22.2 22.9 19.6 18.1 19.0 24.4 22.8 19.6 18.6 18.6
Total Operating Exp 6,335 6,807 7,919 7,596 7,003 8,497 9,275 9,395 26,999 28,657 34,169 46,806 51,666
Income from Operations 1,919 2,751 4,232 3,501 3,087 5,888 7,866 7,399 12,345 12,404 24,240 38,483 44,102
% of Sales 9.8 11.7 14.4 13.1 12.9 17.7 20.2 19.4 14.2 12.5 18.0 20.2 20.7
Non Operating Income 593 1,433 582 251 335 605 318 330 1,688 2,858 1,588 1,365 1,445
Net Investment Income/ (Loss) 60 54 290 818 500 650 851 754 170 1,223 2,755 381 200
Pretax Income 2,573 4,238 5,104 4,570 3,922 7,143 9,035 8,483 14,203 16,485 28,583 40,229 45,747
% of Sales 13.1 18.1 17.3 17.1 16.4 21.5 23.2 22.3 16.4 16.6 21.3 21.1 21.5
Income Taxes Exp. /(Gains) 98 565 187 91 186 427 619 551 587 941 1,784 3,226 3,623
Tax Rate 0.0 0.1 0.0 0.0 0.0 0.1 0.1 0.1 4.1 5.7 6.2 8.0 7.9
Net Income after Extraordinaries 2,477 3,683 4,927 4,496 3,741 6,723 8,428 7,943 13,623 15,583 26,836 37,051 42,172
% of Sales 12.6 15.7 16.7 16.8 15.6 20.2 21.6 20.9 15.7 15.7 20.0 19.4 19.8
Net EPS 2.17 3.23 3.97 3.37 2.79 5.01 6.28 5.92 12.52 12.85 20.00 24.00 27.00
Share Count (weighted) 1,140 1,140 1,240 1,333 1,340 1,342 1,342 1,342 1,088 1,213 1,342 1,544 1,562 Source: Company data, Credit Suisse estimates
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 15
Figure 34: MediaTek—key operating metrics Revenue by product (NT$mn) 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13E 2011 2012 2013F 2014F 2015F
Handsets 11,067 14,019 19,303 17,030 14,177 20,255 24,460 23,332 59,512 61,419 82,223 99,199 119,326
DTV 3181 3,247 3,666 3,396 3435 4,087 4,646 4,789 10,722 13,490 16,957 42,272 41,653
PC Optical (traditional) 2,435 2,747 2,767 2,648 2,203 2,455 2,512 2,354 9,520 10,598 9,524 7,677 6,055
Blu-Ray Optical 207 222 239 222 200 246 279 274 1,076 891 999 1,043 939
DVD Player 516 582 689 615 500 550 561 466 2,866 2,401 2,077 1,536 1,157
Blu-Ray Player 227 256 303 328 282 337 434 411 1,294 1,114 1,465 1,645 1,787
WLAN (Ralink) 1,982 2,367 2,504 2,512 2,363 3,100 3,414 3,835 1,867 9,365 12,712 16,840 17,626
Total Revenue (NT$mn) 19615 23,440 29,471 26,752 23160 31,031 36,305 35,460 86,858 99,278 125,957 170,211 188,542
Handset Units (mn) 108 120 141 133 107 134 159 149 540 502 549 599 680
Handset ASPs (US$) 3.41 3.94 4.64 4.37 4.48 5.08 5.18 5.27 3.76 4.13 5.05 5.56 5.89
Handset Revenue (NT$mn) 11,067 14,019 19,303 17,030 14,177 20,255 24,460 23,332 59,512 61,419 82,223 99,199 119,326
2.5G units (mn - for all below) 98.3 99.3 102.3 92.0 72.2 81.5 92.0 82.8 518.5 391.9 328.5 278.3 207.3
WCDMA units 8.2 18.3 36.0 34.8 26.3 40.0 50.0 49.0 13.2 97.2 165.3 231.7 331.1
TD-SCDMA units 1.8 2.2 2.2 6.2 8.7 12.7 16.5 17.3 8.5 12.5 55.1 83.8 116.0
Feature phone units 98.3 99.3 102.3 92.0 72.2 81.5 92.0 82.8 530.2 391.9 328.5 283.3 232.5
Smartphone units 10.0 20.5 38.3 41.0 35.0 52.6 66.5 66.3 10.0 109.8 220.4 315.5 447.0
Tablet units 0.0 0.0 0.0 0.0 2.0 6.0 7.5 7.5 0.0 0.0 23.0 40.2 61.4
FX Rate (NT$/US$) 30.0 29.7 29.6 29.3 29.5 29.7 29.8 29.7 29.3 29.7 29.7 29.8 29.8 Source: Company data, Credit Suisse estimates
Figure 35: MediaTek—balance sheet summary NT$ mn 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13E 2011 2012 2013 2014 2015
Cash, Cash Equivalent 90,786 100,822 91,177 90,276 98,749 112,748 113,192 118,314 91,032 90,276 118,314 123,693 131,322
Inventories 9,853 11,074 12,091 13,867 12,844 10,956 12,938 13,993 9,392 13,867 13,993 22,890 24,589
Account receivables 7,372 7,659 8,216 6,585 6,795 10,389 11,059 13,352 7,384 6,585 13,352 17,727 19,085
Other current assets 4,434 4,759 6,379 7,343 5,377 7,008 6,104 5,958 4,234 7,343 5,958 7,910 8,516
Total current asset 112,445 124,314 117,863 118,071 123,766 141,102 143,293 151,616 112,042 118,071 151,616 172,221 183,512
LT investment 9,946 8,603 65,822 65,120 67,680 67,469 66,540 66,540 9,417 65,120 66,540 66,540 66,540
Fixed Assets 10,678 10,411 10,792 10,708 11,180 11,253 11,188 11,439 9,810 10,708 11,439 12,441 13,444
Intangible Assets 16,528 17,241 16,248 15,842 15,600 15,481 15,332 15,332 16,151 15,842 15,332 15,332 15,332
Other Assets 536 531 517 502 1,423 2,049 1,842 1,842 321 502 1,842 1,842 1,842
Total Non-Current Assets 37,688 36,786 93,379 92,172 95,884 96,251 94,902 95,153 35,699 92,172 95,153 96,155 97,158
Total assets 150,133 161,100 211,242 210,243 219,650 237,353 238,195 246,769 147,741 210,243 246,769 268,376 280,670
Accounts payable 8,204 10,280 12,054 9,047 7,373 10,873 12,520 12,184 9,022 9,047 12,184 15,946 17,129
Other current liabilities 15,426 25,475 14,302 14,916 15,058 29,871 18,690 18,242 17,299 14,916 18,242 24,220 26,076
Total current liabilities 31,121 47,979 36,887 32,873 35,246 56,858 50,970 50,187 30,428 32,873 50,187 59,926 62,964
Other LT liabilities 1,107 1,314 1,383 1,482 1,834 2,034 2,016 2,016 837 1,482 2,016 2,016 2,016
Total Long Term liabilities 1,245 1,446 1,505 1,595 1,943 2,143 2,125 2,125 985 1,595 2,125 2,125 2,125
Total Liabilities 32,366 49,425 38,392 34,469 37,188 59,001 53,095 52,312 31,413 34,469 52,312 62,051 65,089
Total Equity 117,719 111,636 172,818 175,740 182,438 178,315 185,057 194,414 116,278 175,740 194,414 206,282 215,537
Total Liabilities & Equity 150,133 161,100 211,242 210,243 219,650 237,353 238,195 246,769 147,741 210,243 246,769 268,376 280,670
Profitability Ratios 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13E 2011 2012 2013F 2014F 2015F
Return on Equity (ROE) 2.1 3.3 2.9 2.6 2.1 3.8 4.6 4.1 11.7 8.9 13.8 18.0 19.6
Return on Assets (ROA) 1.6 2.3 2.3 2.1 1.7 2.8 3.5 3.2 9.2 7.4 10.9 13.8 15.0
Return on Net Assets (RONA) 4.2 6.1 4.1 3.7 3.1 5.4 6.7 6.2 24.0 13.0 20.9 25.6 28.2
Return on Sales 12.6 15.7 16.7 16.8 15.6 20.2 21.6 20.9 15.7 15.7 20.0 19.4 19.8
Efficiency Ratios
Asset Turns (Annualized Sales / Assets) 0.5 0.6 0.6 0.5 0.4 0.6 0.7 0.6 0.6 0.5 0.5 0.7 0.8
Days sales outstanding (DSO) 34.3 29.8 25.4 22.5 25.9 28.5 25.9 32.0 31.0 24.2 36.3 33.9 32.7
Days of inventory 79.1 72.8 63.7 80.9 84.4 52.9 54.0 60.0 72.2 87.0 67.3 79.1 76.4
Cash conversion cycle 47.5 35.0 25.6 50.6 61.8 28.9 27.6 39.8 33.9 54.4 45.0 57.9 55.9
Working Capital -9,462 -24,487 -10,200 -5,078 -10,229 -28,504 -20,869 -16,884 -9,418 -5,078 -16,884 -11,398 -10,774
(Increase)/Decrease in working capital 44 15,025 (14,287) (5,122) 5,151 18,275 (7,635) (3,985) 4,154 (4,340) 11,806 (5,486) (624)
Per Share Values
Book Value per common share 103.29 97.95 139.37 131.84 136.15 132.87 137.90 144.87 106.89 144.87 144.92 133.61 137.98
Cash per common share 79.66 88.46 73.53 67.72 73.69 84.01 84.35 88.16 83.69 74.42 88.20 80.12 84.07
Net Cash per common share 72.96 77.62 64.94 60.95 64.05 71.93 69.54 73.36 79.77 66.98 73.38 67.25 71.35
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 16
Companies Mentioned (Price as of 01-Nov-2013)
ARM Holdings (ARM.L, 985.5p) Acer Group (2353.TW, NT$18.95) Actions (ACTS.OQ, $2.43) Amazon com Inc. (AMZN.OQ, $364.03) Apple Inc (AAPL.OQ, $522.35) Asustek (2357.TW, NT$235.0) Broadcom Corp. (BRCM.OQ, $26.72) Hewlett Packard (HPQ.N, $24.37) HiSilicon (Unlisted) Huawei (002502.SZ, Rmb13.4) Imagination Technologies (IMG.L, 277.9p) Intel Corp. (INTC.OQ, $24.43) Lenovo Group Ltd (0992.HK, HK$8.44) Marvell Technology Group Ltd. (MRVL.OQ, $12.0) MediaTek Inc. (2454.TW, NT$404.5, OUTPERFORM, TP NT$480.0) QUALCOMM Inc. (QCOM.OQ, $69.47) RDA Microelectronics (RDA.OQ, $14.85) Realtek Semiconductor (2379.TW, NT$69.6) ST-Ericsson (Unlisted) Samsung Electronics (005930.KS, W1,500,000) Sony (6758.T, ¥1,668) Spreadtrum Communication (SPRD.OQ, $30.41) Sunny Optical Technology Group Co., Limited (2382.HK, HK$7.49) TCL Corp. (000100.SZ, Rmb2.43) Taiwan Semiconductor Manufacturing (2330.TW, NT$109.5) ZTE Corporation (0763.HK, HK$16.54)
Disclosure Appendix
Important Global Disclosures
I, Randy Abrams, CFA, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
3-Year Price and Rating History for MediaTek Inc. (2454.TW)
2454.TW Closing Price Target Price
Date (NT$) (NT$) Rating
02-Nov-10 387.50 350.00 U
08-Mar-11 341.00 315.00
19-Apr-11 309.00 295.00
02-May-11 316.50 315.00 N
23-May-11 310.00 300.00
07-Jun-11 313.50 280.00 U
28-Jul-11 266.00 255.00
07-Sep-11 282.50 260.00
31-Oct-11 318.00 306.00
06-Jan-12 278.50 270.00
04-Apr-12 277.00 300.00 N
30-Apr-12 253.00 260.00
25-Jun-12 280.50 300.00
29-Jun-12 273.00 R
27-Jun-13 328.00 400.00 O
09-Sep-13 370.00 440.00
* Asterisk signifies initiation or assumption of coverage.
U N D ERPERFO RM
N EU T RA L
REST RICT ED
O U T PERFO RM
The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities
As of December 10, 2012 Analysts’ stock rating are defined as follows:
Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months.
Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.
Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months.
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 17
*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractiv e, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ra tings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin Ame rican and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; Australia, New Zealand are, and prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its cur rent share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12 -month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively. Prior to 10th December 2012, Japanese ratings were based on a stock’s total return relative to the average total return of the relevant country or regional benchmark.
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Price Target: (12 months) for MediaTek Inc. (2454.TW)
Method: Our target price of NT$480 for MediaTek is based on a P/E (price-to-earnings) of 20x 2014E EPS of NT$24 (earnings per share), due to leading position in EM smartphones, growth into TD-SCDMA and tablets, LTE and octa-core launching by end 2013, and operating leverage.
Risk: Risks that could impede achievement of our NT$480 target price for Mediatek include: (1) share price volatility and potential downside from inventory and demand swings at its emerging market customer base; (2) competition pressuring pricing and margins more than expected; and (3) local news and market commentary swinging sentiment, typical for a stock with high retail interest in the Taiwan market.
Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections.
See the Companies Mentioned section for full company names
The subject company (2454.TW, MRVL.OQ, 2330.TW, INTC.OQ, 005930.KS, AAPL.OQ, AMZN.OQ, HPQ.N) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.
[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 18
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Credit Suisse AG, Taipei Securities Branch ............................................................................................................................ Randy Abrams, CFA
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[email protected] Bryan Ong 11/02/13 07:14:04 AM STATS ChipPAC Ltd.
01 November 2013
MediaTek Inc.
(2454.TW / 2454 TT) 19
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TC1925.doc
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