Yageo, Walsin stocks rally on signs of output squeeze
By Taipei Times
Posted On 24.7.2018
Source: Taipei Times news
More than NT$11 billion of Yageo shares were traded yesterday, while advisers last week raised their price guidance for Japanese MLCC makers.
Passive-component supplier Yageo Corp (國巨) yesterday saw its stock rally nearly 4 percent amid expectations that the stock would extend its uptrend through the end of the year and speculation that China’s latest curb on toxic emissions would limit production of raw materials for passive components, thereby reducing their supply.
Shares of Yageo leaped 3.82 percent to NT$843, making it the second-most traded stock by value after Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Taiwan Stock Exchange data showed.
Shares of local rival Walsin Technology Corp (華新科技) soared 7.41 percent to NT$369.5 yesterday, while the TAIEX edged up 0.14 percent.
A total of NT$11.45 billion (US$373.6 million) of Yageo shares changed hands yesterday, the tally showed, as more signs indicated that the price hikes for passive components might not come to an end this year.
Yageo has forecast that it could reach full capacity utilization over the next two years given strong customer demand.
On the supply side, the government of Chaoqing City in China’s Guangdong Province ordered all ceramic electric powder suppliers with operations in the city to slash production by 50 percent, beginning on Sunday last week, in the local government’s latest crackdown on toxic emissions, Tencent Holdings Ltd’s (騰訊) news app Tian Tian Kuai Bao (天天快報) reported earlier this month.
The factories were told to fully shut down their factories through early October, the report said.
The scale-down in the production of raw material used in passive components, multilayer ceramic capacitors (MLCC) and chip resistors is expected to further squeeze an already-tight supply of passive components, boosting their prices, the report said.
The order came as it aimed to reduce environmental pollution during a major sports event held by the city government next month, the report said.
A Japanese investment consultancy last week raised the target prices of major Japanese MLCC manufacturers, including Murata Manufacturing Co, Taiyuo Yuten Co and TDK Corp.
It increased the target price of Murata to ￥25,000 from a previous estimate of ￥18,500, as strong demand pushed up MLCC exports 45 percent year-on-year in May, according to the consultancy.
Murata was reportedly in talks with clients to hike MLCC prices by 20 to 30 percent, which would boost the company’s financial performance for the remainder of the year, it said.
Taiyuo Yuten and TDK also saw their target prices raised to ￥4,000 and ￥13,000, from ￥2,800 and ￥10,500 respectively.
