HomeOpinionApple iPhone X And Its 7 Asia-Listed Suppliers
Apple iPhone X And Its 7 Asia-Listed Suppliers
September 20, 2017
It is official, iPhone X (pronounced as TEN) is here. Apple Inc unveils its latest iPhone at the Apple Special Event at the new Steve Jobs Theater on 12th September 2017. Together with iPhone 8 and 8 Plus, new Apple Watch and Apple TV, Apple Inc has launched its new product range to be ready for the upcoming Christmas season. Comments and predictions about how well the new range of Apple products would do are all over the internet. You can see that Apple is still “love-it-or-hate-it” company, with many diehard fans and diehard haters.
Personally, I’m a PC and android guy.
I’m that guy in the suit.
I have never loved the products of Apple. However, I do understand why it has such a big following. Which is why I have been a proud shareholder of the company. Although many commentators are saying that Apple iPhone X does not have many impressive features, I have a feeling that it would still sell very well regardless. And here are some of the Asia-listed suppliers of Apple Inc that might be impacted by its new product ranges.
As the largest contract manufacturer in the world, Hon Hai Precision Industry Co. Ltd (TPE:2317), better known as Foxconn is a key assembler for Apple Inc. The company has grown together with Apple and currently employed more than 1.3 million people in its organization.
Listed in Taiwan, the company is currently trading around 13.4 times its earnings and offering a 3.9% dividend yield.
Apple products are as much about the hardware as it is about the software. And at the heart of the software is its processing microchip. On this end, Taiwan Semiconductor Manufacturing Company Ltd (TSMC) (TPE:2330), the largest semiconductor foundry in the world is also a key supplier to Apple. TSMC has been one of the performing stocks among the Apple suppliers in the past decade. Even from its peak price of TWD66.00 per share back in 2007, its share price now is more than 3 times at TWD 218.0 per share. Listed in Taiwan, the company is still only trading at 16 times its earnings and offering a 3.2% dividend yield.
iPhone prided itself as having one of the best imaging cameras for any smartphones available. In iPhone X, there are not just two but four cameras within the phone, with two 12MP back cameras, one 7MP front camera and an infrared camera front camera as well. This means that its camera supplier might have double the order from the same quantity of phone. One of its camera suppliers is Cowell E Holdings Inc (HKG:1415).
Listed in Hong Kong, Cowell E Holdings is now trading at 11.7 times its earnings and offers a 1.5% dividend yield to investors.
The Apple Watch
One of the fastest growing product for Apple is its Apple Watch. According to its keynote event last week, Tim Cook mentioned that Apple Watch is now the largest watch brand in the world, overthrowing the long-term crown, Rolex. It is also growing extremely fast, growing more than 50% in sales since last year. One of Apple Watch assembler is listed in Taiwan. It is Quanta Computer Inc (TPE:2382).
It is currently trading around 18 times its earnings and offering a 5% dividend yield for investors.
Sound quality has been very important for Apple. The iPhone has been focused on making a great sound. This is done with the help from one of its speaker manufacturer, AAC Technologies Holdings Inc (HKG:2018).
AAC Technologies Holdings Inc is listed in Hong Kong. It is trading around 30 times its earnings and offering a 1.1% dividend yield to its shareholders. Interestingly, the company has also been the target of a short seller attack back in May 2017. Gotham City Research claimed that the company has used “dubious accounting” method to overstate its profits and evade Apple’s labour standards.
Although nothing was proven from the attack, investors should be aware of this incident before investing in ACC Technologies.
Lastly, the iPhone X has changed its display to the OLED technology. This marks a sharp shift in the future of display technology for Apple. One of the companies that might benefit from it could be LG Display Co Ltd (KRX:034220), a key global leader in the OLED technology.
LG Display Co is listed in South Korea, with a price to earnings ratio of 5.2 times but only offers a 1.5% dividend yield.
Value In Focus
These companies might have a skin in the game for the success of Apple. However, investors have to understand that due to Apple’s enormous pricing power over its suppliers, not all of its suppliers would benefit as Apple grows. Moreover, Apple has a history of switching suppliers when they change their components. The example of changing its display technology to OLED is one such example. If the suppliers are unable to change with Apple, it would be left behind.
More On Investing
To find out ALL about my 5 Golden Rules To Investing, join me in Singapore on 28th September 2017, 7 pm. We are holding our first investment workshop in Singapore. We will talk more about the details on how to apply these 5 Golden Rules, on 5 listed companies that I owned which fitted nicely with my 5 Golden Rules.
I would also be sharing with you on my personal portfolio. We will discuss more on how I analyse some of them and why I made the decision to invest in them.
Stanley Lim has spent the last decade in the investment industry. Over the course of his career, he has kick-started a few businesses, worked in the family office industry and most recently in the investment advisory industry. He has been a writer and analyst for The Motley Fool Singapore from 2013 to 2017. He has written close to 2000 articles online, on investment education and market analysis. He is the co-writer of the investment book: “Value Investing In Asia”, published in 2018. Stanley is currently the chief editor of Value Invest Asia.