Date of Report: 17 September 2024
Broker Name: Lim & Tan Securities
Weak iPhone 16 Pro Demand
According to the report, Apple Inc. shares fell on Monday following a report by TF International Securities analyst Ming-Chi Kuo. The report highlighted that the demand for Apple’s new iPhone 16 Pro model has been lower than expected. Pre-order sales, which began on Friday, reached an estimated 37 million units. This figure marks a 13% decline compared to last year’s iPhone 15 launch, signaling a weaker-than-anticipated interest in the Pro model of the iPhone 16.
Absence of Apple Intelligence Feature at Launch
One of the key factors contributing to the lower demand for the iPhone 16 Pro series is the absence of the Apple Intelligence feature at the time of launch. This feature was anticipated to be a major selling point, but its unavailability has affected consumer interest. Following a sluggish start to the year, Apple’s shares had rallied for four months, driven by expectations that AI-powered features would boost sales of the latest iPhone lineup. However, shares slumped around 3% during Monday’s trading session, trimming Apple’s year-to-date gain to 12%, trailing the Nasdaq 100 Index’s 15% rise.
Analysts’ Reaction to Apple’s Product Launch
Many analysts were underwhelmed after Apple’s recent launch event. The event revealed few surprises, as much of the hardware details had already been leaked beforehand. Morgan Stanley’s Erik Woodring suggested that attention would shift to early iPhone 16 pre-order data, which began last Friday. Matthew Maley, chief market strategist at Miller Tabak + Co., noted that the weak demand ahead of the holiday season has increased the risk of a “meaningful decline” in Apple’s share price.
Warren Buffett’s Berkshire Hathaway Reduces Stake
The report also mentioned that Warren Buffett’s investment firm, Berkshire Hathaway, disclosed a reduction in its stake in Apple during the second quarter of 2024. Specifically, Berkshire sold 389 million shares, cutting its stake by half. Despite this significant reduction, Apple still represents 30% of Berkshire’s stock portfolio, down from 51% during the same quarter last year.
Impact on Nanofilm, a Key Apple Supplier
Nanofilm, a key supplier for Apple, was also mentioned in the report. With the weaker-than-expected demand for Apple’s new product launches, Nanofilm is likely to experience downside surprises in its sales and earnings for the second half of 2024. The broker highlighted that even though analysts forecast sales growth of 20% and profit growth of three times to S$12 million for FY2024, Nanofilm’s rich valuations, with a projected PE ratio of 49x for FY2024, make it vulnerable to these developments. The consensus 1-year target price for Nanofilm is S$0.60, suggesting a potential downside of 27%. As a result, the broker maintains an “Underperform” rating for Nanofilm.
This detailed analysis was based on the information presented in the Daily Review report by Lim & Tan Securities on 17 September 2024.
