AAPL: ‘iWatch’ Coming This Year, Says Topeka

Topeka Capital Markets‘s Brian White, who is travelling in Taiwan this week, having meeting with component makers, writes in a note to clients that “We believe the much-hyped Apple (AAPL) iWatch is showing early signs of movement in the supply chain and will be launched this year with interesting new technology features that have not yet been touched upon.”

Apple shares today closed up 88 cents at $429.79.

Most of White’s note, however, is about steady sales of smartphones and “phablet” devices in China, a trend that should be good for panel makers Corning (GLW), whose shares he rates a Buy, AU Optronics (AUO), whose shares he rates a Hold, and for LG DIsplay (LPL), which he rates a Sell.

“Today, we met with a LCD panel maker and we walked away comfortable that the industry has bottomed out, while opening our minds to the possibility of profit generation at certain panel makers this year,” writes White.

TV sets, phablets, and tablet computers are all driving panel production simultaneously, writes White:

The LCD TV market benefited from a much stronger than expected Chinese New Year sell-through that lowered inventory in the country by� approximately one week. During March, production of LCD TVs began for the May Labor Day holiday in China. As such, we believe LCD TV panel unit volumes can grow sequentially in the June quarter. There was also excitement around the ramp of 4K (i.e., Ultra-HD) TVs that carry an ASP that is nearly double full HD TV panels. The sell-through of Ultra-HD TVs will be closely watched as the year unfolds. Finally, we believe tablets showed strength in the March quarter and smartphones experienced seasonality. Looking forward, we believe the ramp of mobile devices is expected to be in full force in the June quarter and in the second-half of the year as new launches occur. As part of this� ramp is the introduction of many, new 5-inch to 6-inch “Phablet” devices, including some devices that are over 6-inches in size. As part of this ramp, higher resolution screens will be increasingly important.