UBSW pre-markets High Tech Computer

A $130 million GDR is being launched for the world''s largest ODM manufacturer of pocket PCs.

Investor pre-marketing began at the beginning of this week and full roadshows are expected to begin on Monday June 10 for pricing two-and-a-half weeks later. UBS Warburg has sole books for a 30 million new share issue, with Credit Suisse First Boston and Morgan Stanley as joint-leads, plus Yuanta Securities as co-manager. There are two common shares per GDR, with a further greenshoe of 1.25 million GDRs.

High Tech only listed on the TWSE at the end of March and with a current market capitalization of $646.71 million, the new issue will be fairly dilutive, equating to 15.6% of the enlarged share capital. The stock closed yesterday (Tuesday) at NT$173 per share, slightly above its IPO price, but down from a high of NT$274 on April 4. Nevertheless on a current EV/EBITDA valuation of 14 times (or 17.45 times on a pro forma basis), the company is said to be fairly fully valued, although trading in line with comps such as Quanta and Compal.

Affiliated to Via Technologies, High Tech is said to be right at the forefront of the handheld market and has pioneered the xda, a new integrated phone and PDA (personal digital assistant), which will be the first combined Pocket PC and GPRS (general packet radio service) devise on the consumer market with a colour screen.

From an ODM perspective, its biggest customer is Compaq, which recently replaced Handspring as the world's second largest handheld devise vendor. As a result, High Tech has a 48% market share of the Pocket PC market, manufacturing the iPAQ for the US computer giant.

Analysts say global shipments of handhelds fell 25.4% during the first quarter and are down 12.1% year-on-year. However, Windows-based Pocket PCs are fast becoming the dominant segment of the handheld market over Palm and Handsping. Tech specialists also say that High Tech's xda is considered the "next killer product" to hit the Pocket PC sector.

High Tech is currently manufacturing the xda for a number of European clients such as British Telecom and the devise will the first that combines a full colour screen, most Windows CE-based applications (Outlook, Word, Excel and Internet Explorer), an MP3 player and a phone connection that is always switched on. This means that users will be able to browse the internet and receive telephone calls without having to keep reconnecting.

The company also recently reported NT$4.17 billion ($122.17 million) in sales for 2002 and net profit of NT$192.91million.