Latest China Smartphone Shipment Data Supports Q3 Apple (AAPL) iPhone Thesis - Stifel

October 13, 2016 7:54 AM EDT
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Stifel affirms Apple (Nasdaq: AAPL) at Buy with a price target of $120 following the latest China export data for September.

Analyst Aaron C. Rakers and his team commented today:

Early this morning, China export data for September was released, and thus we now have full 3Q16 figures, which we view as supportive of our ongoing view that iPhone shipments for the September quarter could be in the high-40M / 50 million range. September mobile phone exports from China were up 3% y/y and represented a 48% m/m increase, which compares to 15%, 39%, and 27% m/m increases in 2013, 2014, and 2015 ... September data reflects the initial seasonal uptick following Apple’s iPhone refresh cycle. 3Q16 total mobile phone exports were -1.5% y/y, but up 14% sequentially, which compares to +11.5%, +13%, and +5% sequentially in 3Q13, 3Q14, and 3Q15, respectively.

As we have consistently highlighted in past reports, we have found this data to exhibit very high historical correlation (R2 = >0.933) when compared to Apple’s iPhone shipments, excluding China (i.e., China consumption – see below; non-Android smartphones +6% seq. and +60% y/y in 3Q16 – would not be counted in exports). Using this historical trend, we would now arrive at an ex-China iPhone shipment level in the 38-39 million range, or up 7%-9% y/y and +20%-23% sequentially.

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