20080722-Mirae Asset-TechFull Tech

Best Bet: Rechargeable Battery Industry
Rechargeable batteries the best bet amid economic downturn
The IT sector should see weaker-than-expected demand in 2H08 amid the
global economic downturn. However, as demand side concerns have already
been priced into IT shares, we are anticipating a silver lining rather than bracing
ourselves for another fall. As it could be some time before we see any signs of
economic recovery, we believe the rechargeable battery market is the best
short-term alternative. Buoyed by the super-budget laptop boom, the demand
for upstream rechargeable batteries should remain intact despite the economic
slowdown.
Handset sector the most defensive
We expect handsets to be the most defensive play within the semiconductor,
handset, and LCD sectors. The handset sector is also suffering from waning
high-end demand worldwide amid the global economic slowdown. Still, the
sluggishness of Motorola and Sony Ericsson should benefit players like Nokia,
SEC, and LGE. CDMA carriers in North America are expected to reduce their
reliance on sluggish Motorola and increase their partnership with SEC and LGE,
which should help sustain lofty profitability for these two companies going
forward.
LGE and Samsung SDI remain our Top Picks in IT sector
We maintain LGE (066570.KS, BUY, TP: W200,000) and Samsung SDI
(006470.KS, BUY, TP: W130,000) as our Top Picks for the IT sector. LGE is
expected to exhibit strong earnings in North America, Latin America, and the
domestic market and stronger-than-expected margin protection in the European
market despite intensifying competition. Samsung SDI anticipates a quick
earnings recovery on its strong rechargeable battery business and turnaround
of its MD and PDP businesses.