June Smartphone Sales Swing to Growth in China Thanks to iPhone
21 JULY 2022 - The China Academy of Information and Communications Technology (CAICT) came out with numbers for phone sales for the month of June on Wednesday, and they were decidedly good for Apple. Not good for China’s smartphones overall, but good for Apple. On the heels of the numbers, a piece from Bloomberg said:
China’s mobile phone shipments jumped 9.2% last month, led by overseas vendors such as Apple and Samsung Electronics Co. while domestic brands like Xiaomi Corp., Oppo and Vivo were down 0.5%, official data showed.
I’m not sure why Bloomberg bothered mentioning Samsung in the piece. For years, it seems, we’ve heard that when the Academy talks international smartphones, what it means is iPhones. This is a point Bloomberg concedes its very next sentence, saying:
Samsung no longer commands a significant share of the country’s smartphone market whereas Apple is the fourth-largest player, suggesting the bulk of the rebound in demand was for iPhones.
Really not sure why Samsung was mentioned.
We Thought It Would Be Big, But…
A piece from Apple 3.0 had Evercore analyst Amit Daryanani pegging Apple’s part of China’s international smartphone market at 90%. So - recapping - Chinese firms Xiaomi, OPPO, and vivo were down half a percent, yet sales of imported phones (~90% of which are iPhones) led China’s entire smartphone market to a 9.2% rise last month.
Digging deeper on the Daryanani note, the analyst says he and his:
…expected the market to begin to recover in June, but the magnitude of growth in MNC [multinational corporations, 90% Apple] shipments was surprising as June is generally not a strong month.
He wrapped his note, saying:
The major uptick in [multinational corporations] growth rate is a clear positive for Apple and positions them well to outperform current iPhone revenue expectations.
Daryanani has an “Outperform” rating on Apple shares. His price target on the shares is $180.
I’m Not Saying I’m Wrong, But I Think I Might Be
Daryanani was not the only Apple analyst dialing iPhone numbers in China. Apple Insider had a look at a note from UBS analyst David Vogt. That note has him handing iPhone an 11.4% share of China’s total smartphone market, taking share from domestic vendors. Apple’s June performance has him - not rethinking his estimates, but thinking his estimates are probably low. “Given the strength in China and our checks,” his note says:
…we believe our 42 million June quarter iPhone estimate (down 9% YoY) is likely conservative and already captures the earlier Covid disruptions suggesting upside is likely ahead of earnings next week…
UBS has a positive rating on Apple shares. The firm’s 12-month price target on the shares is $185.
The Really Good Follows the Really Bad
Also weighing in on iPhone numbers in China was JP Morgan analyst Samik Chatterjee. While he was pleased with the numbers, his excitement was tempered by #TheseTimesInWhichWeLive. Once again, Apple Insider grabs the note. Quoting part of that:
Second consecutive month of better than seasonal shipments, with positive y/y growth for the first time since December, could be an early sign of pickup in demand in China, however, as some of the demand could be due to reopening of lockdowns, it is worth monitoring y/y growth into next months to confirm on demand recovery…
Chatterjee has a positive rating on Apple shares. His price target on the shares is $200.
Listen Up!
Expect the flurry of notes to continue into next week. Apple earnings for the June-quarter - the third quarter of fiscal year 2022 - are due in one week from today. Numbers for last quarter will hit Apple’s site after the close of trading at 1:30 Pacific/4:30 Eastern on Thursday 28 July. About a half-an-hour later, Apple CEO Tim Cook, Apple CFO Luca Maestri, and various financial analysts will do the conference call thing. That goes off at 2PM/5PM. You can hear that as it happens on Apple’s Investor site. Apple will make it available as a podcast soon after. And - of course - we will recap the call here on Friday.
