Apple bear sees strong initial iPhone X pre-orders in China

Rosenblatt’s Jun Zhang sheds more light on the shift in production from iPhone 8 to iPhone X.

From a note to clients that landed in my inbox Friday morning:

Strong Pre-Orders: JD.com [Jingdong and formerly called 360buy] posted 1.1 million iPhone X early preorders ahead of the official start next week. We believe this is a strong number and could end up totaling total 3-4 million units, higher than iPhone 8/8 Plus levels, when the official preorder starts next Friday in China… We believe a subset of Chinese consumers are willing to pay a 20-30% premium to have the iPhone X sooner, which could be a factor on why the early preorders are so strong. We believe some retailers are preordering/purchasing the iPhone X from Apple’s authorized retail channels, in order to resell the phone for profit in China.

Our Take on the News Regarding iPhone 8 Production Cuts: We have not yet heard of actual production cuts, and we do not expect Apple to cut production before the holiday season; however, we do expect Apple to reduce iPhone 8 production and likely maintain iPh-one 8 Plus production in November due to weak demand. We anticipate iPhone 8/8Plus production to trend down from the current 12M units/month run-rate to 7-8M units/month in November/December before any production cuts, as iPhone X production likely ramps in November/December. We believe production cuts of 30-35% are likely on the iPhone 8 and very small production cuts on the iPhone 8 Plus. We expect Apple to allocate more production capacity to the iPhone X in the March quarter. Until the iPhone X launches and Apple understands the market’s reaction to each phone model, we do not expect any further production adjustments.

Zhang maintains his Neutral rating and $150 price target. 

My take: Good reporting from Jhang, who covers China Mobile. Not clear, given what he’s seeing, why he’s sticking with his near-street-low price target. See Look whose Apple price targets are underwater now. 

See also: This Apple bear is trimming his iPhone 8 estimates. 

5 Comments

  1. John Kirk said:
    I try not to make predictions — especially about the future — but this angst over iPhone sales is nuts. It’s clear that buyers are waiting for the introduction of the iPhone X before deciding what they’re going to buy.The iPhone X is the more expensive phone. If analysts think this is a bad thing, they should be in another line of work.

    5
    October 20, 2017
  2. Fred Stein said:
    Agree. No angst here.
    I predicts that the 800 million IB will upgrade to OLED / AR / AI iPhones…eventually. 😉

    1
    October 20, 2017
  3. Gregg Thurman said:
    In my opinion Jhang is a buy side analyst (hence his price target). His unit and revenue estimates are mostly in line with WS estimates. WS consensus sell side price target (targets issued since August earnings) is $184.

    0
    October 20, 2017
  4. Sandro Castellaro said:
    Crazy thought in light of all the hysteria over “high” iPhone X pricing…but is Apple actually leaving alot of money on the table given the brisk resale market in China (and probably elsewhere)?

    0
    October 21, 2017

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