From a note to clients by analyst Amit Daryanani that landed on my desktop Wednesday:
ALL YOU NEED TO KNOW: China’s smartphone market saw a slowdown in August in both the broader market and iPhones specifically. Smartphone data suggests MNC shipments (read, Apple) were down -39.2% y/y in the month of August (-46.9% m/m).
While August results were somewhat underwhelming and saw declines in both the market as a whole and in iPhone shipments, we would note that this likely points to a moment of pause in the weeks leading up to the iPhone 13 launch rather than a fundamental slowdown.
So far, early signs are pointing to robust demand and strong mix for the new lineup, with our iPhone Delivery Tracker showing elevated wait times, particularly for the Pro and Pro Max models across all regions we track, including China at 28 days until first delivery.
Also worth noting, iPhone 13 models in China are ~5-10% cheaper vs. corresponding iPhone 12 models, which we think could help propel Apple’s share in China higher.
Current consensus estimates are calling for iPhone revenue to increase by ~56% in the Sep-qtr. We would note, though, that comps for the Sep- qtr are easier this year than normal as last year’s iPhone release was delayed until the end of October...
In Apple’s Jun-qtr print, we saw the company achieve 50% growth in iPhones, and the monetization narrative that is now just starting to take hold could drive sizable upside.
Net/net: The month of August represents what should prove to be a momentary slowdown ahead of robust demand for the iPhone 13 lineup and we expect strength ahead for the Sep-qtr.
Maintains Outperform rating and $180 target.
My take: Nothing new in a prelaunch slowdown. Nice of China to provide the data.