Both short-term and long-term positive factors support this view. The brokerage expects to see the market upgrade the company's 2007-08 earnings after first-quarter results beat market expectations by 26 per cent during this normally weak period.

Even though the brokerage had been bullish on Cal-Comp's first-quarter earnings, the actual result was still 18 per cent above the forecast. The company's new mobile-phone order from India will become significantly stronger in the second quarter, as hinted by the higher margin from this box-build product.

Also, with a higher-than-expected gross margin in the first quarter from economy of scale, KGI has revised upward 2007-08 sales and gross margin assumptions. Normalised profit has been revised up 12.1 per cent for 2007 and 22.8 per cent for 2008.

KGI says the market will upgrade the company's earnings. Meanwhile, fundamentals are still attractive as the second half is normally the peak season for the industry. Currently, Cal-Comp's share price is trading at only a 6.3 price-to-earnings ratio and is lagging its Taiwan Depository Receipts, which are trading at a ratio of 13.