Neo-Neon Holdings Ltd (真明麗控股), which is scheduled to trade its Taiwan Depositary Receipts (TDRs) on Tuesday, is likely to suffer a 17.6 percent decline in revenues to HK$1.3 billion (US$165.7 million) this year before posting 30.9 percent growth year-on-year at HK$1.7 billion next year, its underwriter Fubon Securities Co (富邦證券) forecast yesterday.
Net income, however, was expected to more than double to HK$344.8 million, or HK$0.4 per share, next year after reporting an estimated 4.9 percent gain to HK$145.4 million, or HK$0.17 per share, this year, the securities firm said in a note to clients yesterday.
The Guangdong, China-based firm, founded by a Taiwanese, Ben Fan (樊邦弘), would continue to experience a revenue boost from its cash cow — decorative lighting — in anticipation of a replacement wave of energy efficient light-emitting-diode (LED) lighting over traditional incandescent light bulbs, the securities firm said.
“The LED market — the main driver behind Neo-Neon’s future growth — will see explosive growth in the next two years,” the note said.
Currently, LED lighting accounts for 60 percent of Neo-Neon’s annual revenues, followed by decorative incandescent lighting at 23 percent and stage lighting at 14 percent.
Hurt by the global slump, Neo-Neon reported HK$554 million in revenues and HK$42.3 million in net profit, or HK$0.014 per share, in the first half of this year, company executives told an investors’ conference yesterday before its TDR issuance.
Fan said earlier this month that his company planned to expand output seven-fold to 70,000 to 84,000 wafers a month over the next three years.
Analysts yesterday gave a preliminary thumbs-up to the company’s secondary offer of 140 million units of NT$12.9 TDRs, which were oversubscribed 16 times on Wednesday, to raise NT$1.8 billion (US$55.6 million).
“In general, the LED sector is red hot and will have no problem reaping 20 percent to 30 percent growth next year,” Henry Yen (顏志龍), a MasterLink Securities Investment Advisory Co (元富證券) analyst, said on the sidelines of the investors’ conference.
Compared with domestic rivals, Neo-Neon enjoys an advantage in integration and branding diversification as both a downstream light manufacturer and upstream wafer maker, he added.
Lee Wen-tung (李文桐) of Reliance Securities Investment Trust Co (德信證投信) agreed, projecting that Neo-Neon’s margin may improve by up to 38.5 percent mid-next year from 28.9 percent in the first half of this year.
Shares of Neo-Neon fell 2.5 percent to HK$5.1 yesterday in Hong Kong.
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