Young Fast Optoelectronics Co (洋華), the nation’s biggest touch-screen module maker, yesterday posted record high quarterly net profits for the April-to-June period, on growing customer demand for new products.
In the second quarter, net income grew almost 30 percent to NT$974 million (US$30.45 million), or NT$7.32 per share, compared with NT$751 million, or NT$5.69 a share, a year earlier, according to the company’s financial statement posted on its Web site.
On a quarterly basis, that translates to an increase of more than 76 percent from NT$553 million, or NT$4.16 a share, in the first three months.
Gross margin improved to 32.9 percent last quarter, from 30.3 percent in the first quarter, beating most analysts’ expectations.
“Young Fast’s major customers, like HTC Corp (宏達電) and Samsung Electronics, launched more models in the second quarter and their sales were quite good,” said Chialin Lu (呂家霖), an analyst with Macquarie Securities.
“We believe new orders from HTC and from new customers will drive further growth for Young Fast,” Lu said.
He said that he expected Young Fast to supply touch screen modules to BlackBerry maker Research In Motion (RIM) from this quarter.
Lu expects Young Fast’s revenues to grow by between 10 percent and 15 percent this quarter from last quarter’s NT$4.2 billion, saying that company chairman T.J. Lin (林德錚) told investors at a teleconference yesterday that sales would “jump” beginning this month.
The teleconference was only open to investors.
Global shipments of touch screen modules used in smartphones would expand 41 percent to 531 million units this year from last year, DisplaySearch said.
The researcher expected the penetration rate of touch screens in mobile phones to double to 50 percent by 2016, from last year’s 25.6 percent.
Despite stellar long-term industry prospects, Young Fast’s gross margin would be under pressure this quarter because the company raised its payroll by 20 percent from last month, said Lu, who attended the teleconference.
The pay raises could erase about a percentage point from the company’s gross margin this quarter, Lu said.
The Guanyin (觀音), Taoyuan County-based Young Fast yesterday also said it planned to raise NT$2.2 billion by issuing 10 million shares to existing shareholders, which could have a negative impact on the company’s stock price because of concern of profit dilution.
Advanced touch-screen modules, or capacitive type touch-screen modules used in iPhones and other high-end smartphones, accounted for 18 percent of the company’s total revenues last quarter and the share would increase this quarter, Lu said, citing Lin’s remarks.
Resistive type modules were the company’s main revenue source at 77 percent.
Lu rated Young Fast at “outperform” with a 12-month target price of NT$405, implying a 25-percent upside from the company’s closing price of NT$324 yesterday.
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