Thu, Aug 25, 2011 - Page 12 News List

Young Fast posted loss of NT$44m last quarter

By Lisa Wang  /  Staff Reporter

Young Fast Optoelectronics Co (洋華), a local maker of touch sensors and touch panels, swung into the red last quarter as slow yield improvement for a new tablet touch panel and foreign-exchange losses weighed on gross margins, a company executive said yesterday.

The company posted a quarterly loss of NT$44 million (US$1.52 million) for the April-to-June period, compared with a net profit of NT$279 million in the first quarter and NT$974 million in the second quarter of last year, according to the company’s financial statement.

The second-quarter results fell short of forecasts by analysts including Samsung Securities’ Lu Chia-lin (呂家霖), who had projected Young Fast would report a net profit of NT$237 million.

Gross margin last quarter fell to 13.9 percent, after falling to a three-year low of 16 percent in the first quarter and compared with 32.9 percent a year ago. Foreign-exchange losses diminished the gross margin by 1.5 percentage points last quarter, Young Fast said.

A spike in tax rates proved the final straw for Young Fast, with the firm drifting into a loss last quarter after its tax rate shot to 130.67 percent, from 13.5 percent in the first quarter and 5.53 percent a year ago.

“The second quarter was a very disappointing quarter and there will be lots of challenges in the third quarter,” Young Fast chairman T. J. Lin (林德錚) told investors via a teleconference.

“The slower-than-expected growth of tablet makers other than Apple Inc led to low utilization for our mid-sized [10-inch touch panel] production line and weighed on the gross margin,” Lin said.

As a result, Lin cut his forecast on revenue contribution from the company’s new 10-inch touch panel to about 10 percent of total revenues this year, from the 10 to 20 percent he estimated earlier.

Lin said that gross margins would not improve until next quarter when a new roll-to-roll processing technology is introduced, adding that the new technology would help lift yields by 5 to 10 percentage points.

Revenues are expected to grow by a double-digit percentage this quarter from NT$4.04 billion last quarter, of which 80 percent would come from its top four customers, including local smartphone maker HTC Corp (宏達電), Lin said.

Lu, who has a “hold” rating on the stock, projected moderate revenue growth of 10 to 15 percent sequentially this quarter.

Young Fast rose 1.05 percent to close at NT$96.50 yesterday, buoyed by the company’s announcement on Tuesday that the board had approved a plan to invest US$7.5 million to buy new equipment for its Vietnam plant to produce touch sensors and touch panels.

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