Tue, Oct 25, 2011 - Page 11 News List

Epileds’ shares dip below their original debut price

OUTLOOK:Primasia said in a note that although Epileds has performed better than many of its peers, factors such as oversupply would hit its second-half growth

By Kevin Chen  /  Staff Reporter

LED chipmaker Epileds Technologies Inc (光鈜科技), which is 30 percent owned by metal-casing maker Catcher Technology Co (可成科技), yesterday saw its shares fall below their NT$30.10 debut price on the Taiwan Stock Market amid growing external headwinds.

The Greater Tainan-based company started trading at NT$31.60 yesterday, dropped to a low of NT$29.10 at about 9:30am and then recovered to NT$30.80 before noon. However, the stock failed to maintain the gains in the afternoon session and ended 0.33 percent lower at NT$30, with 4.53 million shares changing hands.

That compared with an increase of 2.97 percent on the benchmark TAIEX. It also underperformed when compared with most LED-related stocks.

Epistar Corp (晶電), the nation’s largest LED chipmaker, rose 2.53 percent to NT$56.70, Formosa Epitaxy Inc (璨圓) climbed 2.71 percent to NT$20.85, Genesis Photonics Inc (新世紀光電) was up 2.03 percent to NT$45.20, while Tekcore Co (泰谷光電) dropped 1.82 percent to NT$16.20, stock exchange data showed.

Epileds raised NT$302.9 million (US$10.1 million) from this offering by issuing 10 million common shares, implying a potential dilution of 11.1 percent.

As a medium-sized company with NT$902.93 million in paid-in capital and 13 metal organic chemical vapor deposition (MOCVD) reactors to make LED chips, Epileds is focused mainly on the -manufacture of high-powered LEDs, which are used mostly as handset backlights and for -decorative and commercial lighting.

In the first three quarters of this year, the company posted a net profit of NT$203.62 million, up 19.65 percent year-on-year. Earnings per share were NT$2.26 in the first nine months, compared with NT$2.12 for the same period last year.

Accumulated revenue totaled NT$972.68 million in the first three quarters, an increase of 46.13 percent from a year earlier, while gross margins fell to 35.15 percent from 37.53 percent over the same period, company data showed.

Primasia Investment Consultancy Co said in a note yesterday that Epileds’ focus on high--powered LEDs allowed it to post better financial results than other second-tier LED players.

However, as the industry has experienced some negative changes, including “oversupply, sliding average selling prices and weakening end demand,” Epileds is not expected to experience the same strong growth in the second half as it did in the first half, -Primasia said.

This is exemplified by the company’s third-quarter results: net profit fell by nearly 42 percent to NT$62.9 million from the second quarter, sales were down by nearly 20 percent to NT$353.9 million from the previous quarter and gross margin also declined from 38.1 percent to 33 percent.

At an investors’ conference held on Oct. 3, prior to its main bourse listing, Epileds president Ku Chin-fu (古錦福) talked about the challenges facing the company, but shied away from elaborating on the firm’s capacity expansion plan for next year.

Ku said only that the company would focus on its position as a niche player, according to information on the company’s Web site.

“We expect its conservatism on expansion may limit long-term growth potential when LED lighting picks up,” Primasia said in the note.

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