Fri, Feb 10, 2012 - Page 12 News List

MStar Q4 profit rose 6 percent

PROSPECTS:After a forecast slow first quarter, the company expects the launch of new products, including smartphone chips, in the second half to drive profit forward

By Lisa Wang  /  Staff Reporter

MStar Semiconductor Inc (晨星半導體), the world’s biggest supplier of chips for LCD TVs, yesterday reported its best quarterly net profit in five quarters, bolstered by robust demand for its TV and handset chips from emerging markets.

Net income expanded 6 percent to NT$1.66 billion (US$56 million) in the three-month period to December, compared with NT$1.57 billion a year earlier, marking the highest level since the third quarter of 2010.

On a quarterly basis, net profit climbed 2.8 percent from the third quarter’s NT$1.62 billion.

The results were slightly lower than Credit Suisse’s profit estimate of NT$1.73 billion.

For the full year, net income declined 4.8 percent to NT$6.22 billion, or NT$11.76 per share, from NT$6.54 billion, or NT$14.74 a share, in 2010.

This quarter, revenue is expected to drop between 8 percent and 13 percent to between US$282 million and US$298 million, from last quarter’s US$325 million, MStar chairman Wayne Liang (梁公偉) told an investor teleconference.

MStar said revenue last month fell 18.5 percent, or 1.5 percent year-on-year, to NT$2.59 billion.

“The first quarter is a seasonally slow period. We will be affected by these seasonal factors,” Liang said.

Gross margin is expected to fall to between 40 percent and 42 percent in the current quarter, from last quarter’s 42.2 percent, he said.

Shipments of TV chips would be in line with the seasonal slowdown, Liang said.

However, handset chip shipments would be flat this quarter compared with last quarter, before picking up again the rest of the year after the launch of new products — including smartphone chips in the second half of the year, Liang said.

The seasonally lower guidance was “as expected,” Credit Suisse analyst Randy Abrams said in a report released following the investor conference.

MStar’s shipments of TV chips would outperform the forecast 10 percent annual growth for global LCD TV shipments of 230 million units this year, Liang said, as the company benefits from fewer competitors and new customers in Japan.

Liang said handset chips grew the fastest among the company’s products and would continue to do so this year.

MStar aims to double its share of the world’s second-generation handset market from last year’s 6 or 7 percent, Liang said.

The company shipped 50 million handset chips last year, raising their share of MStar’s total revenue of NT$35.69 billion to 15 percent.

Another growth driver is set-top box chips, Liang said.

Set-top box chips are expected to account for as much as 10 percent of MStar’s revenue this year, up from less than 5 percent last year, benefiting from consumer uptake of digital TVs and Internet TVs, Liang said.

Credit Suisse maintained its “outperform” rating on MStar and its price target of NT$223, implying an almost 9 percent upside from the stock’s closing price of NT$205 yesterday.

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