Fri, Aug 10, 2012 - Page 13 News List

TPK outperforms Q2 profit forecast

BEATING THE ODDS:The touch panel producer defied analyst’s expectations that its revenue would contract because of Apple’s switch to in-cell touch screens

By Lisa Wang  /  Staff reporter

TPK Holding Co Ltd (宸鴻) yesterday posted better-than-expected net profits for last quarter, allaying worries that a decrease in orders from its biggest customer, Apple Inc, would cut into the touch-panel producer’s profits.

In addition, the effect of TPK’s diversification into touch panels for tablets and notebook computers in addition to smartphone touch screens is expected to magnify in the second half as customers prepare to launch new products such as Ultrabooks, powered by Microsoft Corp’s Windows 8 operating system.

TPK chief financial officer Freddie Liu (劉詩亮) told investors that the company “is now more optimistic about the third-quarter situation ... At least, the company’s bottom line will be flat in the third quarter, compared with the second quarter.”

Commenting on some pessimistic analysts’ forecast that TPK would make just NT$28 in earnings per share for the whole of the year, Liu said the company would hit that target several months earlier than they expected.

Net profits grew 12.1 percent to NT$2.94 billion (US$98 million), or NT$9.24 per share, in the quarter ending on June 30, compared with NT$2.62 billion, or NT$8.27 per share, in the first quarter.

That represented an annual decline of 22.7 percent from NT$3.72 billion, or NT$11.96 per share.

The quarterly net profits exceeded the NT$2.85 billion, or NT$8.32 per share, predicted by Credit Suisse LCD industry analyst Jerry Su (蘇厚合).

Su had raised his earnings forecast for TPK to NT$38.63 per share this year from NT$37.94 per share, according to a report dated June 28.

Liu said investor concern about revenue erosion from Apple’s switch to in-cell touch screens for its new iPhone from Japanese touch panel suppliers was misplaced.

“Our product transition is going smoothly ... In terms of revenue, June is the trough,” he said.

In this quarter, revenue is expected to grow by a low single digit percent from NT$36.08 billion last quarter, during which touch panels for tablets and notebooks accounted for a bigger share, 41 percent, than the first quarter’s 25 percent, TPK said.

Shipments of touch panels for tablets, e-readers and Ultrabooks would grow significantly this quarter and next quarter, Liu added.

TPK seized a 75 percent share of new Ultrabook touch panel projects globally, with most of them using the company’s new and higher-margin single-glass touch screens, he said.

TPK won touch-panel orders from most of the world’s major PC makers, including Hewlett-Packard Corp, Dell Inc, Acer Inc (宏碁) and Asustek Computer Inc (華碩), Su said in the report.

The touch-panel producer aimed to broaden its customer base to more than 40 this year from the 30 it had last year.

Gross margin would improve slightly this quarter from last quarter’s 16.7 percent, Liu said. Operating profit margin would improve to 11 percent from 10.6 percent, Liu said.

TPK planned to spend NT$12 billion on new equipment, mostly for making single-glass touch panels.

TPK’s 4.3-inch single-glass touch modules will be about half the thickness and weight of touch panels composed of two pieces of glass.

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