Tue, Aug 14, 2012 - Page 14 News List

Brokerages positive on TPK outlook

Staff writer, with CNA

Three foreign brokerages were upbeat about TPK Holding Co (宸鴻) after the Taiwanese touch panel supplier forecast a better-than-expected outlook for the second half of this year.

At an investor conference on Thursday, TPK reported NT$2.94 billion (US$98.2 million) in net profit, or NT$9.24 per share, for the second quarter. In the first quarter, the company’s net profit was NT$2.62 billion, or NT$8.27 per share.

TPK has forecast low single-digit sales growth in the third quarter, with its operating margin rising to 11 percent from 10.6 percent in the second quarter.

In a note issued on Friday, Bank of America Merrill Lynch said it expected more upside factors from TPK’s diversified customer base.

“TPK’s better-than-expected third-quarter guidance suggests that the process of customer and product diversification is going smoother than expected and that investors can now turn the page on the in-cell concerns,” Merrill Lynch analyst Robin Cheng (程翔) said.

At present, Taiwan’s TPK and Wintek Corp (勝華), which supply touch panels to Apple Inc, use mainly on-cell technology in their products.

However, Apple is reportedly using in-cell technology for its next-generation iPhone to achieve a thinner profile.

Cheng expects TPK’s sales to show quarterly growth of 2 percent in the third quarter and 15 percent in the fourth quarter, driven by strong demand for new products such as Apple’s iPad mini and Amazon’s new Kindle Fire.

Meanwhile, Citigroup Inc said that with the higher prices and yield rates of TPK’s new products, it expects new tablet PCs to generate a better gross margin for TPK than iPhone touch panels, which accounted for an estimated 40 percent of TPK’s revenue in the second quarter.

Meanwhile, Daiwa Securities Capital Markets said mass production of TPK’s higher-margin single glass solution products should begin in the second half of the year for a variety of customers, which would help hold up its gross margin.

Jessica Chang (張幸宜), an analyst at Deutsche Bank, said TPK is well-positioned to capture the fresh demand for touch screens used in devices running on Microsoft Corp’s Windows 8 operating system.

“TPK’s effective diversification in touch technologies and customers has paved the way for it to continue benefiting from growing touch-panel demand,” she said.

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