Win Semiconductors Corp (穩懋半導體) shares plunged on Saturday in Taipei trading, one day after its board approved an equipment depreciation plan that would likely cut the company’s earnings per share (EPS) by NT$0.5 per share next year.
Shares ended 3.82 percent lower at NT$32.75 on the GRETAI Securities Market and at one point dropped by the daily 7 percent limit to NT$31.7. The benchmark over-the-counter index ended the day 1.02 percent higher.
Win Semiconductors, the world’s largest pure-play gallium arsenide (GaAs) foundry, which isbased in Taoyuan County’s Linkou (林口), provides foundry services for GaAs components used in handsets, including smartphones. It counts Singapore’s Avago Technologies Ltd, China’s RDA Microelectronics Inc and US-based Skyworks Solutions Inc — who produce GaAs-based electronic devices used by Apple Inc, Samsung Electronics and Nokia Corp in their products — as its major clients.
The company’s board approved a plan to change the depreciation period of some facilities to five years from 10 years in accordance with the international financial reporting standards (IFRS) which Win Semiconductors plans to adopt on Jan. 1.
The company hopes the change in accounting method can “better access the cost-effectiveness of machinery and equipment as well as reflect their actual durability,” it said in a stock exchange filing.
Other benefits include avoiding hefty one-time depreciation charges and balancing the rapid value reduction for facilities that might become obsolete quicker due to increasing GaAs content in mobile handsets and wireless data systems.
Win Semiconductors said in the filing that the move would increase its depreciation expenses by NT$464 million (US$15.97 million) next year, affecting the company’s earnings by about NT$0.5 per share, but analysts said the impact would be short-lived.
“We believe that the NT$0.5 EPS impact will cause some short-term selling pressure, but won’t last too long as this reflects a change to the accounting rule instead of fundamentals,” Carlos Peng (彭國維), an analyst at Fubon Securities Investment Services Co (富邦投顧), said in note to clients on Saturday.
“Considering the company’s future growth potential from China’s 3G migration, better-than-usual first-quarter seasonality in 2013 and potential inventory build of the next-generation iPhoneX in the second quarter of 2013, we believe that the impact of depreciation will be short-lived,” Peng said.
Win Semiconductors reported a net income of NT$1.43 billion in the first three quarters of the year, or EPS of NT$2.21, with a revenue of NT$8.42 billion, compared with a net income of NT$660.19 million (NT$1.06 per share) and a revenue of NT$6.41 billion a year earlier.
Fubon Securities forecast an estimated EPS of NT$2.83 for this year, but lowered its EPS forecast to NT$2.4 next year from previous forecast of NT$2.9 by factoring in this additional depreciation, the note said.
For the first quarter, Fubon projected the company’s revenue would decline by up to 3 percent sequentially, but that would still be better than other tech companies’ decline during the traditional slow season, it said.