Thu, Mar 27, 2014 - Page 14 News List

Analysts see challenging year for Formosa Epitaxy

By Kevin Chen  /  Staff reporter

LED chipmaker Formosa Epitaxy Inc (ForEpi, 璨圓光電) could see a challenging year ahead.

That is the message analysts gave after the company on Tuesday reported widening losses for last year.

ForEpi, the nation’s second-largest LED wafer supplier after Epistar Corp (晶電), saw its shares fall 1.31 percent yesterday following news that the company reported a 123 percent annual increase in net losses from 2012, hit by slowing demand for consumer electronics backlights.

Net losses for last year totaled NT$1.28 billion (US$42.1 million), or NT$2.7 per share, up from a NT$577.35 million loss the previous year, or NT$1.21 per share, the company said in a statement filed late on Tuesday to the Taiwan Stock Exchange.

Since the fourth quarter of 2010, ForEpi has posted losses for nine consecutive quarters, with the net loss for the final quarter of last year standing at NT$388 million, compared with a net loss of NT$434 million in the previous quarter, the company’s balance sheet showed.

Gross loss margin fell to a record low of 34 percent last quarter from 21 percent in the previous quarter and 19 percent the prior year.

“The company released dismal fourth-quarter results last night, indicating continued hardship for upstream LED names,” Yuanta Securities Corp (元大證券) analyst Andrew Chen (陳治宇) said yesterday in a client note.

For the whole of last year, the company’s consolidated revenue dropped 9.96 percent to NT$4.37 billion, with gross loss margin expanding by 16.53 percentage points to 18.25 percent and operating loss margin rising by 17.55 percentage points to 34.05 percent.

ForEpi is targeting a return to profit this year on the back of its new flip chip products, but Chen said he views the firm’s target as “challenging.”

Yuanta says that the company will likely see revenue for this quarter grow 10 percent sequentially, while its quarterly loss could narrow to NT$0.33 per share from NT$0.81 last quarter, given the higher factory utilization and debut of its new flip chip products.

“We believe the company’s outlook should at least improve from 2013,” Chen said.

ForEpi shares closed at NT$18.9, declining 16 percent over the past 12 months and about 28.5 percent lower than the electronics sub-index over the same period, Taiwan Stock Exchange data showed.

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