Wed, Sep 03, 2014 - Page 14 News List

Epistar remains a ‘buy’: Primasia

By Kevin Chen  /  Staff reporter

Epistar Corp’s (晶元光電) sales growth will likely resume after the Lunar New Year holiday next year, Primasia Securities said yesterday, as investors turned cautious about demand in the remaining months of the year, sending the company’s shares down by the daily maximum of 7 percent yesterday.

Shares in the nation’s biggest LED chipmaker, which have underperformed the broader market by 5.32 percent so far this year, closed at NT$59.60 in Taipei trading, after the company’s chairman spoke on Monday about potentially weakening demand for LED TVs and lighting for the current quarter.

At the company’s extra shareholder’s meeting to confirm its acquisition of smaller rival Formosa Epitaxy Inc (ForEpi, 璨圓光電), Epistar chairman Lee Biing-jye (李秉傑) said he expects greater-than-expected impact from inventory adjustments throughout the supply chains of TV brands and slightly weaker-than-expected demand for LED lighting, due to overbooking in the past quarter, local media outlets reported yesterday.

Primasia Securities analyst Filia Lin said the company’s factory utilization rate might start to decline beginning this month and fall further in the traditionally weak upcoming quarter, considering Epistar management’s downbeat prospects for the second half of the year.

Meanwhile, Rigidtech Microelectronics Corp (銳捷), a Taiwanese patterned-sapphire substrate maker and an Epistar subsidiary, yesterday said LED demand would likely weaken in the second half of the year on inventory adjustments.

The company’s utilization rate for this month is showing signs of declining from last month’s full utilization and would likely stay at about 80 percent in the fourth quarter, Rigidtech Microelectronics president Hung Wen-ching (洪文慶) told an analyst meeting.

The firm has planned an initial public offering (IPO) for early next year and counts Epistar, ForEpi and Elec-Tech International Co (德豪) as major clients.

“However, we are still positive on accelerating sales growth for LED lighting and the rising demand for 4K2K LED TVs,” Lin said in a client note yesterday.

In addition, she said Epistar’s share price correction — declining by 12.35 percent over the past three months — should provide a good entry point for long-term investors to load up on more of its shares, taking advantage of the upward trend in the LED lighting market and the company’s improved competitiveness after the ForEpi deal.

Primasia yesterday maintained its “buy” ratings on Epistar shares with a 12-month price target of NT$94.50.

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