Simplo Technology Co (新普科技), which supplies battery packs for Apple Inc’s iPhones and Macbooks, yesterday predicted that net profit would edge down by at least 1.66 percent sequentially this quarter as demand for notebook computers and tablets eases.
For the whole of this year, Simplo chairman and chief executive officer Raymond Sung (宋福祥) said the company is targeting earnings per share of NT$10, down from last year’s NT$10.98.
The forecast fell short of Daiwa Capital Markets Inc’s expectations of NT$11.6 and SinoPac Securities Investment Service Co’s (永豐證券投顧) NT$11.73. Daiwa gave Simplo a “hold” rating, while SinoPac rated the stock “neutral.”
To provide extra earnings growth drivers, Sung said Simplo is developing more niche products, such as battery packs for automation systems, robotic arms and cars, which have higher margins than existing products.
Simplo expects net profit this quarter to fall to between NT$747 million (US$24.27 million) and NT$768 million, from NT$781 million last quarter.
“The second quarter would be virtually flat. Mobile phones are the only segment that is growing,” Sung told an investors’ conference yesterday. “We believe this quarter would be the worst period for notebooks. Overall, the second half would be a better period than the first half [by revenue].”
Gross profit would shrink to between NT$1.52 billion and NT$1.59 billion this quarter, from last quarter’s NT$1.63 billion, he said, attributing the fall to unfavorable foreign exchange rates and increased revenue contribution from lower-margin smartphone battery packs.
Revenue would expand 3.94 percent at best to NT$15.6 billion this quarter, from NT$15.01 billion the previous quarter. Notebook battery packs are the biggest revenue source of Simplo, accounting for more than a 50 percent share.
Shares of Simplo rose 1.32 percent to NT$154 yesterday, but Sung said he was disappointed at the stock’s performance because the shares are valued at only 15 times the firm’s annual earnings per share, much lower than the valuation of between 50 times and 60 times annual earnings for companies listed on Chinese stock markets.
Sung said Simplo paid a corporate income tax of 28 to 30 percent because most of its operations are in China. He urged the government to negotiate with Beijing for an agreement to lower Taiwanese firms’ tax burden, as the Japanese and South Korean governments have.
The government levies only a 17 percent corporate income tax on local firms.
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