Lextar Electronics Corp (隆達), which makes upstream LED chips and provides downstream packaging services, yesterday said revenue for this year would drop by a low single-digit percentage from last year’s NT$14.52 billion (US$443.63 million) due to falling prices and weak demand.
To cope with tepid demand, Lextar plans to trim its capital spending to between NT$1.2 billion and NT$1.3 billion from an original budget of NT$1.5 billion by suspending a second-phase capacity expansion plan, the company told investors yesterday.
Looking ahead, Lextar said this quarter would be a flat period in terms of shipments, as nascent signs showed that demand was stabilizing.
LED chips used in LCD panel backlights account for 60 percent of the company’s total shipments, while those for LED lighting devices make up the remaining 40 percent.
“We saw some rush orders trickle in for LED lighting lately. We will continue to watch if this will become a stable demand,” Lextar said. “We believe the third quarter or the fourth quarter will be the worst period, and business should pick up [next quarter].”
The company said revenue for this quarter is expected to grow by a low single-digit percentage from last quarter thanks to orders from new customers.
However, average selling prices of the company’s products are expected to drop 7 percent sequentially amid persistent pricing pressure, it added.
Lextar’s revenue guidance for the current quarter is better than the forecast by Yuanta Securities Co (元大證券), which predicted a sequential decline of 5 percent in revenue, according to a report released by the brokerage yesterday.
Yuanta analyst Andrew Chen (陳治宇) raised Lexar’s target price to NT$23.5, expecting that its stock would “move away from its distressed valuation as demand will soon bottom [out].”
However, Chen slashed his forecast for Lextar’s net profit by 26 percent to NT$189 million this year, given that the company’s third-quarter results fell short of his expectations.
Last quarter, net profit shrank by 16.8 percent to NT$36 million, compared with NT$43 million in the second quarter, supported by non-operating income of NT$127 million, according to a financial statement released by the company on Thursday.
Quarterly profit was lower than Chen’s forecast of NT$41 million.
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