Mon, Jul 23, 2018 - Page 16 News List

Compeq profit dives due to unfavorable tax rates

SHAKY GROUND:The company’s shares have become volatile recently, because of the postponed launch of Apple’s new MacBook and weak smartphone demand

By Chen Cheng-hui  /  Staff reporter

Compeq Manufacturing Co (華通), which produces multilayer and double-sided printed circuit boards (PCB), last month saw its profit shrink by 41.21 percent annually due to unfavorable tax rates.

Net income last month was NT$107 million (US$3.48 million), with earnings per share of NT$0.09, Compeq said in a filing with the Taiwan Stock Exchange on Wednesday last week.

Revenue also fell 6.98 percent from a year earlier to NT$3.62 billion, it said

Compeq is a major beneficiary of continual specifications upgrades for PCBs and sound supply-demand dynamics for rigid-flex PCBs. The company also leads the global high-density interconnect (HDI) board market with a dominant position in the high-end segment.

However, due to weak smartphone demand and the delayed launch of Apple Inc’s new MacBook laptops, Compeq’s shares have become volatile over the past few sessions and it was required by the stock exchange regulator to release last month’s financial results.

Revenue for the second quarter of this year dropped 2.82 percent annually to NT$10.56 billion, bringing the firm’s cumulative revenue for the first half of the year to NT$21.49 billion, down 2.68 percent from the same period last year, Compeq said.

The company has yet to release its earnings results for last quarter.

It reported net income of NT$482 million in the first quarter, up 20.9 percent annually, with earnings per share of NT$0.4.

Despite market expectations of a persistent migration of PCB specifications and a good opportunity to benefit from the 5G mobile technology uptake, Compeq said it is cautious about its business outlook in the second half of this year.

This is due to an increasingly saturated smartphone market and growing competition from industry peers, coupled with slower specifications migration, the company said.

Global smartphone sales last year fell 0.3 percent to 1.465 billion units, contracting for the first time since the 2007 debut of the iPhone.

The numbers are forecast to drop again this year, down 0.2 percent to 1.462 billion devices, International Data Corp (IDC) said in May.

The smartphone market is predicted to grow about 3 percent annually from next year onward, with worldwide shipments expected to reach 1.654 billion units in 2022, based on a five-year compound annual growth rate of 2.5 percent, IDC said in a report.

A catalyst for the rebound might be the introduction of 5G smartphones next year, IDC said.

“The first commercially ready 5G smartphones will appear in the second half of 2019 with a ramp-up across most regions happening in 2020,” IDC said.

However, Yuanta Securities Investment Consulting Co (元大投顧) said it sees limited gains for Compeq on the 5G front in the near term, as the company has been scaling down its base station business due to poor profitability.

The PCB specifications upgrade might also lead to a rapid capacity expansion from its peers and create further pricing pressure on Compeq’s earnings growth going forward, Yuanta said in a note on July 13.

“We believe Unimicron Technology Corp [欣興] and Unitech Printed Circuit Board Corp [燿華] will gain allocation in iPhone and AirPod this year respectively, both at the expense of Compeq,” Yuanta said.

Compeq shares closed up 1 percent at NT$30.25 on Friday in Taipei trading.

The company’s stock price has underperformed the broader market by 18.5 percent so far this year, Taiwan Stock Exchange data showed.

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