Tue, Jul 31, 2018 - Page 12 News List

Walsin profit soars nearly 10 times on rare upcycle

WINDFALL:Demand for MLCC and chip resistors surged due to widening applications, such as facial recognition for smartphones and advanced autopilot systems in vehicles

By Lisa Wang  /  Staff reporter

Passive component supplier Walsin Technology Corp (華新科技) yesterday said net profit last quarter skyrocketed nearly 10-fold from a year earlier as a persistent supply crunch propelled prices amid an upcycle rarely seen in the industry’s history.

Net profit soared to NT$4.37 billion (US$142.8 million) in the second quarter, compared with NT$443 million in the same period last year.

On a quarterly basis, net profit jumped by 2.33 times from NT$1.31 billion.

Earnings per share (EPS) last quarter rose to NT$9.08, from NT$0.86 a year earlier and NT$2.71 a quarter earlier, according to a company filing with the Taiwan Stock Exchange.

Gross margin last quarter climbed to 56.33 percent, from 24.4 percent last year and 35.8 percent in the first quarter.

In the first six months of the year, net profit surged to NT$5.68 billion, or EPS of NT$11.74, from NT$840 million, or NT$1.63 per share, from a year earlier.

Walsin chairman Chiao You-heng (焦佑衡) said he expects the supply constraints to deepen this quarter as the electronics industry enters peak season.

Demand for multilayer ceramic capacitors (MLCC) and chip resistors has surged due to widening applications, such as facial recognition for smartphones and advanced autopilot systems in vehicles, the company said in May.

To boost MLCC capacity, Walsin’s board of directors yesterday approved a plan to raise funds by issuing 700,000 new shares mostly to existing shareholders, the company said in a separate filing with the exchange.

Most of the proceeds will be used to purchase MLCC manufacturing equipment, Walsin said.

An anticipated explosive growth in passive component demand would fuel revenue growth this year and next year, as already seen in the past few quarters, the company said.

Last quarter, revenue more than doubled to NT$11.38 billion, compared with NT$5.13 billion in the same period last year. That represented quarterly growth of 72 percent from NT$6.64 billion.

Smaller rival Holy Stone Enterprise Co (禾伸堂) yesterday also posted strong quarterly results.

Net profit surged about 6.3 times to NT$967 million in the second quarter, compared with NT$132.11 million a year earlier, it said.

That represented quarterly growth of 97 percent from the first quarter’s NT$490 million, while net profit grew 97 percent.

EPS jumped to NT$6.12 from NT$0.58 last year and NT$3.1 a quarter earlier.

Gross margin climbed to 38.9 percent in the second quarter, from 14.73 percent a year earlier and 30.5 percent in the prior quarter.

The company attributed the performance to its expansion of MLCC capacity, which has boosted the passive component’s revenue contribution to about 50 percent in the second quarter.

“Looking into the second half, MLCC supply continues to be tight. The company will continue to gradually add capacity,” Holy Stone said in a filing with the Taiwan Stock Exchange.

The company aims to build a bigger foothold in the high-end segment, which includes MLCCs used in automotive and industrial devices, and chargers, it said.

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