Mon, Aug 06, 2018 - Page 15 News List

Parade expects better revenue in Q3

PRODUCT OFFERINGS:Yuanta analyst Steve Huang said that the long-term outlook for the company was good with its competitive edge in the realm of high-speed ICs

By Chen Cheng-hui  /  Staff reporter

Parade Technologies Ltd (譜瑞), which specializes in the design and sale of high-speed signal transmission interface and display chips, said it expects revenue to rise to between US$81 million and US$89 million this quarter compared with last quarter’s US$75.67 million.

The sales guidance of a 7 to 17.6 percent rise from last quarter, came as the company expects to gain more orders for its LCD driver ICs and timing controllers (T-Con) for smartwatches, Parade said on Wednesday last week.

The fabless IC designer is the world’s leading supplier of embedded DisplayPort (eDP) T-Con solutions.

Gross margin for this quarter is expected to remain between 40 and 43 percent, with operating expenses of US$18.75 million to US$19.75 million, Parade said in a statement.

The company provided the guidance after releasing financial results for the second quarter, which showed that net income on a consolidated basis decreased 16.93 percent year-on-year and 10.79 percent quarter-on-quarter to US$12.32 million, the lowest in six quarters, with earnings per share (EPS) of US$0.16.

Revenue last quarter fell 11.92 percent year-on-year and 6.18 percent quarter-on-quarter to US$75.67 million, as a result of inventory adjustment by Chinese panel customers and the decline of Parade’s touch controller IC business amid the industry’s fast migration to touch and display integration (TDDI) chips.

Gross margin increased annually and quarterly to 41 percent due to a better product mix, but operating margin decreased to 15.7 percent on a lower sales scale.

Yuanta Securities Investment Consulting Co (元大投顧) said that Parade’s growth momentum is expected to resume in the second half of this year as some issues have largely been addressed.

“BOE Technology Group Co’s [京東方] inventory correction already came to an end, and the new MacBook Air by Apple Inc is to enter mass production from late third quarter, while Parade’s TDDI solution will hit the market by late fourth quarter,” Yuanta analyst Steve Huang (黃柏璁) said in a client note on Wednesday. “Longer term, we continue to like Parade’s competitive edge in the high-speed IC area with continual new product offerings.”

Yuanta said that Parade’s third-quarter sales should increase 15 percent quarter-on-quarter, with gross margin remaining at 40 to 43 percent and operating margin improving to 18.1 percent, while EPS could grow 27 percent from the previous quarter.

CGS-CIMB Securities Ltd (銀河-聯昌證券) said in a separate note on Thursday that Parade needs to grab better business opportunities in mini/micro LED-related products over the next two years, even though sales contributions from the touch controller business have been on the rise so far this year.

“Mini LED, with size of 100-200 [micrometers], is poised to be the next generation of display. Micro LED, with size below 100 [micrometers], might require more time to enter mass production with decent yield and quality,” CGS-CIMB analyst Peter Chan (詹逸群) said in the note.

“Given that Apple often leads in the adoption of the greatest display technology, we believe Parade’s T-Con products for Apple might go through a major upgrade cycle in the next 24 months to support mini/micro-LED displays, and T-Con’s average selling prices could increase substantially, boosting its 2019-2020 sales,” Chan said.

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