Mon, Feb 25, 2019 - Page 15 News List

Chip component sellers’ profits spike

NOT CELEBRATING:The companies and analysts were glum about the year ahead, with Yuanta saying WT Microelectronics’ growing exposure to Apple and China poses a risk

By Chen Cheng-hui  /  Staff reporter

Semiconductor component distributors WT Microelectronics Co (文曄) and WPG Holdings Co (大聯大) reported record profits and sales for last year, but the companies could face headwinds this year due to economic uncertainty, a mature smartphone market and inventory adjustments in the supply chain.

WT Microelectronics on Tuesday last week reported that operating profit last year rose 34 percent to NT$5.26 billion (US$170.65 million) and net profit increased 10 percent to NT$2.78 billion, with earnings per share of NT$5.02.

Consolidated revenue grew 44 percent to NT$273.41 billion.

Revenue this quarter would reach NT$65 billion to NT$70 billion, a decline of 18 to 24 percent from last quarter’s NT$85.76 billion on weakness in the communications, consumer electronics, industrial and automotive segments, the company said.

Gross margin is expected to improve from 3.15 percent last quarter to between 3.3 and 3.5 percent this quarter, while operating margin would be 1.4 to 1.6 percent, compared with 1.5 percent last quarter, it said.

“There are some uncertainties in the global economy and supply chain in 2019,” the company said in a statement.

“The semiconductor sector has been experiencing a downturn and WT Micro is no exception, especially with its increasing revenue base from Apple Inc and a relatively large exposure to the China end market,” Yuanta Securities Investment Consulting Co (元大投顧) said in a note on Tuesday last week.

While the current quarter would likely mark “the bottom for this cycle,” it is still too early to tell whether the semiconductor industry will see an L, U or V-shaped recovery, Yuanta said.

Earnings per share this quarter might come in at NT$0.89, down from NT$1.07 last quarter, Yuanta said, adding that it is conservative about the company’s outlook for this year.

In comparison, WPG Holdings’ operating profit grew 6.2 percent to NT$10.57 billion last year and net profit increased 1.7 percent to NT$7.43 billion, with earnings per share of NT$4.21, the company reported on Jan. 29.

Revenue rose 2.37 percent to NT$545.12 billion, it said.

This quarter, WPG forecast that revenue would drop to between NT$117 billion and NT$123 billion, compared with last quarter’s NT$131.82 billion, as the supply chain faces seasonal weakness, inventory adjustments and US-China trade tensions.

Gross margin is projected to fall to between 4.1 and 4.3 percent, from 4.37 percent last quarter, while operating margin could slide to 1.65 to 1.85 percent, compared with 1.92 percent in the previous quarter, WPG said.

As a result, net profit would drop to between NT$1.08 billion and NT$1.35 billion, from last quarter’s NT$1.57 billion, with expected earnings per share of NT$0.64 to NT$0.8, the company said.

“WPG’s 2019 revenue is expected to decline by a single-digit percentage due to macroeconomic uncertainty, a mature handset market and the clients’ conservative ramp-up of production,” Capital Investment Management Corp (群益投顧) said in a report published on Jan. 31.

Earnings would also decline by a single-digit percentage, given higher financial costs due to US interest rate hikes, it said.

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