Lite-On Technology Corp (光寶科技) yesterday said its board had approved maintaining the company’s high dividend amid concerns about US-China trade tensions.
The company is proposing distributing a cash dividend of NT$2.92 per common share, a payout ratio of up to 85 percent.
Lite-On shares yesterday rose 1.72 percent in Taipei trading, with the payout translating to a 6.3 percent yield based on the NT$47.2 closing price, with the company saying that its free cash flow stood at NT$33.2 billion (US$1.08 billion) at the end of last year.
While lingering trade tensions would likely lead to a quarter-on-quarter sales decline this quarter, the company expects to post “significant” sales gains at the end of this month, Lite-On chief executive Warren Chen (陳廣中) told an earnings conference in Taipei.
In the final quarter of last year, net income fell 4 percent quarter-on-quarter, but rose 10 percent year-on-year to NT$25.21 billion, while revenue dipped 5 percent quarter-on-quarter to NT$50.5 billion, 7 percent lower that the previous year.
Earnings per share were NT$1.08.
During the period, ongoing trade tensions led to imports and consumption falling in China, leading to fewer orders from the company’s Chinese customers, Chen said.
Consumer electronics and home appliances suffered the greatest impact, while softer demand for gaming console power supply units and optical drives had resulted in a less than optimal product mix, Chen added.
However, Lite-On does not have much exposure to the slump in global smartphone sales, he said.
Gross margin in the fourth quarter also fell to 13.4 percent from 15.8 percent the previous quarter, Chen said, attributing the decline to a high comparision base set during the third quarter of last year, while a fall in price of memory chips did not help the company’s average selling price.
While a renegotiation with customers during the height of the US-China trade dispute between July and September had led to higher profitability, price erosion had returned to depress earnings in the fourth quarter, Chen said, adding that the automotive lighting business is facing stiff competition from its Chinese rivals.
Lite-On has plans in place for for production diversification like many of its peers, but the pace would remain slow as the trade talks unfold, he said.
Passive component prices have begun normalizing from scarcity-induced price increases over the past year, but higher inventory levels to fill rush orders ahead of the Lunar New Year holiday would likely add to costs this quarter, he added.
“We have to be ready to fill orders as market conditions rebound,” Chen said.
The company’s net income surged 203 percent year-on-year to NT$7.96 billion last year, with revenue dipping 3.47 percent year-on-year to NT$207.11 billion.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to