Catcher Technology Co (可成), the nation’s leading supplier of light metal casings and enclosures for mobile devices, on Saturday reported net income of NT$3.399 billion (US$111.8 million) for last quarter, up 24.6 percent quarter-on-quarter, but down 48.21 percent year-on-year, or earnings per share (EPS) of NT$4.41, the lowest for the July-to-September quarter in nearly four years.
Third-quarter revenue was NT$27.82 billion, up 73.04 percent from the previous quarter and 10.87 percent from a year earlier, the company said in a financial statement.
Gross margin and operating margin improved from the previous quarter, but were lower than a year earlier at 23.13 percent and 16.05 percent respectively, Catcher’s data showed.
In the first three quarters, Catcher’s net income was NT$7.82 billion, down 62.84 percent annually, or EPS of NT$10.15. Gross margin decreased 18.05 percentage points to 23.7 percent, while operating margin dropped 18.68 percentage points to 14.01 percent from a year earlier, it said.
While Catcher reported weaker profits, its shares rose 5.28 percent last week from the previous week as investors were still optimistic about its outlook in the near term in light of rising iPhone demand.
Shares closed at NT$279 on Friday in Taipei trading. The stock has advanced 46.5 percent from this year’s low of NT$190.5 on May 29, Taiwan Stock Exchange data showed.
“We upgrade Catcher to ‘buy’ on increasing shipments for lower-priced iPhone models, and improving margin and earnings from the second half of 2019, thanks to better iPhone 11 demand, the upcoming iPhone SE2 and a lighter depreciation from 2020,” Bank of America Merrill Lynch analysts led by Robert Cheng (鄭勝榮) said in a research note last week.
Merill Lynch offered a new 12-month price target for the stock at NT$313, up from its previous target of NT$180.
While revenue for last month was the highest in 11 months at NT$12.12 billion, Catcher’s cumulative revenue in the first 10 months of this year was 9.21 percent lower than a year earlier, totaling NT$71.81 billion.
Analysts attributed the revenue figures to demand for iPhone XRs.
Apple launched three iPhone 11 models on Sept. 10, with the cheaper LCD model starting at US$699, down from US$749 for the iPhone XR a year ago, while the more advanced OLED Pro and Pro Max start at US$999 and US$1,099, unchanged from last year’s prices.
Merrill Lynch said the increasing demand for the lower-priced models this year would drive Catcher’s operating margin after it posted a record-low of 9.1 percent in the second quarter.
In addition to stronger demand for iPhone 11 models, the iPhone SE2 is likely to be launched in the first quarter of next year, which would support Catcher’s sales momentum in the first half of next year, Merill Lynch said.
“We expect the SE2 model to adopt similar casing/mechanical design to iPhone 8 [aluminum casing]. Thus, Catcher will enjoy a higher yield rate and faster production ramp. The new model will also bring higher utilization rate and margin during the traditional light season,” Merill Lynch analysts said.
The positive outlook for margin also reflects Catcher’s lower depreciation expenses from next year as the company shifts to focus on the aluminum casings and cut capital expenses, they said.
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