Young Fast pins its hopes on medium touch-panels

THINKING BIG::Young Fast is taking an active approach to increasing profitability by slashing excessive inventory and aiming for economies of scale

By Amy Su  /  Staff reporter

Sat, Aug 25, 2012 - Page 14

Young Fast Optical Co (洋華光電), a manufacturer of small to medium-sized touch panel sensor products, may return to the black in the second half of this year mainly on the back of rising shipments of medium-sized products, a company official said yesterday.

Young Fast posted NT$390 million (US$13 million), or NT$2.6 per share, in net losses in the second quarter, compared with a net loss of NT169 million, or NT$1.13 per share, in the first quarter, the company’s financial report showed.

It was the third consecutive quarter Young Fast to posted a loss. For the second quarter of last year, the company reported a NT$786.4 million, or NT$0.29 per share, net loss, the report showed.

“Shipments of medium-sized touch-panels failed to reach the economies of scale in the second quarter, dragging down the company’s margin and further impacting profitability,” Young Fast chairman Lin Teh-jeng (林德錚) told a teleconference with investors.

Lin said that the company would need to ship at least 100,000 medium-sized products per month to create the economies of scale.

Meanwhile, the company took a more aggressive approach to smaller products in the second quarter by writing off a large amount of excessive inventory, Lin added.

The company’s operating margin turned negative to minus-4.6 percent during the April-to-June period, down from 7.3 percent in the January-to-March period.

Despite the headwinds in the second quarter, Lin said the NT$2.29 billion in sales would be the lowest for this year.

Lin said that company revenue would expand by double-digit percentages sequentially in the third quarter, with sales in the fourth quarter also growing.

Growing shipments of medium-sized touch panels — to will be used in a major customer’s new product — would be the major support for the revenue expansion, the company said.

The market has been speculating that the product in question is Microsoft Corp’s Surface tablet running its Windows 8 OS.

Lin said medium-sized products would account for more than 50 percent of Young Fast’s sales in the second half of the year, from less than 10 percent in the second quarter.

Furthermore, positive factors make Young Fast “very likely” to turn losses into gains in the second half of this year, Lin added.

The company will continue to focus on high value-added small-sized products and selective main clients, Lin said, adding that Young Fast has not been focusing too heavily on the market for low-priced smartphones.

The company’s shares fell 0.4 percent from Thursday to close at NT$74.3 yesterday, compared with the TAIEX’s 0.37 percent drop, stock exchange data showed.