TPK Holdings Co (宸鴻), which counts Apple Inc as its top client, yesterday reported better-than-expected quarterly profits for last quarter as it shipped more higher-margin touch panels for tablets.
The company now expects new notebook computers running on Microsoft Corp’s Windows 8 operating system to fuel demand and drive its quarterly revenue to set an all-time high this quarter.
During the July-to-September quarter, the touch-screen maker saw its net income grow about 3.06 percent to NT$3.03 billion (US$104 million), or NT$9.46 per share.
That was compared with a net income of NT$2.9 billion, or NT$9.24 a share, in the second quarter.
TPK originally expected the third-quarter to be flat in terms of its bottom line, but last quarter’s figure represented a 17.4 percent contraction from NT$3.63 billion, or NT$11.45 a share, in the third quarter of last year.
This quarter, “the momentum is in the notebook,” TPK executive financial official Freddie Liu (劉詩亮) told investors.
“Momentum in Ultrabooks and tablets is also very strong because almost all PC brands aim to launch their new products for the Christmas shopping season. There is the Windows 8 effect, too,” Liu said, adding that TPK would benefit from the sale of notebooks and tablets running Microsoft Corp’s new operating system, which features touch function.
Strong demand has caused “supply constraint. We cannot fully satisfy customer demand,” he said.
For this quarter, revenue is expected to soar by 30 percent from last quarter’s NT$35.63 billion, beating the 20 percent growth which was estimated by most analysts and which brings the company’s revenue to “an historical high,” Liu said.
TPK’s optimism is built on its higher-than-expected revenue for last month, which was released yesterday. Sales jumped 26.6 percent to NT$16.94 billion from September’s NT$13.38 billion, hitting its highest level in 10 months, the company said. That represented an annual expansion of 26.89 percent from NT$13.35 billion.
“October revenue is better than we previously estimated. Revenue in November and December will be also better than we thought,” Liu said. “We expect significant annual growth in the fourth quarter in both revenue and profitability.”
In this quarter, operating profit margins are likely to increase 0.5 percentage to hit around 11.6 percent, from 11.1 percent last quarter, Liu said. He attributed the expansion to improvement in equipment loading rates, as well as a growth in the shipment of notebook touch screens.
Mark Chen (陳彥廷), an analyst with SinoPac Securities (永豐金證券), said the company’s forecast was “aggressive” and that the big growth could lead to a “significant dive in revenue in the first quarter of next year,” citing uncertainty over the uptake of Windows 8 laptops.
Chen said he once offered TPK shares a “sell” rating after Apple stopped using its touch screens for its latest smartphone — the iPhone 5. Now, he says he has changed his mind as the adverse impact from Apple has been reduced in light of a rebound in gross margin to 17.9 percent from 16.7 percent in the second quarter.
In response to Chen’s concerns, Liu said he did not expect a substantial decline in revenue in the first quarter of next year as the impact from seasonally weak PC sales would be small, given that TPK generates less than 10 percent of its revenue from notebook touch screens.
Revenue from touch screens used in notebooks and tablets rose to 54 percent of last quarter’s revenue, from 41 percent in the second quarter and 36 percent in the third quarter of last year, the company’s financial statement showed. Revenue from Apple accounted for 55 percent of the company’s total revenue, down from 76 percent in the second quarter, the company said.
Operating margins would rise 0.5 percentage points to about 11.6 percent this quarter, from last quarter’s 11.1 percent and 10.6 percent in the second quarter, Liu said.
Separately, Wintek Corp (勝華) — which also supplies touch panels to Apple — reported a 12.84 percent decline in revenue for last month to NT$1.25 billion, compared with NT$9.72 billion in September, according to a company statement released on Monday. On an annual basis, that represented 51.25 percent growth from NT$5.6 billion.
Wintek expected revenue to drop 15 percent this quarter from last quarter as sales of Apple’s previous-generation iPhone 4 and iPhone 4S fell, coupled with a reduction in demand for Google Inc’s tablet Nexus 7, Credit Suisse analyst Jeffrey Su (蘇厚合) said in a report.