Elan beats profit forecasts

By Kevin Chen  /  Staff reporter

Thu, Apr 25, 2013 - Page 14

Touch-panel controller chip manufacturer Elan Microelectronics Corp (義隆) on Tuesday reported better-than-expected net profits in the first quarter, rising 22.9 percent from the previous quarter to set a new income record.

In the three months ending on March 31, Elan’s net profit rose to NT$397 million (US$13.31 million), or NT$0.94 a share, from NT$323 million, or NT$0.82 a share, in the fourth quarter last year, the company said in a filing to the Taiwan Stock Exchange.

Credit Suisse AG expected the company to report a first-quarter net profit of NT$328 million, while SinoPac Securities Co (永豐金證券) predicted NT$372 million.

Last quarter’s figure was also higher than the NT$200.95 million, or NT$0.52 a share, that the company posted in the same period last year, company data showed.

Elan’s consolidated revenue rose 21.43 percent year-on-year to NT$1.87 billion in the first quarter, but it was down 2.16 percent from the previous quarter. As a result, the company’s gross margin climbed to 47.7 percent from 43 percent in the previous quarter, and from 45 percent a year earlier.

That was also better than Credit Suisse’s estimate of 42 percent and market consensus forecast of 46.5 percent, Credit Suisse analyst Jerry Su (蘇厚合) said in a note yesterday.

Elan said that revenues would further rise sequentially this quarter on the back of strong demand for tablets and touchscreen PCs running Microsoft Corp’s Windows 8.

The company said it expected shipments in the second quarter to grow by double digits from the first quarter because of better seasonality. It also forecast that gross margins this quarter would be similar to last quarter because of a better product mix and cost reductions.

Su said Elan is gaining market share in the touchscreen notebook market as the company has secured orders from almost all notebook brands.

In the first quarter, touch-related sales accounted for 65 percent of Elan’s total sales, the company said.

“We forecast Elan will capture at least 45 percent of the notebook touch controller IC market in 2013, as it leads its peers by 3 to 6 months on providing single chip solution,” Su said in the note. “We believe notebook and smartphone touch controllers will become the new growth drivers for Elan in 2013 through 2015.”

Credit Suisse forecast Elan’s second-quarter sales would increase 19 percent quarter-on-quarter to NT$2.22 million, with a gross margin of 48.3 percent.

The bank also predicted that Elan would report NT$5.08 in earnings per share this year and NT$5.44 next year, compared with NT$2.81 last year, reflecting gains in market share and a better product mix.

Elan shares closed up 0.68 percent in Taipei trading yesterday., underperforming the broader market, which rose 1.02 percent.

Credit Suisse has an “outperform” rating on Elan and raised its 12-month target price to NT$92 from NT$62.