Semiconductor equipment maker Hermes Microvision Inc (HMI, 漢微科) reported solid growth in net profit last quarter, with earnings per share reaching a record level in the company’s history.
Net profit increased 37.76 percent year-on-year and 4.91 percent quarter-on-quarter to NT$557.62 million (US$18.51 million) in the second quarter, which translates to earnings per share of NT$8.44, the company said in a filing to the Taiwan Stock Exchange on Wednesday.
“We remain upbeat about the company’s performance this year and expect its earnings to increase 49.9 percent from last year to NT$34.45 per share and grow another 41 percent to NT$48.89 per share next year,” Yuanta Investment Consulting Co (元大投顧) analyst Felix Hsu (徐凰原) said in a note yesterday.
Hermes Microvision’s shares closed 0.65 percent higher at NT$936 yesterday on the over-the-counter market.
Hsu retained his “buy” rating on the stock, with a target price of NT$1,000.
“The company is one of a few semiconductor companies that can deliver high growth in coming years,” he said.
Hermes Microvision has a more than 85 percent share of the global e-beam inspection (EBI) systems market, mainly used in wafer inspection.
Wafer inspection is conducted mostly by optical surface scans, which can only detect physical defects and encounter limitations beyond 28 nanometers (nm), but EBI can significantly improve resolution to 3nm and is able to detect voltage contrast defects, analysts say.
“HMI’s market leadership is unchallenged,” Michael Liu (劉明龍) and William Kuo (郭德齊), analysts at KGI Securities Investment Advisory Co (凱基投顧), said in a separate note. “It is a major beneficiary of semiconductor companies’ continued migration to more advanced process technologies, such as the 22/20nm process or the 14nm FinFET [fin field-effect transistor] process.”
In the first half of the year, Hermes Microvision’s net profit increased 60.15 percent to NT$1.1 billion, or earnings per share of NT$16.47, from NT$680 million, or NT$11.05 per share, in the same period last year. Accumulated revenue expanded 25.33 percent to NT$2.5 billion from NT$1.99 billion last year, the company’s data showed.
Gross margin was 70.38 percent and operating margin was 44.79 percent in the first half, compared with 70.49 percent and 38.92 percent a year earlier respectively.
Despite market concerns about cyclical inventory adjustments in the semiconductor sector and weakening global PC demand, the company is expected to see mild or flattish growth in its earnings and margins in the current quarter from last quarter due to a better product mix and steady prices, KGI said.
However, with steady orders from first-tier semiconductor companies and new orders from second-tier companies, the company’s business would stay strong through next year, the brokerage said.
KGI maintained its “add” rating on Hermes Microvision shares, with a target price of NT$1,100.
Separately, Hermes Microvision said on Wednesday it plans to issue between 4 million and 5 million new shares in the form of global depositary receipts to strengthen its working capital.
The company said its board had agreed to the fund-raising plan, but did not set an issue price for the new shares, nor a time frame for the rights issue. The company is likely to raise as much as NT$4.68 billion, based on yesterday’s closing share price of NT$936.
The company has earmarked capital expenditure of NT$1 billion this year and next year for the construction of new factories in the Southern Taiwan Science Park (南部科學園區).