Parade shares plunge on weak business guidance

By Kevin Chen  /  Staff reporter

Wed, Nov 06, 2013 - Page 14

Shares of Parade Technologies Ltd (譜瑞) fell by their maximum daily limit yesterday after the leading supplier of embedded DisplayPort (eDP) time controllers offered a weaker-than-expected business guidance for this quarter, citing seasonal factors and product-mix adjustments.

The Neihu District (內湖), Taipei-based company saw its shares drop 6.91 percent to NT$202 as investors took note of the company’s lower sales growth projection for this quarter and greater margin pressure.

Parade is a fabless semiconductor company that specializes in the design and sale of high-speed signal transmission interface solutions. Its eDP technology is being increasingly used in notebook PCs, tablets and all-in-one desktop PCs to enable graphics processors to better interface with display panels.

On Monday, Parade said that its third-quarter net income had dropped 56.66 percent year-on-year to NT$174.04 million (US$5.83 billion), or earnings per share (EPS) of NTS$2.34.

Net income rose 47.28 percent quarter-on-quarter from the second quarter, the company’s filing to the Taiwan Stock Exchange showed.

Gross margin in the July-to-September quarter was 42.87 percent, 8.69 percentage points lower than in the previous year and 4.03 percentage points less than the previous quarter, while its operating margin declined 17.64 percentage points year-on-year, but rose 0.09 percentage points quarter-on-quarter to 16.41 percent last quarter.

The company said its consolidated revenue for last quarter fell 18.37 percent from a year earlier to NT$1.17 billion, but the figure increased 44.58 percent quarter-on-quarter, thanks to the increasing adoption of eDP for both Apple Inc and non-Apple clients.

Parade said it now expects consolidated revenue to increase by between 17 percent and 27 percent this quarter from last quarter and gross margin to fall to between 40.5 percent and 43.5 percent this quarter.

Yuanta Securities Co (元大證券) analyst Steve Huang (黃柏璁) yesterday said the company’s sales forecast was lower than his forecast of 32 percent sequential growth, which he attributed to slowing non-Apple notebook shipments. He forecast the company would post EPS of NT$3.7 this quarter.

As Parade’s third-quarter results and fourth-quarter guidance were weaker than expected, Fubon Securities Co (富邦證券) revised downward its sales growth forecast by 5.84 percent to NT$1.45 billion and slashed its EPS forecast by 34.4 percent to NT$3.99 for this quarter, Fubon analyst Shen Hua-jian (沈華堅) said in a client note.

KGI Securities Co (凱基證券) analyst Eric Kao (高天慶) also cut his fourth-quarter sales estimate to NT$1.47 billion with an EPS forecast of NT$3.24.

However, Kao said that Parade’s edge in eDP solutions will remain intact as long as display technology trends continue moving toward higher resolution, slimmer forms and lower power consumption.

KGI forecast the company’s revenue would grow 71 percent to NT$6.97 billion next year from this year’s NT$4.08 billion, with EPS more than doubling to NT$18.96 next year from NT$7.82 this year.