Simplo Technology Co (新普科技), the world’s largest battery pack supplier for notebook computers and tablets, yesterday forecast that its fourth-quarter revenue would post sequential growth of between 15.7 percent and 18.46 percent, as it gradually ramps up shipments for Apple Inc’s new products.
The Hsinchu-based firm said it expects revenue in the range of NT$16.8 billion to NT$17.2 billion (US$566.6 million to US$580.1 million) this quarter, compared with the NT$14.52 billion it made in the third quarter, a company filing with the Taiwan Stock Exchange showed.
Simplo’s sales forecast is lower than the 20 percent quarterly increase predicted by SinoPac Securities Investment Service Co (永豐投顧), but falls in line HSBC Securities Taiwan Corp’s estimate of 17 percent, amid signs of improved demand for Apple’s iPad Air, MacBook Pro and iPhones.
The company yesterday also predicted that its net profit in the October-to-December period will range from NT$926 million to NT$970 million, or earnings per share (EPS) of between NT$3.01 and NT$3.15, up from the NT$835 million, or NT$2.71 EPS, recorded in the third quarter,
In addition, Simplo estimated that its gross margin would climb to 11 percent this quarter from 10.88 percent the previous quarter.
Yuanta Securities Corp (元大證券) said Simplo's fourth-quarter earnings guidance is 12.4 percent above its forecast of NT$843 million, possibly because of the additional subsidy income from the Chongqing government and higher than expected iPhone production yield.
Still, Yuanta analyst Dennis Chan (詹宗勳) yesterday said in a client note that he forecast Simplo’s net profit to drop 5.09 percent year-on-year to NT$3.14 billion this year and to fall by 15.5 percent next year to NT$2.65 billion on lower non-operating income and strong competition.
Simplo shares closed 1.15 percent lower at NT$129.50 yesterday ahead of the release of its fourth-quarter outlook.
The stock has declined 11.3 percent so far this year, according to GRETAI Securities Market statistics.
The battery manufacturer, which also counts Hewlett-Packard Co, Dell Inc, Levono Group (聯想), Acer Inc (宏碁) and Asustek Computer Inc (華碩) among its major clients, recorded NT$5.47 billion in consolidated revenue last month, up 3 percent month-on-month, but down 3.58 percent annually.
In the first 10 months of the year, Simplo’s cumulative revenue totaled NT$43 billion, a decrease of 9.84 percent from a year earlier, company data showed.
The firm expects this month’s sales to continue increasing from last month, but visibility for next month remains vague, Simplo chairman and CEO Raymond Sung (宋福祥) was quoted as saying at an investors’ conference by the Chinese-language Apple Daily yesterday.
For the whole of the year, the company is predicting revenue of between NT$54.32 billion and NT$54.72 billion, 6.9 percent to 7.6 percent lower than the NT$58.84 billion it made last year.
Its net profit is expected to reach between NT$3.13 billion and NT$3.17 billion this year, or earnings per share of between NT$10.15 and NT$10.29, with an 11.11 percent gross margin, Simplo said.
Analysts said the company faces earnings challenge next year due to tepid notebook and ultrabook computer sales, lower average selling prices and decreasing profit margins for the battery packs used in Apple’s iPad Air, as well as increasing competition from Chinese rivals.
“While we acknowledge Simplo’s efforts in diversifying into high-power applications and increasing the level of automation, these applications contribution and positive impact on margins is likely to be limited in the near term,” HSBC analysts said in a client note on Monday.
“Simplo needs to secure non-IT products strong enough to sustain future earnings growth,” UBS Securities analyst Patrick Chen (陳鈞寧) said in a separate note last week.
Chen said the company has started paying more attention to non-IT product applications, such as battery packs used in electric vehicle or energy storage systems.
However, those applications account for less than 5 percent of Simplo’s total sales, meaning that it will take a few more years for that strategy to yield a more substantial return, he added.