Analysts upbeat despite Compal’s net profit plunge

By Kevin Chen  /  Staff reporter

Sat, Mar 29, 2014 - Page 13

Compal Electronics Inc (仁寶) on Thursday reported net profit of NT$2.47 billion (US$80.85 million) for last year, or earnings per share (EPS) of NT$0.57.

That is a drastic drop from the NT$6.41 billion, or NT$1.47 per share, the world’s second-largest contract notebook computer maker reported in 2012.

The company suffered a net loss of NT$2.73 billion in the third quarter of last year, its first-ever quarterly loss, mainly due to a NT$4.9 billion one-time loss associated with the divestment of its loss-making telecom subsidiary Vibo Telecom Inc (威寶).

However, the company swung into the black last quarter with net profit of NT$2.45 billion, or NT$0.57 per share, which not only helped offset the third-quarter loss, but also allowed it to remain profitable for the whole year, its financial statement shows.

The fourth-quarter figure, Compal’s best result in nearly 10 quarters, beat Credit Suisse AG’s forecast of NT$2.33 billion and Yuanta Securities Corp’s (元大證券) estimate of NT$1.94 billion.

“The fourth quarter of 2013 was the first quarter where Compal was free of the Vibo impact, in other words, a new start for the company,” Yuanta analyst Vincent Chen (陳豐丰) said in a client note.

Chen said the fourth-quarter result was due to sizable investment gains, including NT$400 million from selling substrate maker Simpal Electronics Co (欣寶). Also making a contribution was the company’s Chinese laptop joint venture, Lienpal Ltd (聯寶), which finally broke even in the quarter, he added.

Compal’s consolidated revenue totaled NT$692.75 billion last year, up 1.44 percent from NT$682.89 billion in 2012.

The company’s main growth drivers this year would be smart devices, such as smartphones and tablets, while notebook computer shipments could continue declining, Chen said.

“Several new customers will be driving this trend from 2014, with Apple iPad on the tablet side, as well as HTC (宏達電) and Lenovo (聯想) on the smartphone side,” he said on Thursday.

Credit Suisse analyst Thompson Wu (武光明) yesterday said in a note that Compal would start assembling iPad minis in the second quarter, with full-year volume of 1.85 million units.

“Compal will have a stronger earnings recovery in 2014,” he said.

Net profit this year could be three times last year’s to reach NT$10.34 billion, or NT$2,41 per share, and revenue may increase by 12.76 percent to NT$781.16 billion from last year, Wu said.

Gross margin is likely to rise to 4.2 percent from 4.05 percent, and operating margin may improve to 1.6 percent from 1.33 percent, the analyst said.