Wed, Sep 06, 2000 page18

• Everspring confident of IT components bet

  NEW DIRECTION The home security systems specialist's expansion into digital hands-free sets and screen components has analysts painting a rosy picture

  • By Thomas Ker / CONTRIBUTING REPORTER
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  Everspring Industry Co derives nearly three quarters of its revenue from the sale of home security systems and accessories. And yet it is listed under the electronics sector of the Taiwan Stock Exchange. Local investor confidence about the company's future might explain why.

  "Its profits are very steady; its financial composition is very steady," said Robin Wu, deputy-manager of research at Tachan Securities Co. What's more, its new products will bring in good revenue over the next few years, he said.

  By new products, Wu is referring to Everspring's digital Bluetooth wireless hands-free set, its liquid crystal display backlight drivers and other new IT components.

  Production of the hands-free set will undergo a pilot run this month and mass production should begin from October, an official at Everspring said.

  The company is also forming a strategic partnership with Aurora Corp (震旦) this month to help market the product. Aurora is one of Taiwan's largest distributors of telecommunications products.

  Though analysts say the product, using Bluetooth technology, is hitting the market too early, Everspring is confident it will be the trend of the future and is confident its version of the product is superior to its competitors.

  "Other products use the analog system, which is susceptible to radio interference," said E. Ting, special assistant to the CEO at Everspring. "Our product is fully digitized, so doesn't have this problem," he said.

  Everspring plans to produce one million of the hands-free sets over the next 12 months. Revenue generated from the product should come to NT$500 million to NT$700 million, Ting said.

  "Our target is to become the OEM partner of the three major mobile phone manufacturers for hands-free sets," Ting said, referring to Nokia, Motorola and Ericsson.

  According to one company source, Ericsson has contacted the company about the product, though no official announcement or agreement has been made.

  According to market analysts, the sets will be sold at a retail price of NT$2,000, with the focus initially on the local market. But with mobile phone prices tumbling, demand could be limited unless the company can reduce its costs, they said.

  As well as hands-free sets, the company has also started production of backlight module drivers, called PT inverters, for thin film transistor liquid crystal display screens.

  Backlight modules emit light from the back of an LCD screen to light up the panel. Compared to the traditional inverters, the Everspring version is smaller, more efficient, and cheaper, according to a recent analysis report by Barits Investment Services.

  With TFT-LCD output set to rise over the coming months as more production lines come into operation, demand for screen components such as backlight components is expected to increase, analysts said.

  As a result, while security systems continue to be the main source of Everspring's revenue, contributions from products such as the PT inverter will grow.

  "We hope 30 percent of revenue will come from the new products next year," said Ting.

  Meanwhile, revenue from the company's security systems and accessories continues to grow. "The average margin for security alarm devices is about 28 percent," said Ting.

  "Traditionally, the market grows 10 percent every year," he said.

  Everspring's revenue for August, released yesterday, hit a record NT$200 million, 88 percent up on the same month a year ago, on the back of strong demand in Europe for security-related products.

  Last week, the company announced net income for the six months ended June 30, 2000 of NT$648.70 million, up from NT$254 million for the same period last year.

  The traditionally strong season for security products and the introduction of new products over the third and fourth quarter should see the company make NT$6.5 per share in after-tax profit for the year, Everspring said in a statement.

  Tachan Securities' Wu agrees with the prediction. "With its low capitalization and a target EPS of NT$6.5, it's a good buy," said Wu.

  The company's relatively rosy outlook has rubbed off on its share price.

  The stock rose 2.3 percent yesterday to NT$133.5. Turnover of 21.23 million was its highest since the beginning of June.

  The stock has risen nearly 104 percent in the past year.
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