Radiant Opto-Electronics Corp (瑞儀光電), which was added to the MSCI Taiwan Index earlier this month, is expected to maintain its leadership in the global backlight module business as mobile devices become thinner, lighter and higher-resolution, Credit Suisse said yesterday.
Radiant, a Greater Kaohsiung-based LCD backlight module supplier, should continue to secure a more than 70 percent share of backlight modules for Apple’s tablet devices given the company’s “optical expertise and in-house design/production capability,” Credit Suisse analyst Jerry Su (蘇厚合) said in a client note.
“Taiwanese panel makers are -losing market share to [South] Korean counterparts, but Taiwanese backlight module makers are gaining market share on better cost structure and technology,” Su wrote.
INTEGRATION
Oversupply and falling prices have caused Taiwan’s two biggest LCD firms — Chimei Innolux Corp (奇美電子) and AU Optronics Corp (AUO, 友達光電) — to report losses for the past three quarters, prompting the government to consider industry integration or a merger in a bid to better compete with Samsung Electronics Co and LG Display Co.
In the first three quarters of the year, AUO posted NT$40.59 billion (US$1.33 billion) in losses, while Chimei saw its losses reach NT$44.45 billion over the same period, the companies’ data showed.
CAPITAL INJE
Council for Economic Planning and Development Minister Christina Liu (劉憶如) said last week that the government would invest part of the NT$200 billion National Development Fund (國發基金) in the nation’s top industries, including the LCD industry.
Backlight makers are enjoying better profits than the LCD industry, Credit Suisse said, adding that the thinner and lighter designs of tablet devices and ultrabook computers, as well as higher LED proliferation in monitors and TVs, “require more optical and mechanical expertise, rather than just assembly know-how.”
The Swiss brokerage said it expected Radiant to earn between 30 percent and 35 percent of its revenue and between 45 percent and 50 percent of its profits from Apple’s iPad and MacBook Air next year.
Radiant, which has three operational facilities in China and one in Taiwan, reported a gross margin of 9.7 percent in the third quarter after posting 11.7 percent and 10.1 percent in the previous two quarters.
Gross margin is expected to increase slightly to 9.8 percent this quarter and reach 10.4 percent for the whole of this year, Credit Suisse estimated.
This year’s net income might reach NT$4.16 billion, or NT$9.48 in earnings per share, and NT$5.04 billion, or NT$11.5 per share, for next year, compared with NT$2.6 billion, or NT$5.9 per share, last year, it said.
Radiant earned an “outperform” rating from Credit Suisse, with a target price of NT$121, which implies a 36.3 percent upside from yesterday’s closing price of NT$88.8.
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