Lextar Electronics Corp (隆達電子), an LED manufacturing arm of AU Optronics Corp (友達光電), yesterday said its sales for this quarter could drop by a single-digit percentage from last quarter, but that it expects sales for next quarter to increase by double digits.
That prompted Yuanta Securities Corp (元大證券) to forecast that Lextar’s sales would grow 20 percent to about NT$16.5 billion (US$544 million) this year from last year, citing the company’s upbeat guidance for the LED industry.
Lextar’s shares closed down 0.14 percent at NT$34.5 yesterday, underperforming the benchmark TAIEX, which gained 0.43 percent.
Lextar is a vertically integrated LED producer, with businesses ranging from epitaxial wafer manufacturing to chip packaging and module and system assembly. Its end products include backlight units and lighting items.
In a meeting with investors, Lextar said it expects sales for the current quarter to contract by between 3 percent and 5 percent from last quarter.
Revenue for next quarter could increase by 25 percent sequentially, the company said.
The company’s latest sales guidance came after Lextar forecast sales contribution from its LED lighting product contract-manufacturing business would increase to account for 40 percent of its total sales this year, up from a 30 percent share last year, on the back of rising demand for LED lighting product in the global market.
Sales of components used to make LED lighting products are also expected to take off this year, supported mainly by increased capacity at the company’s plants in China’s Suzhou City, Lextar said.
With increased sales from its LED lighting product contract-manufacturing business, Lextar’s gross margin is estimated to improve to 14.6 percent this year, while the company’s earnings per share (EPS) are forecast to reach NT$1.6, Yuanta analyst Andrew Chen (陳治宇) said in a note.
Last quarter, Lextar saw its net profit drop by 81.3 percent to NT$33 million (US$1.09 million), or earnings per share of NT$0.09, for last quarter due to seasonal factors. The figure fell 42.7 percent year-on-year.
Gross margin and operating margin fell to 10.1 percent and zero respectively from 14.7 percent and 6.3 percent in the previous quarter, due to lower factory utilization and falling prices.
For the whole of last year, the firm's net profit rose 232.4 percent to a record high of NT$948 million, because of “continued moderate improvement in both backlight and lighting applications,” the company said.
Last year’s EPS of NT$1.91 rose 176.8 percent from NT$0.69 in 2012, data showed.
“The company has seen recovery in the LED industry in 2013,” Lextar president Allen Huang (黃登輝) said. “However, fierce competition dragged down prices, so LED makers are losing significant profits through margin erosion.”
Due to intensifying pricing competition, Lextar’s gross margin dropped by 0.4 percentage points to 12.7 percent last year from a year ago, the company’s data showed.
However, the firm’s overall sales performance stayed strong last year, which was attributable to its merger with LED backlight module maker Wellypower Optronics Corp (威力盟) in February last year, Lextar said.
Lextar said its merger with Wellpower Optronics helped expand the company’s client portfolio and also better optimized its capacity utilization last year.
“As the lighting industry is expected to reach 20 percent LED penetration by the end of this year, Lextar is fully prepared to accommodate the surging demands,” the company said.
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