TPK Holdings Co (宸鴻) yesterday posted a net profit for last quarter because of improved gross margin and narrowed losses from subsidiary Cando Corp (達鴻).
The touchpanel maker, which counts Apple Inc as its top client, posted a profit of NT$129 million (US$4.26 million), or NT$0.39 per shares, compared with a net loss of NT$1.61 billion in the fourth quarter of last year, the company’s financial statement showed.
Gross margin rose to 10 percent last quarter from 7.2 percent a quarter ago.
Non-operating losses, primarily from Cando, shrank to NT$191 million last quarter from losses of NT$1.22 billion the previous quarter, the company said.
“In the second quarter, most customers are still digesting inventory after the Christmas shopping season. However, we are aggressively sampling new products for customers,” ahead of new product launches in the second half of the year, TPK chief financial officer Freddie Liu (劉詩亮) told investors.
Revenue is expected to grow up to 5 percent sequentially this quarter from last quarter, when sales hit their weakest level in nine quarters at NT$26.62 billion, Liu said.
Operating profit margin will be unchanged at 1 percent this quarter due to price decline, he said.
“The first half is the adjustment period for the company in capacity and technology. We are confident about the second-half operation as customers will roll out new products for handsets and notebook computers,” Liu said.
TPK plans to start production at a new US$500 million factory in China in September, which will manufacture touchpanels used in smartphones, tablets and notebooks, Liu said.
Liu said the factory’s products would be the cheapest in the industry.
Henry Yen (顏志龍), senior research officer at Masterlink Securities Investment Advisory Co (元富投顧), said TPK’s revenue forecast for the current quarter was largely in line with market expectations.
“It is disappointing that TPK gave a vague message about potential orders for Apple’s new iPad and iPhone, which are widely watched by the market,” Yen said.
TPK is a major touchpanel supplier for Apple’s iPads. The company also makes touchpanels for handsets, using touch-on-lens technology, which is different from in-cell technology.
NPD DisplaySearch said last week that Apple did not plan to give up existing in-cell touchpanels for its new smartphones, indicating the likelihood that TPK will be able to regain smartphone touchpanel orders from Apple is slim.
Last quarter, Apple accounted for 47 percent of TPK’s revenue, down from 50 percent three months ago, according to the firm.
Talking about growth momentum, TPK president Tom Sun (孫大明) said 4G smartphones and wearable devices would give a boost to TPK’s operation in the second half of the year.
“This is the first time we have offered services for wearables,” Sun said. “The arrival of the 4G era will spur replacement handset demand.”
Demand from notebooks will increase as touchpanel notebook penetration is forecast to rise to 22 percent this year from 9.9 percent last year, Sun said, citing a projection from NPD DisplaySearch.
TPK expects to see a significant revenue contribution from touchpanels for automobiles in 2016 after winning orders from major car makers in France and Germany.
The company supplies touchpanels to electric car maker Tesla Motors Inc.
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