Shares in Everlight Electronics Co (億光), one of Taiwan’s leading LED lighting and product suppliers, moved higher yesterday morning after the company announced on Wednesday that it would invest NT$30 billion (US$943 million) over the next few years to expand production.
The massive investment plan has prompted many investors to believe that Everlight is upbeat about the global LED market outlook, so it is gearing up to raise capacity to meet growing demand, dealers said.
Shares of Everlight dropped 0.14 percent to NT$68.9, erasing gains in early trading yesterday.
“The NT$30 billion investment plan appears encouraging to many investors and has reinforced their faith in Everlight’s earnings outlook after the planned production capacity expansion,” Hua Nan Securities (華南永昌證券) analyst Kevin Su (蘇俊宏) said.
Everlight chairman Robert Yeh (葉寅夫) told the media that the company plans to pour money into the local market over the next three to five years.
The NT$30 billion investment is to be the largest-ever in Taiwan’s LED industry.
The first stage of the investment plan is scheduled to start next year with a NT$10 billion investment, with mass production starting in 2016 to boost production capacity by 25 percent.
Yeh said that Everlight is expected to finalize the location of a new plant in January for the first phase. According to a preliminary estimate, the new production complex could have an area of 17,000 ping (56,198m2).
Currently, Everlight operates production facilities in New Taipei City’s Tucheng District and Miaoli County, while it also owns plants in Suzhou and Zhongshan in China.
Yeh said that in the near future, demand for LED backlighting will continue to rise on the back of solid demand for 4K ultra-high-definition TV panels, which need 50 percent brighter backlights.
“I agree with [Yeh’s] assessment,” Su said. “Large TV screens have been in great demand in the global market and several major flat-panel makers like AUO Optronics Corp (友達光電) and Innolux Corp (群創) have benefited from the trend. LED backlight suppliers, including Everlight, are also riding the uptrend.”
Everlight said that the company is confident in the global LED lighting market, as the penetration rate of LED lighting is continuing to grow.
“The investment plan has made many investors believe that Everlight has anticipated securing large orders in the future, otherwise it would be unlikely to announce such a large project,” Su said. “Everlight has good fundamentals and is a financially sound company.”
In the first nine months of this year, Everlight posted NT$1.63 billion in net profit, up 46.94 percent from a year earlier. Its earnings per share (EPS) for the nine-month period stood at NT$3.83, compared with NT$2.63 in EPS a year ago.
As of September, its debt-to-asset ratio fell to 48 percent from 50 percent registered as of June.
“As many foreign institutional investors have been away from the trading floor during the Christmas holiday, local investors preferred to pick up relatively small-cap stocks, like Everlight, particularly after the new investment plan surfaced,” Su said.
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