Epistar Corp (晶電), the nation’s No. 1 LED chipmaker, yesterday reported a net loss of NT$2.65 billion (US$80.62 million) for last quarter, due to soft demand for backlight devices and falling lighting product prices.
The poor showing prompted Hong Kong-based brokerage CLSA to cut its target price for Epistar.
Last quarter’s results widened Epistar’s full-year loss to NT$3.01 billion, or a loss of NT$2.81 per share, from a net income of NT$1.81 billion the previous year, according to the firm’s stock exchange filing.
Epistar’s operating margin slipped into negative territory of minus-13.76 percent last year from the 8.62 percent recorded the previous year, while its gross margin plummeted to 0.48 percent from the previous year’s 19.04 percent.
“We lowered our target price from NT$27.58 to NT$24.3 on the company’s lower book value per share due to bigger-than-expected losses,” CLSA analyst Skyle Chen (陳淑玲) said in a client note.
Affected by intensified price competition, Epistar’s gross margin dropped further to minus-16.3 percent last quarter from minus-5.2 percent in the previous quarter, while its utilization rate fell to between 60 percent and 70 percent, Chen said.
In a bid to diversify into new markets, the company worked with TrueLight Corp (光環科技) for epi-wafers and produced LEDs for automobile headlights, which resulted in an 8 percent quarterly increase in operating expense last quarter, Chen said.
Epistar’s management said that after selling three of the company’s factories and shifting its focus to more profitable products, the company expects to see cost savings this quarter, with its gross margin breaking even this month and next month from last quarter’s minus-16.3 percent.
However, as global LED demand has not shown any signs of a recovery, the oversupply will continue to pressure Epistar’s stock price, Chen said.
The analyst forecast that Epistar would post a gross margin of minus-0.9 percent and operating margin of minus-13.6 percent this year.
Epistar’s combined revenues fell 10.64 percent year-on-year to NT$3.82 billion in the first two months of this year, compared with last year’s NT$4.28 billion, according to the firm’s filing.
Shares of Epistar dropped 2.59 percent to NT$26.35 in Taipei trading yesterday.
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