With no clear indications of a turnaround in the short term, Epistar Corp (晶電) could report another unprofitable year amid a slow recovery in revenue growth, Capital Investment Management Corp (群益投顧) said.
“We estimate Epistar’s revenue will expand slightly by 1.61 percent annually to NT$25.92 billion [US$808.23 million] this year, with a loss of NT$2.09 per share,” Capital Investment said in a client note on Thursday last week.
Epistar has been making an effort to reduce its operational costs and is reaching out to non-LED applications businesses, after the nation’s leading LED chipmaker reported a net loss of NT$3.01 billion, or a loss of NT$2.81 per share, for last year.
A supply glut in the industry, caused by production capacity expansion in China, made Epistar’s net loss last year the largest in the company’s history, company data showed.
The company has reduced its production capacity by 25 percent since the fourth quarter of last year, with the number of metalorganic chemical vapor deposition machines cut to 375. The company has been phasing out obsolete machines and has centralized its production lines in the second quarter in a move to lower its annual costs by NT$400 million this year, Capital Investment said.
In the mean time, Epistar has diversified its business scope by increasing investments in power device components for non-LED applications since the beginning of this year, while its investments in automotive daytime running lamps could help it gain orders next year, Capital Investment said.
However, Epistar still faces an excess supply in LED chips despite a mild recovery in demand this year, the brokerage said.
Epistar reported revenue of NT$12.61 billion for the first half of this year, down 5.98 percent from NT$13.41 billion in the same period last year, its data showed.
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