TPK Holding Co Ltd (宸鴻) yesterday said its net profit almost doubled to NT$591 million (US$20.23 million) last quarter compared with a year ago as it shipped more higher-priced touchpanels for premium smartphones.
This helped the company’s full-year bottom line return to profit after two straight years of losses.
However, the growth momentum is subsiding as the smartphone industry enters its slow season this quarter, TPK chief strategist Freddie Liu (劉詩亮) said in a teleconference.
Short-term headwinds would reduce the company’s revenue by between 35 and 40 percent to between NT$20.5 billion and NT$21 billion, compared with NT$32.87 billion in the final quarter of last year, Liu said.
The company was originally expecting to beat the seasonal slowdown and post a flat first quarter, based on the assumption that its major customer’s new product might gain traction following a belated launch, Liu said.
The seasonal weakness is expected to drive factory utilization lower, with the company’s operating profit breaking even, Liu said.
Despite the hurdles, TPK will endeavor to eke out a profit this quarter through cost improvement and production efficiency, he said.
“With new products entering mass production in the second half, we believe that growth in the second half would be more significant [than the first half],” he said.
“We still believe revenue would grow this year, but it would be very challenging to keep net profit at last year’s level due to intensifying competition,” he added.
To cope with clients’ new demand, TPK plans to boost capital spending by 62 percent to NT$7.5 billion this year from NT$4.63 billion last year, by adding new manufacturing equipment.
The company will continue to invest in on nano-silver touchpanel technology in anticipation of demand for the new type of touchpanel technology, which goes with flexible OLED screens for smartphones, Liu said.
“If we can commercialize the nano-silver technology as soon as possible, it would become a major driver for the company in 2019,” he said.
Customers from the US, China and South Korea have shown strong interest in the technology, he said.
By 2020, the flexible OLED market is estimated to reach US$20 billion, Liu said.
During the final three months of last year, net profit expanded to NT$591 million from NT$296 million in the corresponding period of 2016, after TPK rejoined the supply chain for Apple Inc’s iPhone last year, company data showed.
That translated into earnings per share (EPS) of NT$1.53, up from NT$0.89 a year ago.
On a quarterly basis, net profit slumped 32 percent from NT$870 million, or EPS of NT$2.37, in the third quarter last year.
Gross margin improved to 6.7 percent last quarter from 5.5 percent a year ago. It represented a decline from 8.6 percent in the third quarter last year.
For the full year, TPK swung back to net profit of NT$2.4 billion, or EPS of NT$6.63, from the previous year’s net loss of NT$1.47 billion, or minus-NT$4.27.
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