Simplo Technology Co (新普科技), the world’s largest battery pack supplier for laptops, tablets and smartphones, said that it would continue to focus on the non-information technology (IT) segment this year to further improve profitability.
Profits in the non-IT segment, including battery packs for electric bicycles, batteries for automation equipment and lithium-based back-up units (BBUs) for data centers, are more than double those of the IT segment, the Hsinchu-based company said.
Over the next five years, the company hopes to boost non-IT sales to between 20 and 30 percent of total sales, thus increasing gross margin and earnings per share, Simplo chairman and chief executive officer Raymond Sung (宋福祥) said in a statement on Thursday.
“Data centers represent a huge market for BBUs over the next five years, but it requires repetitive certification testing, because data centers have complicated software systems and security considerations,” Sung said.
“Simplo is sending samples to potential customers and we expect BBU sales to data centers to contribute to our bottom line in the second half of this year,” he said.
The firm expects Intel Corp’s CPU shortage to negatively impact the IT segment into the third quarter, and plans to focus on industrial products, weaning itself off of notebook computer sales, he said.
Simplo primarily supplies battery packs for Apple Inc’s products, but said that Apple’s sales performance is as important as the performance of other customers, it said.
Performance this year is expected to top last year’s NT$64.45 billion (US$2.09 billion) in consolidated revenue, as sales are expected to grow every quarter, Sung said.
Simplo reported net income of NT$3.21 billion last year, up 22.48 percent annually, or earnings per share of NT$17.35, up from earnings per share of NT$10.18 in 2017.
Simplo’s gross margin was 10.37 percent and operating margin hit 6.15 percent, up from 8.8 percent and 4.49 percent respectively in 2017.
Intel’s CPU shortage would weigh on notebook computer shipments of major brands and negatively impact Simplo’s business, Yuanta Securities Investment Consulting Co (元大投顧) said.
“However, benefiting from a Japanese competitor’s exit from the notebook battery market and more orders from makers of mid and high-end notebooks, Simplo has seen higher-than-average selling prices and a higher number of shipments, resulting in better-than-expected sales and earnings last year,” Yuanta analyst Calvin Wei (魏建發) said in a note on Thursday.
Greater environmental awareness is prompting the lead-acid batteries in uninterruptible power supplies (UPSs) to be replaced with lithium batteries, Wei said.
“Simplo started shipping a small number of UPS systems with lithium batteries last year and this year, and expects that number to increase substantially next year,” he said.
Simplo’s board of directors on Wednesday approved a cash dividend of NT$2.13 billion, or NT$11.5 per common share — the highest in the company’s history — which would represent a payout ratio of 66.28 percent.
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