Catcher Technology Co (可成), the nation’s leading supplier of light metal casings and enclosures for mobile devices, said that its gross margin would return to about 30 percent after its profitability gauge had remained at about 23 percent in the first three quarters of the year.
The company’s confidence is based on a variety of factors, including inventory digestion, the popularity of the new iPhones and a high utilization rate, the Chinese-language Liberty Times (the sister newspaper of the Taipei Times) reported yesterday.
At a meeting with analysts on Thursday, Catcher chairman Allen Hung (洪水樹) said that the biggest impact on the company’s operations this year was smartphones, the report said.
At the end of last year, it was forecast that there would be high demand for casings this year, Hung said, but it turned out just the opposite and the company had to address issues such as high inventory, low utilization rates, rising production costs and declining gross margin.
In the first three quarters of the year, Catcher posted net income of NT$7.82 billion (US$256.07 million), or earnings per share of NT$10.15, a decrease of 62.84 percent year-on-year, while gross margin decreased 18.05 percentage points from a year earlier to 23.7 percent, the company’s financial statement showed.
“It has been a stressful year, but what you can see is that the worst has now passed,” Hung said, adding that there is clear order visibility through early next year on the back of demand for iPhones and 5G smartphones.
As of the third quarter, Catcher had allotted NT$3.1 billion to capital spending, significantly less than the NT$11 billion it spent last year, Hung said.
Depreciation and amortization would begin to decline next year, which would help to boost profits, he said.
Yuanta Securities Investment Consulting Co (元大投顧) analyst Nicole Tu (塗景婷), who attended the analyst briefing, said the company also gave a guidance on its projects in the automotive segment.
Catcher would start shipments of the products in the next one to two quarters, and forecast growth in sales next year, she said.
“Good demand for iPhones and the trend toward 5G should drive strong year-on-year revenue growth from the fourth quarter of this year to next year. Additionally, the 5G trend will likely bring an upside for casing average selling prices owing to the higher number of antenna modules inside smartphones, as well as heat dissipation issues, which increases the complexity of the casing design,” Tu said in a client note. “Even with a limited contribution next year, we believe its auto segment should be stable and profitable in the long term.”
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