Catcher Technology Co (可成), the nation’s leading supplier of light metal casings and enclosures for mobile devices, last week reported weaker-than-expected financial results for last year, as well as falling sales in the first two months of this year.
Net income dropped 59.7 percent year-on-year to NT$11.27 billion (US$373.06 million), or earnings per share of NT$14.63, after revenue decreased 4 percent to NT$91.63 billion, the company said in a regulatory filing on Tuesday last week.
Gross margin of 24.3 percent and operating margin of 15.4 percent were both lower than a year earlier due to sliding capacity utilization and reduced prices.
Cumulative revenue in the first two months of this year was NT$9.93 billion, up 18.8 percent from NT$20.41 billion in the same period last year, but last month’s revenue plunged 41.3 percent year-on-year and about 74 percent month-on-month to NT$2.02 billion, the lowest in nine years, company data showed.
Catcher said that its revenue performance was due mainly to the COVID-19 outbreak, as disease-prevention policies hampered its operations and logistics.
JPMorgan Securities (Taiwan) Ltd (摩根大通證券) said that Catcher’s revenue for this month should recover from the previous month thanks to an improving rate of workers returning to production lines at its plants in China.
However, it might still be shy of market consensus estimates by a “big shortfall,” JPMorgan said in a note on Wednesday, without elaborating.
Yuanta Securities Investment Consulting Co (元大投顧) said the company’s lower production scale amid the COVID-19 pandemic could lead to a lower-than-expected gross margin this quarter.
“However, we believe its low gross margin from last year should recover in 2020, with likely better-than-expected iPhone 11 sales, while its high confidence in its business relationships with major clients will enable it to see iPhone shipment growth,” Yuanta said in a note to clients on Tuesday.
Meanwhile, China-based Luxshare Precision Industry Co (立訊精密) is rumored to be expanding its presence in Apple Inc’s iPhone assembly business by as early as next year, with Catcher likely a major partner for metal casing and frame manufacturing, Chinese-language media reported.
Yuanta said that Catcher’s position in Apple’s casing supply chain should remain stable if Luxshare makes the move.
However, JPMorgan said it would not necessarily be a positive development for Catcher, due to potential regulatory approval headwinds and downside risks for market share dynamics.
Catcher shares fell 19.62 percent for the whole of last week and have dropped 16.08 percent so far this year.
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