Novatek Microelectronics Corp (聯詠) expects revenue and earnings to continue to increase this quarter on the back of a better product mix, the company said on Thursday after posting better-than-expected financial results for last quarter.
Novatek designs chips used in flat-panel displays and multimedia applications.
The Hsinchu-based company told an investors’ conference that its revenue in the July-to-September quarter is likely to rise to between NT$37.8 billion and NT$38.8 billion (US$1.36 billion and US$1.40 billion) from NT$34.11 billion three months earlier.
Photo: Grace Hung, Taipei Times
Novatek expects gross margin to expand to 48 to 51 percent and operating margin increase to 33 to 36 percent this quarter, on the back of continued product mix adjustments and product price hikes.
The company has been improving its product mix of large display driver ICs (DDI), system-on-chip solutions for TV controllers and OLED DDIs.
It reported gross margin of 50.33 percent and operating margin of 35.16 percent in the April-to-June quarter, both exceeding guidance and increasing significantly from the prior quarter and the previous year.
Net profit was NT$9.79 billion in the second quarter, up 66.57 percent quarter-on-quarter and 282.76 percent year-on-year, the company said. Earnings per share (EPS) were NT$16.08, compared with NT$9.66 the previous quarter and NT$4.20 a year earlier, it said.
In a note to its clients on Friday, Cathay Futures Consultant Co (國泰證期顧問) retained its “buy” rating on Novatek and set its 12-month target price on the stock to NT$774.
Cathay revised upward its EPS forecast for the company to NT$60.08 for this year, up 8.49 percent from its previous estimate, and adjusted its next-year EPS target to NT$64.49, also up 6.21 percent from its estimate before.
“Work from home and learn from home have evolved into a long-term trend, and it will still take 2 to 2.5 years for semiconductor companies to have extra production capacity. Basically, there is no immediate solution to the capacity constraint in the overall supply chain,” Cathay said in its note on Friday.
“As far as IC designers are concerned, how to obtain production capacity has become the biggest issue. Even if there are some doubts about the outlook for [the] flat panel sector, the tight capacity will still keep DDI average selling prices at high levels,” it said.
Novatek shares closed 1.75 percent lower at NT$560 on Friday in Taipei trading. They have advanced 51.76 percent so far this year.
Cathay’s target price for Novatek compares with Taishin Securities Investment Advisory Co’s (台新投顧) NT$660, Capital Investment Management Corp’s (群益投顧) NT$619 and Yuanta Securities Investment Consulting Co’s (元大投顧) NT$870.
Several foreign brokerages last week also raised their target prices for Novatek, after the company’s gross margin last quarter exceeded 50 percent and its optimistic outlook for this quarter eased market concerns about the near-term outlook for its shipments, which have been capped by a tight supply of components since last year, especially wafers.
Among the foreign brokerages were Goldman Sachs Group Inc, which set a stock price of NT$1,049, JPMorgan Securities Ltd with NT$700, Nomura Holdings Inc with NT$720 and Morgan Stanley with NT$414.
With improved prospects for Novatek’s profit margins, Goldman Sachs raised the company’s EPS forecast to NT$56 this year and NT$55 next year, while JPMorgan adjusted upward its forecast to NT$61 for this year and NT$64 next year.
In Italy’s storied gold-making hubs, jewelers are reworking their designs to trim gold content as they race to blunt the effect of record prices and appeal to shoppers watching their budgets. Gold prices hit a record high on Thursday, surging near US$5,600 an ounce, more than double a year ago as geopolitical concerns and jitters over trade pushed investors toward the safe-haven asset. The rally is putting undue pressure on small artisans as they face mounting demands from customers, including international brands, to produce cheaper items, from signature pieces to wedding rings, according to interviews with four independent jewelers in Italy’s main
Japanese Prime Minister Sanae Takaichi has talked up the benefits of a weaker yen in a campaign speech, adopting a tone at odds with her finance ministry, which has refused to rule out any options to counter excessive foreign exchange volatility. Takaichi later softened her stance, saying she did not have a preference for the yen’s direction. “People say the weak yen is bad right now, but for export industries, it’s a major opportunity,” Takaichi said on Saturday at a rally for Liberal Democratic Party candidate Daishiro Yamagiwa in Kanagawa Prefecture ahead of a snap election on Sunday. “Whether it’s selling food or
CONCERNS: Tech companies investing in AI businesses that purchase their products have raised questions among investors that they are artificially propping up demand Nvidia Corp chief executive officer Jensen Huang (黃仁勳) on Saturday said that the company would be participating in OpenAI’s latest funding round, describing it as potentially “the largest investment we’ve ever made.” “We will invest a great deal of money,” Huang told reporters while visiting Taipei. “I believe in OpenAI. The work that they do is incredible. They’re one of the most consequential companies of our time.” Huang did not say exactly how much Nvidia might contribute, but described the investment as “huge.” “Let Sam announce how much he’s going to raise — it’s for him to decide,” Huang said, referring to OpenAI
The global server market is expected to grow 12.8 percent annually this year, with artificial intelligence (AI) servers projected to account for 16.5 percent, driven by continued investment in AI infrastructure by major cloud service providers (CSPs), market researcher TrendForce Corp (集邦科技) said yesterday. Global AI server shipments this year are expected to increase 28 percent year-on-year to more than 2.7 million units, driven by sustained demand from CSPs and government sovereign cloud projects, TrendForce analyst Frank Kung (龔明德) told the Taipei Times. Demand for GPU-based AI servers, including Nvidia Corp’s GB and Vera Rubin rack systems, is expected to remain high,
RSS