Compeq Manufacturing Co (
The readjustment upward came as no surprise after the company had run up NT$16.3 billion in revenue for the first 10 months of the year. Rather, the new forecast met or fell below market expectations.
"It's not a big rise," said Morris Chen, a research analyst at China Securities Co. "Revenue is coming from non-operating income" in the fourth quarter, he said, adding that quarter by quarter, the new projection showed that the company's fourth-quarter profit margin would fall.
The depreciation of the New Taiwan dollar was one significant factor that increased the company's non-operating income and led to the adjusted forecast, said S. C. Hong, spokesman at Compeq. Instead, of rising, as had been expected, Taiwan's currency has fallen from a peak of NT$30.3 at the beginning of April to nearly NT$32.3 now.
A changed product mix was also a key factor in higher than expected profit margins, said Hong. Listed companies must revise their financial forecasts in accordance with regulations if they expect pre-tax profit to show a 20 percent difference from the original forecast.
Last year, 90 percent of Compeq's revenue came from the sale of PC-related printed circuit boards. Six percent came from tele-com-related printed circuit boards. The boards connect electronic signals between chips and other electronic components via copper pathways.
This year, while PC-related printed circuit board sales should account for a fifth of Compeq's annual revenue, the portion from telecom-related boards will grow to 30 percent of annual sales, said Hong. Major customers include Ericsson, Nokia, Siemens and Acer Communications and Multimedia Inc.
Analysts predict Compeq's sales of telecom-related printed circuit boards will reach above 35 million units this year, or about 10 percent of total world sales. Next year's shipment of at least 75 million units, which could account for 15 percent of world sales, will be the driving force behind the expected 30 percent to 40 percent annual revenue growth for the company, analysts said.
"Revenue from the high density interconnection handset section should double next year," said Jennifer Chen, an analyst at Taiwan International Securities Corp, who is predicting an earnings per share next year of NT$6.5. Meanwhile, "Revenue from the Intel flip chip division should be stable," she said.
Compeq has been ramping up production of flip chip integrated circuit substrates for Intel's central processing units throughout the year. The division broke even at the end of the second quarter and has been a significant factor in the company posting consecutive record monthly revenues for the past five months, analysts said.
However, revenue growth from the division looks set to settle down following rumors last month that Intel Corp was cutting orders due to lower than expected PC demand. Compeq denied the rumors, saying orders had not been reduced.
Still, Intel also wasn't increasing orders, as many analysts had previously anticipated.
"We are continuing to produce within the original range," said Hong.
So while Compeq's readjusted financial forecast announced yesterday failed to surprise the market, it at least reassured it about the limited impact of Intel's readjusted order plans.
"Fourth quarter revenue might have fallen," said Jennifer Chen. Instead, the new financial forecast shows that Intel's flip chip orders "will have no big effect on revenue," she said.
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