Source: Digitimes news
Updated, May 15, 2018. Yageo Corp (國巨), Taiwan biggest supplier of passive components, reported that net profit increased 583 percent year-on-year to NT$2.61 billion (US$87.7 million) last month, as revenue nearly doubled from the same period a year earlier.
The jump represents earnings per share of NT$7.43, an annual increase of 878 percent, and earnings per share of NT$12.15 in the first quarter, a quarterly increase of about 61 percent, Yageo said in a filing to the Taiwan Stock Exchange (TWSE) on Friday last week.
Consolidated sales reached NT$4.84 billion last month, up from NT$2.43 billion in the same period a year earlier, the filing showed.
The Sindian District (新店), New Taipei City-based company, which has since last year seen robust sales growth due to its global leadership in chip resistors and multi-layered ceramic capacitors (MLCCs), released the monthly results at the request of the stock exchange regulator due to an unusual spike in its stock price in recent sessions.
Shares fell 1.78 percent to NT$830 on Friday last week in Taipei trading, but rose 23.15 percent for the week, TWSE data showed.
The stock has jumped 135.13 percent this year, increasing the company’s market value to NT$290.97 billion, an increase of NT$193.3 billion from the beginning of this year, the data showed.
Yageo is the largest chip resistor maker in the world, with a 34 percent market share, and the third-largest MLCC supplier. Essential for regulating electrical flows, the components are widely used in smartphones and automotive electronics, as well as in applications for the industrial Internet of Things.
Analysts said prices of passive components have been rising since last year as Chinese suppliers scale down production amid Beijing’s tightened pollution controls and as leading Japanese manufacturers such as Murata Manufacturing Co focus more on automotive-use MLCCs.
The shortage of passive components is expected to persist into next year, Capital Investment Management Corp (群益投顧) analyst Ray Tsai (蔡睿) said.
“Outside of Taiwan, major makers of MLCCs and chip resistors have persistently reduced outputs or raised prices of products featuring certain specs, leading to increasingly tighter supply-demand conditions in the market. Therefore, we optimistically expect shortages of MLCCs and chip resistors to persist into next year,” Tsai said in a note on Thursday.
Robust developments in advanced driver-assistance systems, electric vehicles, 5G applications and the industrial Internet of Things could significantly boost demand for mid and high-end passive components and serve as long-term drivers following the shortage, he added.
Lingering expectations of further price increases due to limited capacity could continue to serve as a growth catalyst for Yageo into next year, as major players in the market might need up to 12 months to procure the equipment needed for capacity expansion, BNP Paribas SA analyst Laura Chen (陳佳儀) said.
“The passive components upcycle is forecast to continue for at least one to two years,” she said.
Yageo announced consolidated revenues for April 2018 surged 99% from a year earlier to NT$4.84 billion (US$162.6 million). Yageo’s revenues totaled NT$15.86 billion for the first four months of 2018, rising 71.5% on year.
Yageo indicated revenues for April 2018 reached a record high, driven by the arrival of new production capacity for niche-market products, continued ramp-up in customer demand and a pick-up in orders for high-end smartphones from the Greater China region.
April shipments to all regions registered sequential increases, said Yageo, adding that shipments for all product applications also grew on month. Yageo specializes in MLCCs and chip resistors.
In addition, Yageo expects sales generated from the car electronics and industrial control segments to climb as a proportion of company revenues in 2018. Meanwhile, robust demand for high-end products will make a further positive contribution to its performance during the year.
Yageo disclosed previously plans to expand production capacity for MLCCs to 50 billion units a month in the third or fourth quarter of 2018, up from 40 billion units at the end of 2017. Yageo will also expand production capacity for chip resistors to 120 billion units in September 2018, up from 90 million units at the end of last year.
Inductor specialist Chilisin has announced consolidated revenues for April 2018 increased 21% from a year ago to NT$1.22 billion. Growing shipments of laminated products, large- and small-size molding chokes and wire-wound inductors led to the 6.5% on-month growth in April revenues, the company said.
Chilisin has expanded its product lines and customer base through the 2017 acquisitions of chip resistor maker Ralec and ferrite cores supplier Ferroxcube, as well as an equity investment in China-based Yuanling Xianghua Electronic, a provider of inductors and ferrite materials. Chilisin is also looking to complete its acquisition of fellow power inductor company Mag.Layer Scientific Technics later in 2018.