Yageo shares fall despite profit

source: Taipei times news

BEATING ESTIMATES:First Capital Management Inc said that the firm’s gross margin was more than the 46 percent it predicted and raised its revenue forecast for Yageo.

Yageo Corp (國巨), the world’s biggest supplier of chip resistors, saw its shares fall by 8.61 percent yesterday, despite posting another record-breaking quarterly net profit as it hiked its prices due to supply constraints.

In the quarter that ended on March 31, Yageo made NT$4.26 billion (US$144 million), which was more than the company’s share capital of NT$3.51 billion. That represented a 4.3 times increase from NT$818.4 million in the first quarter of last year.

On a quarterly basis, net profit jumped 40 percent from NT$3.02 billion. Earnings per share surged to NT$12.15 last quarter, compared with NT$1.62 a year earlier and NT$8.62 the previous quarter. Gross margin climbed to a record high of 51.4 percent last quarter, mainly driven by rising contributions from high-end products for cars and industrial devices.

A persistent tight supply of multilayer ceramic capacitors (MLCC) and chip resistors also helped, Yageo said in a company statement on Tuesday.

The firm’s figures for last quarter beat some analysts’ expectations. First Capital Management Inc (第一金投顧) yesterday said that Yageo’s gross margin beat its estimate of 46 percent and its earnings per share were also higher than the NT$10.13 it anticipated.

“The significant increase in last quarter’s net profit is primarily attributable to the newly unveiled pricing scheme for MLCC,” First Capital said in a research note.

MLCC accounted for 60 percent of Yageo’s revenue totaling NT$11.02 billion in the first quarter of this year, delivering a gross margin of about 60 percent, the investment consultancy said.

First Capital raised its revenue forecast for Yageo to NT$51.8 billion from NT$47.9 billion, in anticipation that the supply crunch would worsen after Japan’s Kyocera Corp announced its decision to stop supplying standard-type MLCC, it said. This would prompt Yageo to start a new round of price hikes later this year, it added.

Yageo shares dropped to NT$584 yesterday in Taipei trading, but they have rallied about 65 percent since Jan. 2, when the stock closed at NT$354. The firm is expected to boost capacity by between 25 and 30 percent this year to cope with robust demand, Taishin Securities Investment Advisory Co (台新投顧) said.

“The capacity expansion should help increase Yageo’s revenue this year,” Taishin Securities Investment Advisory said in a research note yesterday. “We expect supply of passive components to be tight during the second half of this year based on information from the supply chain.”

The investment advisory expects Yageo to make NT$49.63 billion in revenue this year, representing year-on-year growth of about 54 percent. Yageo last month said it spent NT$12 billion in the final quarter of last year to expand its capacity to cope with rising demand. Given its rosy profit outlook, Taishin Securities Investment Advisory and First Capital raised the target price of Yageo to NT$720 and NT$756, respectively, until December.

 

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