EVERLIGHT Will Witness Growth in 2H17 but Profit of the Year Might Still Fall

LED package giant EVERLIGHT reported a solid 2Q17 revenue and profit better than that in 1Q17, yet worse than that in the prior year period. The product mix adjustment and price wars are said to account for the annual decline in EVERLIGHT’s finance. Besides, its new capacity is yet to contribute.

Consolidated earnings per share (EPS) of 1H17 reached NTD 1.56 per share, down 23.5% YoY. In 2H17, the demand in the traditional peak season is predicted to soar and boost both EVERLIGHT’s revenue and profit. However, EVERLIGHT’s consolidated revenue of 2017 is still expected to witness an annual slide, compared with that in 2016, due to the low revenue in the reference period 1H17.

(Image: LEDinside)

EVERLIGHT is a huge LED packaging manufacturer. In the face of threats from Chinese competitors, recently EVERLIGHT has been actively adjusting its product mix in hope to stabilize its gross margin. However, the gross margin in 2Q17 dropped at 22.7%, with a dip over 2% year over year. It is mainly because of the great pressure under the price competitions of major commodities such as LED backlights and lighting.

The company chose to be selective on orders they receive. It gives up on low-margin products and continues to reduce the proportion of capacity in the products of traditional backlight and lighting. It attempts to develop applications for the niche markets, including automotive lighting, flashes, video walls and infrared LED. Among them, automotive lighting ranges across turn signals, in-car lighting, dashboard backlighting, ambient lighting, rear lights and head lights.

In terms of the development of automotive lighting business, Everlight invested in setting up new factories in Tongluo, Miaoli. The construction finished in 2H16 and the mass production started in 2017.

EVERLIGHT's revenue in 2Q17 bounced back to NTD 6.99 billion, up 4% QoQ but down 1.8% YoY. Its seasonal gross margin dropped to 22.7%, down 2.4 % YoY. EPS for this quarter was about NTD 0.85, down 16% YoY. The consolidated EPS of 1H17 was NTD 1.56, down 23.5% YoY. Diluted EPS was NTD 1.34.

The 3Q17 revenue might recoup to above NTD 7 billion due to the demand in the traditional peak season. However, the annual revenue of 2017 might be lower than that in 2016, with an annual decrease of a double-digit percentage.

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