Yageo Corp (國巨), the nation’s 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.
GLOBAL LEADER
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.
TIGHTENING MARKET
“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.
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