Yageo Corp (國巨) has seen its shares suffer a 68.32 percent correction from a high of NT$1,310 on July 3, reflecting investor concerns that rising prices for its passive components might wane sooner rather than later, analysts said.
Although the third quarter had looked like it might be firm’s peak quarter this year, US-China trade tensions could continue to weigh on demand for its products, including multilayer ceramic capacitors and chip resistors, into the fourth quarter, leading to increasing uncertainty about the firm’s earnings outlook in the mid to long-term, they said.
“As pricing pressure on products persists in the fourth quarter and investors’ fund flows and investor structure remain unstable, we have not seen signs that the stock is hitting bottom,” SinoPac Securities Investment Service (永豐投顧) analyst Jacky Wang (王嘉籐) said in a note on Thursday.
Wang offered a “neutral” rating on the stock.
Yageo shares on Friday closed up 6.96 percent at NT$415, bouncing back from Thursday’s 8.38 percent slump amid an across-the-board recovery in the local bourse.
For the year to date, the stock has risen 17.56 percent, compared with the broader market’s 5.61 percent fall.
President Capital Management Corp (統一投顧) also maintained its “neutral” rating on Yageo, but revised downward its 12-month target price on the stock to NT$480, valuing the firm at four times its estimated earnings per share next year of NT$119.52.
“The undersupply problem will remain unchanged in the passive components industry in 2019, but the shipment growth momentum is clearly sliding in the near term, which may affect market sentiment and raise concerns over the price outlook,” President Capital analyst William Tsai (蔡濰年) said in a note on Oct. 5.
“Coupled with an increasing worry about inventories into the first half of 2019, there is likelihood for downward revision of full-year earnings to the industry,” he wrote.
Yageo reported consolidated sales of NT$10.25 billion (US$331.61 million) last month, up 241.63 percent year-on-year, but down 3.29 percent month-on-month. Last month’s figure was lower than market expectations and was the first monthly decline this year.
In a statement on Oct. 5, Yageo blamed the monthly sales decline on the impact of the China-US trade war.
“Some customers in the Greater China region reduced demand due to inventory adjustments,” it said, stressing that demand from other customers was “still strong and solid.”
Third-quarter sales hit record high of NT$30.67 billion, up 266.4 percent annually and 59.4 percent quarterly, with cumulative sales in the first nine months of this year skyrocketing 169.55 percent to NT$60.94 billion from a year earlier, company data showed.
However, the company is cautious about the fourth quarter, which is the traditional slow season for passive components industry.
“As the China-US trade war continues to tighten and even expand and customers in the Greater China region adopt a conservative attitude, the company will be conservative on four-quarter revenue,” Yageo said.
Meanwhile, Yageo rival Walsin Technology Corp (華新科技) reported that last month’s consolidated revenue reached NT$6.29 billion, an increase of 2.25 percent over August and 203.78 percent compared to September last year, thanks to rising orders from its Japanese customers.
In the first nine months of the year, cumulative revenue increased by 129.59 percent to NT$35.99 billion compared with the same period last year.
Walsin’s stock has also corrected by 64 percent since reaching a high for the year on July 2 of NT$458.5, as investors gradually moved to the sell-side, reflecting growing concerns about changes in market dynamics, analysts said.
Shares on Friday closed at NT$165, up 5.43 percent from Thursday. They have risen 57.14 percent so far this year.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
RSS