Solomon Systech Announces 2014 Annual Results

Strong Growth Momentum in Unit Shipments

Highlights:

 

	For the Year Ended 31 December
	2014		2013		Change
	US$’m	HK$’m equivalent	US$’m	HK$’m equivalent
Unit Shipments (million units)	115		91		+27%
Sales	60.1	465.6	55.2	427.4	+9%
Gross Profit	20.8	161.2	21.0	162.7	-1%
Gross Margin	34.6%		38.1%		-3.5pts
Net Profit/ (Loss)	(3.0)	(23.3)	1.3	10.3
Earnings/ (Loss) per share	(0.12) US Cent	(0.95) HK Cent	0.05 US Cent	0.42 HK Cent
Book-to-bill Ratio	1.1		0.8

 

(Hong Kong – 26 March 2015) – Solomon Systech (International) Limited (“Solomon Systech” or “the Group;” HKSE: 2878) has demonstrated its determination to “Build on Growth Momentum”.  Unit shipments grew well during the year under review, and the book-to-bill ratio of 1.1 is a positive indicator for future growth.

 

In 2014, the Group managed to achieve solid year-on-year and also quarter-to-quarter growth in both unit shipments and sales.  The Group’s total shipments increased 27% to 115 million units, while the total sales rose 9% to US$60.1 million.  Gross profit was US$20.8 million.  Due mainly to additional investment in new products and technology, net loss was US$3.0 million. The gross margin decreased by 3.5 percentage points to 34.6% because of a provision of US$2.2 million on slow moving inventory.  Excluding the inventory provisions, the gross margins for the last two years were at a comparable level.

 

Dr. Humphrey Leung, Managing Director of the Group, said, “The increase in business was attained as we have gained growth momentum, particularly in the Advanced Display and Large Display businesses.  We managed to capitalize on the strong growth of the wearables market, in particular smart watches and health & fitness devices, and increase our business share of the major customer for large LCD panels for TVs and monitors.

 

“For smartphones, we have further expanded our product portfolio to cover IGZO TFT LCD display driver IC and In-cell Touch TFT LCD display driver ICs, as well as touch panel controller ICs.  We have also extended the application portfolio of key products to broaden revenue sources.”

 

Business Review

The total unit shipments of Advanced Display products recorded a strong rise of 20% year-on-year to 68.8 million units.  The increase was mainly attributed to the Group’s success in capturing the rapidly growing wearables market and also its efforts in further extending the range of applications for both its OLED and bistable products.

 

For the Mobile Display business, the Group has achieved further progress in shifting its focus towards higher resolution technologies and extending the application portfolios of its products.  It has scored design wins with the new In-cell touch display driver IC for FWVGA panels and also leveraged its new IGZO TFT LCD driver IC to start design for HD/FHD mobile applications.

 

For the Mobile System business, a new eDP-to-MIPI display interface controller IC for large-sized displays with WQXGA resolution has been developed.  The Group has also scored design-wins for a number of smart watches and other mobile applications, and enriched its portfolio of touch panel controller ICs with new products.

 

Last but not least, the Large Display business unit grew significantly as its total shipment surged over two times year-on-year to 26.2 million units (2013: 8.3 million units).  The growth momentum was especially strong in the second half of the year, as the Group’s new large TFT display driver ICs for 18.5” HD monitors and 21.5” FHD monitors have completed qualifications and started mass production.  These new products have been adopted by the Group’s major customer for their key product lines, contributing to the increase in unit shipments.

 

 

Prospects

Accelerating Growth Momentum

 

The year 2015 is anticipated to be the “Year of the Wearables”.  To capitalize on the enormous potential of this market segment, the Group is to launch more new PMOLED driver ICs and also MIPI display interface controller ICs to cater to the market trends of larger panel size, higher resolution, higher dpi, curved surfaces and color display.

 

The smartphone market is another key growth driver.  Smartphones are rapidly incorporating higher resolution displays with lower power consumption and larger screens to match demand for increasing functionality.  The Group has focused on developing new display driver ICs, On-cell and In-cell touch panel controller ICs, and MIPI display interface controller ICs to cater to these trends. An array of new products is in the pipeline to debut during 2015 in order to capture the rising market opportunities.  The Group also targets to have pilot production for its new AMOLED display driver IC for HD resolution displays in smartphones.

 

To ride on the growth momentum of its business with the key customer for LCD TVs and monitors, the Group will strengthen its design engineering resources and launch multiple new products, aiming to further increase its share of this key customer’s increased capacity.

 

As for the AMEPD (AM e-paper) business, the Group continues to develop leading-edge high value-added solutions to meet the market trends of higher resolution, color, flexibility and large format displays.  In addition to working with world-leading ESL manufacturers, the Group is also exploring other market opportunities.

 

Leveraging China as a Key Market

The Group views China as a market offering immense potential.  It has already established a strong foothold in terms of customer relations and in R&D, as well as sales and distribution networks in China.  The Group is engaged to be a key IC provider to a major customer for its 8.5 generation IGZO TFT-LCD production line in Nanjing, China, which is scheduled to start pilot production in mid-2015, presenting great business opportunities for both its Mobile Display and Large Display business units.  The Group has invested more resources in design engineering as well as sales and marketing to set up a special team for this strategically important project. In addition, multiple new products are on the roadmap to be launched in 2015 and 2016.

 

Dr. Leung concluded, “Looking into 2015, we shall continue to invest in product R&D to further strengthen our technology capabilities and new product introduction, and also enhance customer outreach.  We target to leverage the strong growth markets of wearables and ESLs to ramp up shipments of PMOLED display driver ICs and low power AMEPD driver ICs, respectively, and capitalize on the increased capacity of our major customer to boost the business of our Larger Display and Mobile Display business units.  We shall also further leverage the emerging new technologies, including In-Cell and multi-touch technologies, to boost business growth. All in all, we aim to further build up our growth momentum.”