Solomon Systech Announces FY2008 Interim Results
Step Up Product Diversification Effort
Financial Summary
| For the six months ended 30 June | ||||
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2008 |
2007 |
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| US$’m | HK$’m equivalent | US$’m | HK$’m equivalent | |
| Sales | 50.8 | 395.0 | 103.4 | 804.5 |
| Gross Profit | 11.0 | 85.7 | 25.0 | 194.2 |
| Gross Profit Margin | 21.7% | 24.1% | ||
| Net Profit / (Loss) | (6.0) | (46.4) | 9.8 | 76.3 |
| Earnings/ (Loss) per share, Basic* | (0.25) US cent | (1.95) HK cents | 0.40 US cent | 3.1 HK cents |
| Earnings/ (Loss) per share, Diluted ** | (0.24) US cent | (1.87) HK cents | 0.39 US cent | 3.0 HK cents |
| DPS, Interim | 0 US cent | 0 HK cent | 0.13 US cent | 1.0 HK cent |
| As at 30 June 2008 |
As at 31 December 2007 |
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| US$’m | HK$’m equivalent | US$’m | HK$’m equivalent | |
| Total Assets | 189.2 | 1,471.8 | 202.4 | 1,582.1 |
| Shareholders’ Funds | 160.6 | 1,249.4 | 172.1 | 1,345.6 |
* EPS, Basic calculation is based on the weighted average number of shares for the period
** EPS, Diluted calculation is based on the adjusted weighted average number of shares for the period
- Display IC shipment reached 61 million units
- Book to bill ratio for the period ended 30 June 2008 was 0.90
- Launched display system solutions for China CMMB standard mobile digital TV
- Entered the growing solid-state lighting and signage industry through acquisition of Advanced Packaging Technology Limited
(Hong Kong – 11 September 2008) – Solomon Systech (International) Limited (“Solomon Systech” or “the Group”; SEHK: 2878) announced its interim results for FY2008.
For the six months ended 30 June 2008, Solomon Systech reported sales amounted to US$50.8 million (HK$395.0 million). The decrease was mainly due to (1) average selling price erosion at 20%; (2) reduced business from a major customer; (3) demand for consumer electronics dampened by global economic slowdown; and (4) sluggish demand from module maker customers possibly with chipset and module stocks to be used up. Through altering product mix, internal cost reduction measures and on-going prices discussion with contract manufacturers, the Group managed to offset part of the pressure from product price erosion on its gross margin. The Group’s gross profit margin for the first half year was 21.7%, down 2.4% year-on-year with inventory scrap accounting for 1.6%.
During the review period, the Group recorded net loss of US$6.0 million. The main reasons were the lower gross profit, an investment provision of US$1.1 million, and the unrealized gain/loss on financial assets at fair value through profit or loss of US$1.4 million. Basic loss per share was 0.25 US cent (1.95 HK cents).
The Group’s financial position remained healthy with net cash at US$126 million (31 December 2007: US$138 million).
Mr. Humphrey Leung, Managing Director of the Group, said, “The first half year of 2008 was very challenging for Solomon Systech. In addition to the global economic slowdown, rocketing inflation in China has dampened demand for consumer electronics. To overcome the adversities, the Group continued its efforts in product diversification and providing fast turnkey solutions to customers.”
Business Review
During the review period, the Group shipped some 61 million units of display IC. Mobile TFT (“m-TFT”) display ICs shipment recorded growth of 29% year-on-year to 22 million units reflecting that the m-TFT product family was gradually over-taking monochrome STN and color STN (“CSTN”). Due to technology migration, shipment of monochrome STN and CSTN continued to drop. OLED display IC shipment also dropped, by 15%, to 11 million units. However, the OLED display market has been more or less stabilized with OLED display technology finding its way into various new applications. The shipment of new display ICs fluctuated as the volume shipment had shifted from mobile phone application to electronic-shelf-label application. In the first half year, the Group also shipped a small volume of display system ICs.
| Units Shipped (million) | 1H 2008 | 1H 2007 | Change | ||||||
| Monochrome STN | 11 | 18 | -39% | ||||||
| Color STN | 14 | 41 | -66% | ||||||
| m-TFT | 22 | 17 | +29% | ||||||
| OLED | 11 | 13 | -15% | ||||||
| New Display | 3 | 9 | -67% | ||||||
| System IC | 0 | 0 | – | ||||||
| Miscellaneous | 0 | 1 | -100% | ||||||
| Total | 61 | 99 | -38% | ||||||
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For the Display Panel business, after a year of focusing strategically on serving key customer accounts, the Group won several major projects in new market applications such as audio video (“AV”) products and personal navigation device (“PND”). The Group will continue to support these strategic accounts so as to open up more business opportunities. On the front of Display System Solution business, the Group launched the MagusCoreTM multimedia solution with initial focus on mobile digital TV (“MDTV”) application in China.
The Group’s research and development expenses amounted to US$8.5 million for the first six months in 2008. To support business growth and stay competitive in the market, the Group focused on enhancing the features of existing products and developing new products including touch panel intellectual property (“IP”), dynamic backlight control, new generation Mobile Industry Processor Interface (“MIPI”) ICs, as well as supporting total system solutions with hardware, software and firmware for MDTV.
Prospects
Looking ahead, the second half of 2008 is expected to stay challenging for the Group. To improve the situation, the Group has made progress in delivering new and advanced ICs and expanded its customer base.
Mobile Display
The Group expects m-TFT LCD to become the major panel technology for mobile display applications in the coming six months and accordingly m-TFT to continue to make up a major portion of its IC unit shipment. The Group will keep expanding its m-TFT business through introducing new generation driver IC products with competitive features and supporting more display resolution formats to facilitate diversification of product application. As for OLED display ICs, the market will remain stable in the second half of 2008 because OLED display technology is becoming more mature in mass production, and demand from new applications, such as multi-functional mobile applications including Bluetooth headsets, health products and industrial applications, has been stable. The Group continues to be the leader in the Passive Matrix OLED display ICs market and will develop Active Matrix OLED display ICs, another major family of OLED technology, with leading panel makers.
New Display
The Group has begun shipping in large quantities of new display product to electronic shelf label applications in the first half of 2008 and the design-in work continues in E-paper projects such as price tag and USB disk. For the microdisplay business, the Group will continue to support microdisplay ICs and module products for application in high-definition movies, stereo 3D games and viewfinders of high-end digital cameras. All-in-all, the Group is confident that the demand for new display will surge, and will continue its research effort and expand the business to ensure it stays ahead of the competitions.
Display System Solution
The Display System Solution business unit is producing image processors and graphic controllers for supporting consumer applications such as MP4, GPS, digital photo frames and other portable consumer products. With design-wins for new display controller products continuing, the Group expects the segment to make volume shipment in the next six months. In the high-speed mobile interface market, the business unit boasting early leadership in MIPI has several design-wins projects from top-tier industry players that are expected to command mass production in the second half of 2008. Also, end-products using MagusCoreTM for CMMB, the MDTV standard adopted in China, will be introduced in the China market in the second half of 2008. The Group expects the advent of more projects requiring display system solutions in the second half of 2008.
Other New Business
The Group acquired 21.6% equity ownership of Advanced Packaging Technology Limited (“APT”) in August, which turned APT into an associated company. APT is in the business of development, manufacturing and sale of high-brightness light-emitting devices (“LED”) and advanced integrated circuit products. The acquisition was prompted by the Group seeing potential in the continuous growing solid-state lighting and signage industry. The Group expects the acquisition to provide an attractive platform to extend its display IC applications into the energy-saving or “green” product arena.
“We will concentrate on developing projects with strategic alliances, providing dedicated services, launching new and comprehensive products and solutions to customers to defend our market position and prepare for long-term growth,” concluded Mr. Leung.
Solomon Systech (International) Limited |
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| Condensed Consolidated Interim Income Statement | |||
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For the Six Months ended 30 June 2008
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