02.21.2001
Winter blues for Wintek in 1Q01

• Wintek (2384 'Sheng Hua') booked pretax profit of only NT$2.3m in January, much lower than the NT$37m last year. Slow sales and gross margin decline are behind the poor results. January sales fell 19% YoY due to a fall-off in orders from Motorola. Gross margin was down to 19% last month compared to 25% in January 2000, mainly due to poor utilization rate and increased production costs. Gross profit in January was NT$67.7m, a 38% YoY decline. Wintek also expects monthly revenue in 1Q01 to come in at a low NT$350-400m. Sales will start to pick up from 2Q00, driven by more handset orders.

• The company has invested NT$200m to gain a 10% holding in driver IC supplier Solomon Systech, a subsidiary of Solomon Technology Corp. (2359 'Sou Lou Men'). It has also invested in IC design house Xi Chuang (unlisted). Wintek is moreover actively investing in LCD upstream key components, aiming to reduce costs and stabilize supply.

• We maintain our 2001 EPS forecast of NT$3.20 for a P/E of 22x and revise our recommendation to NEUTRAL from Accumulate.

MarthaChen@Primasia.com +886-[0]2-2547-8878