03.21.2001
No improvement in profitability for Wintek

• Wintek (2384 'Sheng Hua') reported pretax profit of NT$2.68m in February, compared to NT$2.28m in January. Gross margin and pretax profit margin in the first two months were 17.2% and 0.7%, respectively, well below the 25% and 12.44% in 2000.

• Gross margin declined to 15.5% last month from 18.9% in January, mainly caused by a lower utilization rate and greater pressure on handset LCD module ASP. Revenue in the first two months was down 18.9% YoY.

• Wintek announced preliminary 2000 revenue at NT$6.5b (55.4% YoY growth) and net profit at NT$709m (57.2% YoY growth) for EPS of NT$2.91. The results are in line with our estimations: our revenue forecast is 2% higher and net profit forecast 4% lower.

• We have not revised our 2001 forecast model on anticipation of operation recovery in 2Q01. We predict revenue of NT$8.0b for 20% YoY growth, below Wintek's target of 30%; and net profit of NT$816m, up 15% YoY.

• However, we may yet lower our earnings forecast given profit margin pressure and the global slowdown in handset growth. We remain NEUTRAL on this counter.

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