Yageo shares boosted by earnings growth

Taipei, Shares of Yageo Corp., the largest multi-layer ceramic capacitor (MLCC) maker in Taiwan, moved higher Friday after it reported more than 80 percent net profit growth in 2020.

Yageo shares closed up 1.24 percent at NT$572.00 (US$20.36), off a high of NT$583.00, outperforming the Taiwan Stock Exchange, where the benchmark weighted index ended up 0.47 percent at 16,255.18 after giving up part of its earlier gains.

The stock attracted strong buying soon after the market opened as investors were encouraged by the earnings report it released Thursday, and momentum continued to the end of the session.

“Its 2020 earnings sparked interest in the stock,” Hua Nan Securities analyst Kevin Su said. “Yageo and other passive electronics components are expected to raise product prices in the second quarter, and the company could do even better this year.

“But the stock faced stiff technical resistance ahead of NT$600. I suspect there is not much room for its share prices to go higher,” Su said.

In a statement released Thursday, Yageo reported a net profit for 2020 of NT$12.98 billion, up 86.9 percent from a year earlier, with earnings per share of NT$27.58.

In the fourth quarter only, the company’s net profit soared 314.9 percent from the same quarter a year earlier to NT$3.71 billion, or NT$7.51 per share.

The fourth quarter EPS, the highest in eight quarters, beat the EPS of NT$7.37 a quarter earlier and NT$2.31 seen in the fourth quarter of 2019.

Overall, the full year EPS of NT$27.58 far outpaced the EPS of NT$16.35 reported for 2019.

Yageo said the strong fourth-quarter showing was largely the result of a merger with U.S.-based Kemet Corp. that was completed in the third quarter and high utilization of its production capacity in Greater China.

Global demand for electronics components also stayed strong during the three-month period as the stay-at-home economy continued to boom.

Yageo has sought to grow through acquisitions. It acquired Kemet for US$1.64 billion to consolidate its position as the third largest MLCC vendor in the world and solidify its share of the automotive electronics market.

In addition to Kemet, Yageo acquired another American company, Pulse Electronics Corp., for NT$22 billion in 2018.

In the four quarter, Yageo’s gross margin — the difference between revenue and cost of goods sold — rose 4.5 percentage points from a year earlier to 38 percent, and also grew 0.6 percentage points from a quarter earlier.

Its operating margin — the difference between sales, cost of goods sold and operating expenses — for the fourth quarter rose 6.1 percentage points from a year earlier to 22.9 percent but was down 2.2 percentage points from a quarter earlier, Yageo’s earnings report showed.

Yageo said the company booked NT$952 million in foreign exchange losses caused by a stronger Taiwan dollar against the U.S. dollar, which eroded fourth-quarter EPS by NT$1.93.

For 2020 as a whole, the company’s gross margin was 39.4 percent, up 3.6 percentage points from a year earlier, while its operating margin rose 6.4 percentage points from a year earlier to 25.8 percent.

The market expects the company’s consolidated sales for the first quarter to top NT$23 billion, which would be 3-4 percent higher than a quarter earlier, and its net income to surpass NT$4.4 billion, which would be 15 percent higher than in the previous quarter.

 

Source: Focus Taiwan News Channel

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