FOR IMMEDIATE RELEASE: 11/14/2016
DSCC Updates Display Supply Chain Financial Health Report-12 More Companies Added
Austin, TX -
Display Supply Chain Consultants (DSCC) has updated its report covering the financial health of all publicly traded companies in the display supply chain with twelve additional companies -
- AP Systems
- Japan Display
- Wonik IPS
The Display Supply Chain Financial Health Report provides its clients with all of the critical data (income statements, balance sheet, cash flow, industry metrics), insights, market commentary and guidance released by publicly traded display supply chain companies in their quarterly earnings reports, stock exchange filings, press releases and conference calls along with unbiased analysis from DSCC analysts within 48 hours of their earnings calls.
Company analysis is provided in PowerPoint presentations while the financial and industry data is incorporated into pivot tables which makes comparisons by company, metric, layer of the supply chain, country, etc. extremely easy. In addition, the results are aggregated which results in the creation of industry averages across all financial and industry metrics.
This press release includes summaries for 12 companies added this week, including glass and materials companies, panel makers and equipment companies.
- AP Systems
- After 14 quarters, AP Systems reached record high revenues in Q3’16 to US$107M, up 32% Q/Q and 37% Y/Y.
- Operating margin jumped from 1% to 9.9% Q/Q, while operating incomes reached $10.5M, up 1188% in Q3’16.
- OLED equipment accounted for 88% of total revenues or $94M.
- AVACO reached US$43.5M and US$2M of Q3’16 revenues and operating income, respectively.
- In terms of Q/Q and Y/Y growth, AVACO marked rather disappointing revenues and operating income, down both 24% and 60% in Q/Q while it is Y/Y growth is up 140% in revenues; however, its operating income is down 41%.
- AVACO has been working closely with LG Display. In October 14, AVACO announced that the company supplies its encapsulation tool for US$4M to LG Electronics.
- Revenues rose 77% Q/Q and 76% Y/Y on dramatic ASP and unit growth.
- Gross margins surged from 1% to 41%, operating margins jumped from -10% to 33% and net margins rose from -17% to +34%. HannStar enjoyed the highest margins in the display industry by a wide margin.
- Unit shipments rose 26% Q/Q and 23% Y/Y as utilization surged while ASPs rose 41% Q/Q and 41% Y/Y.
- <6” displays rose from 61% to 74% of its revenues as it boosted allocation to low-end smartphone and feature phone displays where supply is tight and prices have risen rapidly.
- Japan Display
- Revenues rose 19% Q/Q while falling 11% Y/Y to $1.92B on higher volumes. However, revenues were down 6% vs. guidance, which it attributes to lower demand from some customers, primarily in China, delays in shipments from some customers, likely Apple, and the stronger yen. Indicated that yen appreciation reduced sales by 30B yen.
- Gross profits jumped 64% while falling 37% Y/Y to $128M. Gross margins rose from 5% to 7%, significant, but not as large of a jump as other suppliers enjoyed as high end LTPS smartphone prices rose more slowly than other applications.
- Operating profits were positive after two consecutive quarters of operating losses at $12M with operating margins of 1%. It beat its guidance however at 1.235B yen vs. 1.0B yen on structural reforms. It indicated the yen appreciation reduced operating income by 5B yen.
- With small operating profits, it suffered a net loss of $48M, the third consecutive quarter where it lost money. Net margins were -3%, better than -7% in Q2’16.
- Mobile displays accounted for 81% of revenues, up from 80% in the prior quarter.
- For Q4’16, JDI expects a 35% Q/Q and 3% Y/Y increase in revenues to $2.6B on seasonal strength in the US and Europe and recovery of share in China. Both volumes and APSs are expected to increase significantly.
- Operating income is expected to surge, rising 71% Q/Q to $98M.
- Expects Q1’17 revenues to decline sequentially, but rise Y/Y on smartphone display sales to China.
- JDI expects to raise its non-mobile display share to rise from ~20% in 2016 to 33% in 2018 and 50% in 2021 as it attacks a number of other markets though cooperation with different types of businesses. To that end, it announced a strategic alliance with E Ink, targeting a number of non-mobile applications.
- JDI also revealed progress of a number of structural reforms including selling their stake in a Chinese module assembler, shutting down an older fab and reducing headcount by nearly 5000 people.
- Jusung released preliminary results for Q3’16. Revenues fell 6% Q/Q while rising 26% Y/Y to $56M. Operating income fell 7% Q/Q while rising 5% Y/Y to $7.3M with operating margins flat at 13%. So far this year, FPD equipment is accounting for around 55% of revenues.
- Q3 display revenues were primarily from Korea, but they did have some revenues from China and Taiwan manufacturers as well. They expect to see significant equipment business from Chinese flexible OLED manufacturers.
- Jusung has publicized 3 POs from LG Display this year in May, September and October.
- NEG revenues declined Y/Y and Q/Q in yen terms, but stronger yen means increases in US$ terms
- Display glass substrate volume increased Q/Q and “a moderate price decline continued”
- Glass fiber shipments fell Q/Q due to holidays in US and EU
- Margins recovered from Q2 2016, but near flat Y/Y
- Net income hit by 1-off costs associated with Xiamen display glass launch
- FX losses on receivables and payables hurt profit margin
- Nikon sales were up 9% Q/Q while falling 2% Y/Y to $1.7B. For the first half of fiscal 2016, sales were down 4% on a decline in digital camera sales.
- The yen appreciation and slower camera sales caused margins to fall. Gross margins fell from 45% in Q2’16 to 40% in Q3’16, operating margins fell from 9% to 5% and net margins fell from 7% to 4%. Digital camera sales fell 57% in the first half of their fiscal year.
- Due to lower than expected results, it announced a number of structural reforms to boost revenues and improve profitability.
- FPD litho sales were a bright spot however, shipping one more tool than expected in the quarter and two more for the new fiscal forecast. Nikon indicated the better than expected FPD litho business allowed it to raise its operating margin forecast.
- Nikon’s semiconductor and FPD litho business rose 29% Q/Q and 48% Y/Y to $621M.
- In terms of new systems, FPD outsold semiconductors 51 to 11 units for the 1H’16.
- The semiconductor litho business is losing money, but strong FPD litho results are expected to enable the litho business to account for 92% of their 49B yen operating income for the fiscal year.
- In Q3’16, Nikon installed 24 litho systems, giving it a 77% share with Canon at 23%. Of Nikon’s shipments, 21 were 6th gen or smaller for LTPS while just 3 units were for 7th or larger generation substrates. Nikon has been dominating the LTPS business with its FX-66S, 67S and recently released the FX-68S which offers 78 plate per hour throughput at 1.5um.
- For the fiscal year, Nikon is expected to ship 92 units, vs. 46 last year.
- SFA’s revenues rose 11% Q/Q and 119% Y/Y to $267M, with operating income up 56% Q/Q and 74% Y/Y to $26M. Its operating margins rose from 7% in Q2’16 to 10% in Q3’16.
- SFA produces a wide variety of LCD and OLED equipment, from automation to thin film deposition and encapsulation to lamination. It can provide most of the equipment in an OLED line. Since July, it has announced 2 POs with BOE, one with Visionox and 2 with an undisclosed customer, rumored to be Samsung Display Corp. (SDC). The SDC POs are expected to be worth over $1B for their A3 line.
- TPK revenue and income improve Q/Q in Q3 2016 on new product ramp-ups and seasonality for 2H.
- Special loss of $8 million due to Typhoon Meranti
- New product launches and seasonal demand should continue in Q4
- Q3’16 revenues rose 20% Q/Q and were flat Y/Y at $489M.
- Operating income rose 316% Q/Q and 21% Y/Y to $63M with operating margins rising from 4% in Q2’16 to 13% in Q3’16.
- FPD/PV equipment revenues rose 35% Q/Q and 31% Y/Y to $222M in Q3’16, accounting for 45% of total revenues.
- FPD/PV equipment bookings rose 13% Q/Q, also reaching $222M.
- Wonik IPS
- Wonik IPS announced tentative Q3’16 revenues of $85M, up 89% Q/Q while falling 56% Y/Y.
- Q3’16 operating income was announced as $9.5M, up 198% Q/Q but down 74% Y/Y. Operating margins were 11.1%, up from 7.1%.
- Net profit rose 227% Q/Q, but was down 74% Y/Y at $7.9M, with net margins rising from 5% in Q2’16 to 9% in Q3’16.
- FPD equipment revenues accounted for around $29M or 34% with the majority of revenues coming from semiconductors.
- The merger talks between Wonik IPS and Terasemicon was terminated on November 7th due to Wonik IPS’ shareholders’ opposition.
- Q3’16 revenues rose 24% Q/Q and 49% Y/Y to $93M.
- Operating income rose 968% Q/Q and 119% Y/Y to $5M with operating margins rising from 1% in Q2’16 to 6% in Q3’16.
- FPD equipment revenues rose 47% Q/Q and 78% Y/Y to $59M, accounting for 64% of total sales, the highest since Q2’15.
- FPD equipment operating income rose 477% Q/Q and 945% Y/Y to $4.39M with operating margins rising from 2% to 7%.
Over the next week, we will be adding:
- Applied Materials
- Best Buy
- Idemitsu Kosan
- And more
Companies covered in this
- Equipment - Applied Materials, AP Systems, Avaco, Canon (Tokki), Coherent, Jusung, LIG Invenia, Nikon, Orbotech, SFA Engineering, SNU Precision, Terasemicon, TES, ULVAC, Viatron Technologies, V-Technology, Wonik IPS and Y.A.C.
- Materials - 3M, Asahi Glass, Corning, Idemitsu Kosan, LG Chem, Merck, NEG, Nitto Denko, Toppan, Toray, TPK and UDC.
- Panels - AUO, BOE, CPT, CSOT, HannStar, Innolux, JDI, LG Display, Samsung Display, Sharp and Tianma
- OEMs - Compal, Foxconn, Pegatron, Quanta and TPV
- TVs and Phones - Apple, Changhong, Haier, Hisense, LGE, Samsung, Sharp, Sony and TCL
- Retailers - Amazon, Best Buy, Costco and WalMart
Display Supply Chain Consultants (DSCC) was formed by experienced display market analysts from throughout the display supply chain and delivers valuable insights through consulting, syndicated reports and events. The company has offices in the US, China, Japan, Korea, Taiwan and the UK. DSCC is on the web at www.displaysupplychain.com and can be reached in the US at firstname.lastname@example.org.