Wah Lee Industrial Corp. (3010.TT)

2023 2Q Management Report

August 22, 2023

Company Basic Information

2Q23 Consolidated Results Announcement

Closing Price (22/08/2023)

NT$87.1

Wah Lee's 1H23 cumulative sales reached NT$30,545 million, a 19.3%

52 WK High

NT$93.6

YoY decrease.

52 WK Low

NT$77.5

Information Communication Technology 25.45% YoY decline: The

Book Value/share

NT$71.6

hawkish tone of US FED on interest rates, leading to conservative

Shares on Issue (M)

236.0

Market Cap (USD M)

653

consumer behaviors and high inventory levels, has continued to cause

QFII Holding (%)

11.5

the slow-moving of ICT materials in 1H23, albeit the monthly sales

Monthly Avg Daily Turn

NT$100M

have grown month by month. Wah Lee's high-end engineering

Key Financial Indicators

plastics and PCB/MB materials both posted YoY declines.

We expect

to see mild to strong returns of demands in 2H23 on a HoH basis,

2021

2022

1H23

possible growth can be in double digits.

ROE

19.1%

15.0%

11.4%

Semiconductor 0.51% YoY increase: Wah Lee's semiconductor raw

Debt/Asset

61.0%

62.0%

60.0%

Cash Conversion

materials for the high end manufacturing processes, now into 3 nm, are

Days

76.5

76.0

91.4

playing a critical role in the semiconductor industry. The inventory

digestion speed had been slower than expected in the beginning of the

year. 2Q23 semi sales was lower than 1Q23 sales, which was

3010 WL

Price Chart

(1 yr)

consistent with the view of the leading foundry maker in their most

recent analyst meeting. However, with the demands of AI servers and

next generation smartphone chips, semi material sales will resume its

growth momentum soon.

FPD 26.21% YoY decline: The FPD sales in 1H23 showed a YoY

decline because in January 2022 the electronic whiteboards were

shipped in large quantities to avoid the delay of delivery due to the

Product Mix (1H23)

Chinese New Year holidays.

However, the whiteboard

sales has

returned in 2Q23 and will continue to rise in 2H23. FPD sales also

expects a significant 2H23 HoH sales growth.

Green Energy 39.88% YoY decline: The mainland Chinese government

phased out their EV subsidy policy starting in 2023 and the rush to

purchase EVs before the phase out in Q4 2022 has driven down the

demands of EV batteries in 1H23. However, the EV battery cathode

materials and electrolyte sales will recover in 2H23 due to the

expansion into new customers.

1H23 EPS: NT$4.15, 2Q23 EPS of NT$2.92 set a record 2Q high

1H23 consolidated sales totaled NT$30,5458M. Consolidated 1H23 gross

Wah Lee Consolidated Entities

profit was NT$2,604M with 1H23 gross margin of 8.52% and 2Q23 gross

margin of 9.34%. 2Q23 GM was high due to the reversals of reserves for

include Wah Lee Taiwan and

subsidiaries in China, Singapore,

losses in slow-moving and write-off of inventory starting in

2H22, as

Thailand, Vietnam, and Indonesia.

inventory was gradually digested. 1H23 operating expense ratio was

IR Contact

4.66%, which was at its normal level, and operating margin was 3.86%.

Eric Lin

Operating profit was NT$1,180M.

Non-operating profit was NT$237M,

+886-2-2715-2087 ext.22061

mainly contributed from long-term investment companies. Pretax profit

eric.lin@wahlee.com

totaled NT$1,417M. After tax and minority profit was NT$978M, with

1H23 EPS of NT$4.15.

Wah Lee Industrial Corp. (3010.TT)

2023 2Q Management Report

August 22, 2023

2023 Outlook

Generally speaking, monthly sales in 1H23 showed a gradual, MoM growth pattern. 2Q23 sales showed a 12.44% QoQ growth from 1Q23 sales. This has signaled the gradual digestions of inventories at all levels of the tech industry. Most of Wah Lee's industry sectors, including engineering plastics, PCB/MB raw materials, FPD related sales, and green energy sector will see mild to strong HoH sales growth, indicating the resumption of consumer and enterprise spendings. The overall FY2023 sales will show a modest decline or a flat YoY from a year ago, and will see a YoY growth for the year of 2024 and onwards. We are confident that the general trends in the mega technology advancements will continue to move on. The generative AI (e.g. ChatGPT), HPC, 5G communications, EV/automobiles, smartphones, consumer electronics, high-end semiconductor manufacturing will eventually bring the general demands back to a positive growth cycle. Gradual digestions of customers' inventory levels will also lead to the return of technology raw material demands. Wah Lee is well-positioned in the raw material supply chain and will ride on the mega trends of technology advancements. We will be in the forefront of demand returns and closely monitor the inflection point of underlying economic cycles.

Operating Result (M)

2020

2021

2022

1Q20

2Q20

3Q20

4Q20

1Q21

2Q21

3Q21

4Q21

1Q22

2Q22

3Q22

4Q22

1Q23

2Q23

Total Rev

59,081

70,515

73,570

12,353

14,836

16,160

15,731

16,284

16,866

18,756

18,610

19,510

18,336

19,149

16,575

14,378

16,167

Gross Profit

4,801

5,983

5,567

1,005

1,195

1,287

1,313

1,438

1,496

1,572

1,476

1,558

1,428

1,438

1,143

1,094

1,510

Operating Profit

2,108

3,073

2,643

425

545

636

501

726

758

804

784

802

697

704

440

431

749

After Tax Profit

1,859

2,843

2,485

344

440

636

439

597

641

842

764

768

657

737

323

289

689

Shares Ourstanding

231.40

236.02

236.02

231.40

231.40

231.40

231.40

231.40

231.40

236.02

236.02

236.02

236.02

236.02

236.02

236.02

236.02

EPS (NTD)

8.03

12.05

10.53

1.49

1.90

2.75

1.89

2.53

2.71

3.57

3.24

3.26

2.78

3.12

1.37

1.22

2.92

Operating Result (%)

GP Margin

8.1%

8.5%

7.6%

8.1%

8.1%

8.0%

8.3%

8.8%

8.9%

8.4%

7.9%

8.0%

7.8%

7.5%

6.9%

7.6%

9.3%

OP Margin

3.6%

4.4%

3.6%

3.4%

3.7%

3.9%

3.2%

4.5%

4.5%

4.3%

4.2%

4.1%

3.8%

3.7%

2.7%

3.0%

4.6%

AT Profit Margin

3.1%

4.0%

3.4%

2.8%

3.0%

3.9%

2.8%

3.7%

3.8%

4.5%

4.1%

3.9%

3.6%

3.8%

1.9%

2.0%

4.3%

Growth % YoY

Sales YoY

8.0%

19.4%

4.3%

2.4%

5.7%

11.0%

12.2%

31.8%

13.7%

16.1%

18.3%

19.8%

8.7%

2.1%

-10.9%

-26.3%

-11.8%

GP YoY

14.7%

24.6%

-7.0%

9.5%

10.5%

11.5%

27.2%

43.1%

25.2%

22.1%

12.4%

8.3%

-4.5%

-8.5%

-22.6%

-29.8%

5.7%

OP YoY

33.9%

45.8%

-14.0%

31.6%

27.3%

36.8%

40.3%

70.8%

39.1%

26.4%

56.5%

10.5%

-8.0%

-12.4%

-43.9%

-46.3%

7.5%

AT Profit YoY

31.3%

52.9%

-12.6%

9.2%

27.9%

41.6%

42.5%

73.5%

45.7%

32.4%

74.0%

28.6%

2.5%

-12.5%

-57.7%

-62.4%

4.9%

Safe Harbor Notice

Wah Lee Industrial Corp. (the Company) has made forward-looking statements in this report. The forward-looking statements contain information regarding, among other things, the Company's financial condition, future expansion plans and business strategies. The Company has based these forward-looking statements on its current expectations and projections about future events. Although the Company believes that these expectations and projections are reasonable, such forward-looking statements are inherently subject to risks, uncertainties and assumptions about it.

The Company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur and the actual result could differ materially from those anticipated in these forward-looking statements.

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

Wah Lee Industrial Corporation published this content on 22 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 August 2023 07:27:08 UTC.