• Tue. Dec 1st, 2020

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Quick market observation: Himax Technologies, Inc. (NASDAQ: HIMX)

On Thursday, Himax Technologies, Inc. (NASDAQ: HIMX) changed -12.57% to recent value of $2.99. The stock transacted 2116606 shares during most recent day however it has an average volume of 1796.04K shares. It spotted trading -41.37% off 52-week high price. On the other end, the stock has been noted 75.88% away from the low price over the last 52-weeks.

Himax Technologies, Inc. (HIMX) reported its financial results for the fourth quarter ended December 31, 2019.

Fourth Quarter 2019 Financial Results

The Company recorded net revenues of $174.9M, a raise of 6.5% sequentially and a decrease of 8.4% contrast to the same period last year. Revenues were better than its guidance of flat quarter-over-quarter. Both display driver and non-driver businesses contributed to the better-than-guided sales. Gross margin was 20.6%, exceeding the previous guidance of a slight increase contrast to third quarter’s 19.5%. A more favorable product mix among small display products, improved WLO factory utilization and higher-than-predictable engineering fees from new project engagements improved the gross margin for the fourth quarter. IFRS profit per diluted ADS was 0.6 cents, exceeding its guidance of a loss per diluted ADS of about 3.0 to 4.5 cents. Stronger sales and improved gross margin both contributed to the better-than-predictable earnings. In addition, the Company booked a revaluation gain of $3.8M from an investment it made in an AI startup during November 2017. The revaluation gain was not included in the November guidance. Non-IFRS profit per diluted ADS was 0.9 cents, exceeding its guidance of a loss per diluted ADS of about 2.7 to 4.2 cents.

Revenue from large display drivers was $57.9M, up 15.6% sequentially, and down 22.0% year-over-year. The sequential growth was driven by Chinese panel consumers’ ramping of new LCD fabs and their building of inventories in anticipation of growing demand and price hike in 2020. The revenue was, however, lower than the level of the last quarter of 2018 when the production outputs of panel makers reached the peak. Since then, they have cut back their production every quarter to address the overall weak TV demand and industry-wide oversupply. Large panel driver ICs accounted for 33.1% of its total revenues for the quarter, contrast to 30.5% in the third quarter and 38.9% a year ago.

Revenue for small and medium-sized display drivers was $81.1M, up 5.1% sequentially and up 1.6% year-over-year. The section accounted for 46.4% of total sales for the quarter, contrast to 46.9% in the third quarter and 41.8% a year ago. The sales growth, both sequentially and year-over-year, was primarily driven by higher automotive and tablet sales, offset by a decrease in TDDI sales for smartphone, although the decrease was less than the Company before predictable.

Sales into smartphones were down 22.5% sequentially and down 14.3% year-over-year. Both the sequential and year-over-year declines were caused mainly by lower TDDI shipments. However, on a full-year basis, Himax’s 2019 TDDI shipments were close to double contrast to the previous year as the Company’s fulfillment was capped during 2018Because of capacity constraint. Starting Q419, Himax’s business started to see a major turnabout thanks to the Company’s penetration into more tier-1 smartphone OEMs, the industry’s rapid roll-out of TDDI in mid to low-end smartphones and the Company’s aggressive move to develop new foundry for TDDI. The fourth quarter sales of traditional DDICs declined by 20.2% sequentially but increased 14.3% from last year. Display drivers for tablet and other consumer products were up 26.5% sequentially, better than the Company’s previous guidance of a 20% increase. This was Because of consumers’ inventory replenishment and strong demands from certain brand consumers. The fourth quarter sales of tablet and consumer products were also up by 25.8% year-over-year.

Driver IC revenue for the automotive application was up 23.2% sequentially, better than the Company’s guidance of over 15% increase. It was up 1.9% from the same period last year.

Revenues from non-driver businesses were $35.9M, down 3.0% sequentially and 2.6% year-over-year. Non-driver products accounted for 20.5% of total revenues, as contrast to 22.6% in the third quarter of 2019 and 19.3% a year ago.

Gross margin for the fourth quarter was 20.6%, up 110 basis points sequentially but down 370 basis points from the same period last year. Gross margin outperformed the Company’s previous expectation of a slight increase contrast to the 19.5% of the third quarter. A more favorable product mix among small and medium-sized display driver products, improved WLO factory utilization and higher engineering fees from project engagements were the factors behind the sequential increase. Increased shipments of the WLO product to an anchor consumer led to higher capacity utilization of its WLO fabs and therefore better gross margin contrast to the same period last year. The year-over-year decline was largely Because of smartphone TDDI ASP erosion arisen from increased competition as well as more TDDI shipments for lower-end market. Moreover, its large panel driver IC businesses faced headwinds during 2019 when the cost of its COF packaging material went up for capacity shortage and the display industry suffered from a severe capacity oversupply.

IFRS operating expenses were $37.4M in the fourth quarter, down 5.6% from the preceding quarter and down 8.8% from a year ago. The sequential decrease was caused by reduced salary and R&D expenses. The year-over-year decrease was also a result of reduced salary and R&D expenses, offset by the increase of depreciation expense. Non-IFRS operating expenses for the fourth quarter were $36.8M, down 6.2% from the previous quarter and down 9.5% from the same quarter in 2018.

IFRS operating margin for the fourth quarter was -0.8%, up from -4.7% in the previous quarter and down from 2.8% in the same period last year. The sequential improvement was primarily a result of higher sales, better gross margin and lower operating expenses. The year-over-year decline was a result of lower sales and gross margin, offset by lower operating expenses.

Fourth quarter non-IFRS operating loss was $0.7M, or -0.4% of sales, versus non-IFRS operating loss of $7.3M, or -4.4% of sales last quarter, and down from 3.0% for the same period last year. The sequential improvement and year-over-year declines were for the same reasons stated above.

IFRS profit for the fourth quarter was $1.0M, or 0.6 cents per diluted ADS, contrast to loss of $7.2M, or 4.2 cents per diluted ADS, in the previous quarter and IFRS profit of $8.5M, or 4.9 cents per diluted ADS, a year ago. IFRS earnings per diluted ADS exceeded previous guidance of a per diluted ADS loss of about 3.0 to 4.5 cents. The better-than-predictable earnings were Because of stronger sales, improved gross margin, lower operating expenses and a revaluation gain of $3.8M, or 2.2 cents per diluted ADS, from a previous investment in an AI startup made during November of 2017. This was the second revaluation gain the Company booked for the same investment with the first such gain of $2.9M, or 1.7 cents per diluted ADS, booked in the same period last year. The year-over-year decline was a result of lower sales and gross margin, offset by lower operating expenses. Not Including the revaluation gain, IFRS loss for the quarter was $2.7M, or 1.6 cents per diluted ADS, contrast to loss of $7.2M, or 4.2 cents per diluted ADS, in the previous quarter and profit of $5.6M, or 3.2 cents per diluted ADS from the same period last year.

Fourth quarter non-IFRS profit was $1.5M, or 0.9 cents per diluted ADS, contrast to non-IFRS loss of $6.9M, or 4.0 cents per diluted ADS last quarter and non-IFRS profit of $8.7M, or 5.0 cents per diluted ADS for the same period last year. Non-IFRS earnings per diluted ADS exceeded previous guidance of a loss per diluted ADS of about 2.7 to 4.2 cents. The better-than-predictable earnings were Because of the reasons mentioned above. Not Including the revaluation gain, non-IFRS loss for the quarter was $2.2M, or 1.3 cents per diluted ADS, contrast to non-IFRS loss of $6.9M, or 4.0 cents per diluted ADS last quarter and profit of $5.8M, or 3.3 cents per diluted ADS for the same period last year.

HIMX has a gross margin of 20.50% and an operating margin of -2.70% while its profit margin remained -2.00% for the last 12 months. Its earnings per share (EPS) expected to touch remained -469.40% for this year while earning per share for the next 5-years is expected to reach at 25.00%.  The company has 180.97M of outstanding shares and 148.7M shares were floated in the market. According to the most recent quarter its current ratio was 1.6 that represents company’s ability to meet its current financial obligations. The price moved ahead of -32.02% from the mean of 20 days, -26.11% from mean of 50 days SMA and performed -0.04% from mean of 200 days price. Company’s performance for the week was -27.07%, -36.11% for month and YTD performance remained 12.41%.

 

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