Source: Taipei Times by Chen Cheng-hui

Electronics manufacturer Qisda Corp (佳世達) yesterday posted another quarter of inventory destocking as gross margin last quarter hit the highest level in 20 years, with executives saying that market supply and demand has gradually been restored, but is yet to significantly recover.

The company’s inventories totaled NT$35.8 billion (US$1.13 billion) in the second quarter, down by NT$20.4 billion from a year earlier and a decrease of NT$3.8 billion from the previous quarter.

“Inventory amount has decreased for five consecutive quarters,” Qisda chief financial officer Jasmin Hung (洪秋金) said at an investors’ conference.

Gross margin, a key gauge of profitability, reached 16.3 percent last quarter and totaled 16.1 percent in the first half of the year, both the highest in 20 years, Hung said, citing a continued improvement in the company’s information technology (IT) business and steady contributions from new ventures with high added value.

Qisda manufactures IT products, consumer electronics and networking and communications devices. It also provides smart business solutions and has cultivated a high-margin medical business, with hospital operations having recovered significantly this year.

The company’s consolidated revenue last quarter increased 3.3 percent quarter-on-quarter to NT$52.11 billion thanks to contributions from new high-added-value businesses, although quarterly revenue decreased 17.01 percent from the same period last year.

Net profit surged 216 percent quarterly and rose 4.3 percent annually to NT$1.02 billion in the second quarter on the back of nonoperating gains of NT$660 million, the company said.

Earnings per share were NT$0.53 in the April-to-June period, lifting them for the first half to NT$0.69, it said.

Qisda chairman Peter Chen (陳其宏) said he remained confident in sales performance this quarter, with revenue this month predicted to be higher than last month, and next month would also be better than this month.

However, “the prospects for the fourth quarter are not as good as expected, and the visibility of the industry remains relatively low,” Chen said.

Qisda said demand for IT products, mainly monitors and projectors, is gradually picking up and the company’s medical business is expected to be an important growth driver in the third quarter.

Both the business solutions and networking and communications segments are expected to benefit from long-term demand for digital transformation and IT infrastructure, although they would still undergo inventory adjustments in the short term, the company said.

Overall, the company said it is cautiously optimistic about the second half of the year, but would pay extra attention to external uncertainties, such as global inflation, central banks’ monetary tightening, geopolitical tensions and slowing market demand.