Win Semiconductors Corp

Good morning and good evening, ladies and gentlemen, no matter where you are. Welcome to WinSTEMI's Resolved Broadcast Conference for the second quarter of year 2020. My name is Joe Chen, the spokesman and Associate Vice President of Finance of WinSTEMI. Joining me today is Steve Chen, the General Manager of Corporate Administration. And today's call will be organized into three sections. First of all, Steve will comment on the results for the second quarter and provide brief guidance for the third quarter. Secondly, I will go through the financials in detail. And after that, we will open to the floor for Q&A. Please freely submit your questions by clicking the question button on the web page window throughout the conference. Before we begin, I would like to draw your attention to the face cover notice on page 2 of the presentation. Please note that this presentation contains forward-looking statements, and these statements and I hope results may differ materially from our expectations. And the company undertakes no obligation to update this forward-looking statement going forward. Now, let me hand over the call to Mr. Steve Chen, General Manager of Wintani.

Thank you, Joe, and welcome everyone. While the overall demand in the first half of 2020 has faced many uncertainties arising from the COVID-19 pandemic and the U.S.-China trade tensions, we have delivered satisfactory financial results over this period. For the second quarter, our revenue mightily declined by 0.4% quarter-on-quarter, increased by 36% YOY, roughly in line with our previous expectation. Revenue for the third half of this year increased by 50% over the same period last year. Gross margin for the second quarter marked a record high level at 44.8%, driven by better parliament and capacity utilization maintaining at a high level of 90%. As a result, net profit for the second quarter increased by 5% quarter-on-quarter and 113% year-on-year. Earning per share for the second quarter and the first half reached NT$3.94 and NT$7.7, respectively, hitting the new highs for the same period in the company's history. In the second quarter, cellular PAs delivered the highest growth among all product segments. Especially, the percentage of 5G cellular revenue contribution to our total cellular revenue has risen to over 25%. In addition, the first half revenue of Gain on Silicon Carbide waivers, which are mainly being utilized for the 5G, has been close to the full year revenue of last year. This week confirmed that the demand for 5G continues to be strong and the trend of 5G remains unchanged. As the COVID-19 pandemic remains severe globally and US-China trade tensions are still ongoing, we expect short-term impact of our business may be inevitable and the peace and The off-season will be less obvious and more difficult to predict this year. However, we will continue to execute our long-term strategy of diversifying customers, expanding production capacity, and maintaining R&D investments, while preparing for the potential risk of the continued emerges of the great strong event in the global market. Looking ahead to the third quarter of 2020, we expect revenue to grow by mid-single digits, quarter on quarter, and growth margin to be around the level of low 40. I will turn the call back to Joe. Thank you. Okay, thank you.

It's our pleasure to present the financial results for the second quarter of the year 2020. And you can also refer our presentation slides. Okay, remember to refer to the Bay Poplar notice that is in the page two. And then I'm gonna start from page four. Talk about the revenue and the margin trend. The second quarter of 2020 revenue was $1,648 million NT. CO2 is down about from 4%. But the YOY is up 36%. And as a whole, the year 2020, because of COVID-19 pandemic and the U.S.-China trade tension, so the seasonality is not so significant as usual because the seasonal up and down is not that obvious. and then so the quarter over quarter become more and more difficult to predict. But I think we have a better performance in the first half from the top line to the bottom line. The second quarter 2020, because of the utilization rate, maintaining the higher level and also the better product mix. So our growth margin, reaching the regular high, increased by 1.8 percentage points, become 44.8% and operating margin also up 1.7 percentage points to reach the In the second quarter of 2020, our net profit was $1,561 million. and QOQ is up 5% and YOY also up 113%. Then the EPS coming at 3.94 NT dollars compared to last quarter, last quarter was 3.76%. So accumulated, the first half become 7.7 NT dollars. and the pre-purchase, the next page, part of the pre-purchase flow and our financial position. The Q2, because of the higher capacity expansion, So we generate an outflow of free cash flow in this quarter. And also because of that, interest-bearing debt and the yielding ratio also going up. But our financial structure still remains very healthy. And next page, we're gonna talk about the product mix in page seven. In Q2, the problem is obviously if you compare to last quarter, the major difference will be cellular. You see that cellular has become between 45% and 60%. and also something exciting is the 5G cellular become higher than 25% among the overall cellular business. And also, Steve mentioned it, inside the infrastructure, silicon carbide accumulates the first half. It's almost reaching the whole year's revenue level. So that's why and next page in transcript to page 8 the Q3 guidance I think Steve has already mentioned it I'm going to read it over again we expect Q3 year 2020 revenue to grow by at least single digit CO2 and we expect Q3 year 2020 growth margin to be around the level of $40. So now we can quickly flip over to the financial statement starting from the income statement in page 10. The page 10 talks about QQ's income statement Before I start, I have to remind everybody that this is under the unaudited basis. The final results have to be based on the CPA report. The net revenue for QQ was $6,000. 6048 mmHg compared to last quarter, last quarter was 1671 million actually it's down about 0.4% CO2 gross profit becomes $27.7 million. Gross profit QOQ is up 4% and YOY also up 79%. And because as we mentioned it, the better part of this, the gross margin reaching the regular high of 44.8%. compared to 43% last quarter, it's improved about 1.8 percentage points. Upgrading expense become 674 million NT. And so the operating expense ratio was 11%, which is in line with the last quarter. Operating income becomes only 133 million NT. The CO2 is up 5% and YY is up 122%. And the operating margin becomes 36.6% compared to 31.9% last quarter, which improved 1.7 percentage points. and the none of items I'm going to leave you guys to read it by yourself in page 12. And you can refer to page 12. And the major ISM will be foreign exchange. But the number of ISM was negative. An income before income tax was 20, 130 million NT, and the income tax expense has become 380 million NT, so therefore net income becomes 1,651 million NT, so Q2 is up 5%. And YOY is also up 113%. So therefore net margin become a 27.3% QOQ is including about 1.4 percentage points. And finally the EPS was 3.94 NT dollars and last quarter was 3.76. And so the ROE Equivalent ROE for the QQ was 23% in line with last quarter. And also, something also in line with last quarter is utilization rate 90%. and that decrease up to a depreciation 868 million NP and car park 1938 million NP is all increasing compared to last autumn okay and then we can flip to the next page in page 11 Page 11 talked about the income statement for the period of the first half, accumulated Q1 and Q2. The next revenue was 12,119,000,000 NT and then the YOY is up 50%. Growth profits 5,318 million NC, YOY is up 120%. And the growth margin, I'm sorry, the growth margin is 43.9%. The YOY is also improving 14 percentage points. Operating expense becomes $1,347 million and operating expense ratio is 11%, also improving. And operating income becomes $3,971 million and the YOY is up and operating margin become 32.8% while YOY improving 17.7 percentage points. The number of IPOs is positive. It's again for 23 million NT and the details you can refer to page 12 by yourself. Income before income tax was $3,995 million NT and the income tax expense is $769 million NT so therefore the net income becomes $3,226 million and YOY is up almost 250%. So the net margin was 26.6%. It's improving, YOY is improving 15.1 percentage points. So accumulated EPS for the first half becomes $7.70. And so the ROE, equivalent ROE for the first half was 21%, and then again, The utilization for the first half is again 90%. And you can see the depreciation is also higher than the year before. And the cost is also significantly increasing to $3,216 million. Okay, then we finish this page and then we're going to skip the page 12 for your own reference. And please refer to the page 13 for balances. As to the year 2020, June 30th, The total assets was 47,169,000,000 NT and the total liability is 15,629,000,000 NT. The common stock remained the same. The total equity became 31,540,000 NT. The put value per share became 72,015 NT. The current ratio is improving to 172%. And that ratio, similar level, is around 33%. And for you guys' information, the June 22nd... distributed the dividend payout on June 22, and so that will make the current liabilities, I mean the dividend payable and also the cash on hand will be both reducing That's my presentation. Now we can go to the Q&A. Please submit your questions in the input box on the webcast window now.