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WPG Holdings Limited — Call Transcript 2024
Nov 14, 2024
52266_rns_2024-11-14_9b098959-dbee-4a03-882a-e1a7e08e61ff.pdf
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2024 3rd Quarter Earnings Conference
2024/11/15
© 2024 Weikeng Industrial Co., Ltd.
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Agenda
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Welcome Company Introduction
3Q’24 Financial Results
Market Status & Outlook 2024-2025 Summary of Strategic Approach Q &A Q & A
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Safe Harbor Notice
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WEIKENG’s statements of its current expectations are forward-looking statements subject to significant risks and uncertainties and actual results may differ materially from those contained in the forwardlooking statements.
Information as to those factors that could cause actual results varied can be found in WEIKENG’s Quarterly or Yearly Financial Statements and Report filed with the Taiwan Stock Exchange Corporation (the “TWSE”) and such other major information will be posted on the TWSE’s Market Observation Post System ( MOPS) from time to time.
Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.
In addition, any financial information contained in this report is prepared in accordance with the International Financial Reporting Standards (IFRSs).
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Company Introduction--Brief Facts
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⚫ The Jan~Oct of 2024 consolidated sales: NT$ 72.3Billion (YoY=+24%)
Weikeng Industrial (Taiwan/ Greater China)
Weikeng International (HK/China)
Weikeng Tech (Sin/SEA)
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⚫ Parent company
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⚫ 2024 Jan~Oct sales:
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NT$34.9 Billion
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，
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(YoY=+NT$8.5 Billion +32%)
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⚫ Wholly-owned subsidiary
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⚫ 2024 Jan~Oct sales:
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NT$35.9 Billion
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，
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(YoY=+NT$6.2 Billion +21%)
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⚫ Wholly-owned subsidiary
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⚫ 2024 Jan~Oct sales: NTT$1.5Billion
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，
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(YoY=-NT$0.4 Billion -23%)
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Company Introduction – Revenues, 2020-2024/Jan-Oct
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Weikeng Facts Group Consolidated Revenues, 2020-2024/Jan-Oct
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Group Consolidated Revenues, 2020-2024/Jan-Oct
80
72 72
70 71
2 1
70 2 2
Auto
58
60 Comm. 8%
2
8%
36
50 40 36
39
Consumer
40 29 11% Computing
50%
30 Industrial
23%
20
35
33
27 30 28
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0 Data for Jan-Sep’24
2020 2021 2022 2023 2024/Jan-Oct
Unit: NTD billion Taiwan China SEA
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Consolidated Statements of Comprehensive Income
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| Selected Items from Consolidated Statements of Comprehensive Income (In NT$ Millions) |
3Q 2024 |
1Q1~3Q 2024 |
2Q 2024 |
1Q1~3Q 2023 |
3Q24 Over 2Q24 (QoQ) |
1Q~3Q24 Over 1Q~3Q23 (YoY) |
|---|---|---|---|---|---|---|
| Net Revenue | 24,011 | 64,992 |
22,537 |
52,700 | 7% |
23% |
| Gross Margin | 1,305 5.43% |
3,783 5.82% |
1,429 6.34% |
3,333 6.32% |
-9% -0.91ppts |
13% -0.50ppts |
| Operating Expenses | 685 | 1,906 |
657 |
1,903 |
4% |
0% |
| Net Operating Income | 620 2.58% |
1,877 2.89% |
772 3.42% |
1,429 2.71% |
-20% -0.84ppts |
31% +0.18ppts |
| Net Non-Operating Income & Expenses |
(180) | (756) | (306) | (672) | 41% | -12% |
| Profit before Tax | 440 1.83% |
1,120 1.72% |
465 2.06% |
757 1.44% |
-5% -0.23ppts |
48% +0.29ppts |
| Net Profit | 347 | 877 |
361 |
559 |
-4% |
57% |
| Basic EPS(NT Dollar) | 0.76 | 2.00 | 0.84 | 1.32 | -10% | 52% |
| Exchange Rate(NT$/US$) | 32.31 | 32.03 | 32.34 | 30.93 | 0% | 4% |
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**Comparison of the 3Q’24 and 2Q’24: 1. The financial cost increased by NT$39 million
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- Net exchange gains and losses increased by NT$151 million
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**1Q~3Q Year-on-Year Comparison: 1. The financial cost increased by NT$137 million
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- Net exchange gains and losses increased by NT$36 million
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Balance Sheets and Key Indices
| Selected Items from Balance Sheets (In NT$ Millions) |
Sep. 30, 2024 | Sep. 30, 2024 | Jun. 30, 2024 | Jun. 30, 2024 | Dec. 31, 2023 | Dec. 31, 2023 | |
|---|---|---|---|---|---|---|---|
| $ | % | $ | % | $ | % | ||
| Cash and Cash Equivalents | 2,080 | 5 |
1,495 |
4 |
2,411 |
6 | |
| Notes and Accounts Receivable, net | 16,685 | 43 |
16,474 |
43 |
13,587 |
35 |
|
| Inventories, net | 18,737 | 48 |
18,400 |
47 |
20,517 |
53 |
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| Total Assets | 39,116 | 100 |
38,743 |
100 |
38,646 |
100 |
|
| Short-term Borrowings | 14,844 | 38 |
17,962 |
46 |
14,702 |
38 |
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| Notes and Accounts Payable | 8,133 | 21 |
5,714 |
15 |
9,593 |
25 |
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| Convertible Corporate Bonds Payable, current portion | 875 | 2 | 1,177 | 3 | - | - | |
| Convertible Corporate Bonds Payable | 2,211 | 6 | - | - | - | - | |
| Total Liabilities | 28,980 | 74 |
29,372 |
76 |
29,880 |
77 |
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| Total Equity | 10,136 | 26 |
9,371 |
24 |
8,766 |
23 |
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| Key Indices | |||||||
| A/R Turnover (Days) | 64 | 67 | 68 | ||||
| Inventory Turnover (Days) | 88 | 92 | 101 | ||||
| A/P Outstanding (Days) | 40 | 36 | 36 | ||||
| Current Ratio (X) | 1.49 | 1.34 | 1.40 | ||||
| ROWC(%) | 9.66 | 9.37 | 7.37 | ||||
| ROE(%) | 12.37 | 11.69 | 8.77 |
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Market Status & Outlook(I)
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| Market Segment | Market Status & Outlook |
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| Semiconductor Market | ⚫ Gartner Predictions ➢ 2024: Global semiconductor revenue is expected to grow by 19%, reaching US$630 billion. ➢ 2025: Expected growth of 14%, reaching US$717 billion. ⚫ IDC Predictions ➢ 2024: The global semiconductor market is projected to grow by 21.5%, reaching $673 billion. ➢ 2025: Growth of 15.9%, reaching $779 billion. ⚫ Highlights from TSMC's Earnings Conference ➢ CoWoS Capacity: Expected to double annually in both 2024 and 2025, but demand will continue to outpace supply. ⚫ HBM Memory: ➢ Increased demand for HBM chips, with the average selling price (ASP) performing better than expected. ➢ ASP is projected to remain strong in Q4’24 and Q1’25. |
| Server Market | ⚫ TrendForce Predictions for 2024 ➢ General Servers: Shipment volumes are expected to remain stable. ➢ Global AI Server Market: Market value is projected to reach US$187 billion, accounting for 65% of the server market. ➢ AI Server Share: Expected to account for 12.2% of total server shipments, an increase of approximately 3.4 percentage points compared to 2023. ⚫ Nvidia and AMD Demand ➢ Nvidia: Demand for GPUs and networking exceeds expectations. ➢ AMD: AI demand surpasses expectations. ⚫ Investments by Cloud Service Providers (CSPs) ➢ 2H 2024: CSPs are expected to continue making significant investments. ➢ 1H 2025: Capital expenditures may pause to assess service levels and energy efficiency. ➢ 2H 2025: Capital expenditure investments are expected to resume. |
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Market Status & Outlook(II)
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| Market Segment | Market Status & Outlook |
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| Automotive Market | ⚫ Inventory Adjustment ➢ Duration: Expected from Q4 2024 to Q1 2025, with growth resuming in 2H 2025. ⚫ Automotive Chip Demand ➢ Demand Bottom: Expected in Q4 2024 and Q1 2025. ➢ Demand Improvement: Anticipated to recover starting in 2H 2025. ⚫ Electric Vehicle Market Forecast for 2024 (DIGITIMES Research) ➢ Global Market: ✓ Estimated sales shipments: 17.19 million units (adjusted down from 18.42 million units). ✓ Annual growth rate: 23.8%, showing a slower growth trend compared to the rapid growth from 2021 to 2023. ✓ Reason for slowdown: Slower EV sales in Europe and the United States. ➢ China EV Market: ✓ Estimated EV sales shipments in 2024: 11 million units (accounting for over 60% of the global total). ✓ Annual growth rate: 32.7%. ✓ Reason for growth: China automakers are introducing affordable and diverse models, targeting different market segments, which significantly replace traditional fuel vehicles. |
| PC/Notebook Market | ⚫ Gartner Predictions ➢ Global PC Shipments (Q3’24): 62.9 million units, a year-over-year decline of 1.3%, but the PC market remains on a recovery track. ➢ PC Demand: ✓ End of 2024: Global demand will see some improvement. ✓ 2025: Stronger growth is expected as PC replacements peak. ⚫ Canalys Predictions ➢ 2024: Global shipments of AI-enabled PCs are expected to reach 48 million units, accounting for 18% of total PC shipments. ➢ 2025: AI-enabled PC shipments will exceed 100 million units, making up 40% of total PC shipments. ➢ 2028: Manufacturers are projected to ship 205 million AI-enabled PCs, with a compound annual growth rate (CAGR) of 44% from 2024 to 2028. |
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Market Status & Outlook(III)
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| Market Segment | Market Status & Outlook |
|---|---|
| Smartphone Market | ⚫ Semiconductor Revenue and Shipments ➢ Smartphone Semiconductor Revenue: Growth is expected, with shipments in 2024 performing better than anticipated. ⚫ 5G Market Expansion: ➢ 5G deployment is accelerating in emerging markets such as Latin America, Indonesia, and India. ⚫ Shift in Phone Production Bases: ➢ Gradual relocation of production outside of China, particularly to India, to support local development initiatives. ⚫ Generative AI-Enabled Smartphones: ➢ By 2025, shipments are expected to grow significantly, capturing 32% of the market share and further driving semiconductor content growth. ⚫ DIGITIMES Research Predictions ➢ 2024: Global smartphone shipments are estimated to reach 1.1814 billion units, growing by 4.9%. ➢ 2025: Continued rebound in smartphone demand, with a growth rate of 3.6%, reaching an estimated 1.2239 billion units. |
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Market Status & Outlook(IV)
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| Segment | 2023 | 2024(F) | 2025(F) | Segment | 2023 | 2024(F) | 2025(F) |
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| Semiconductor | $530.0B | $629.8B | $716.7B | Global new vehicle | 89.1Mu | 90.9Mu | 91.5 |
| -11.7% | 18.8% | 13.8%% | 8.7% | 2.0% | 1%% | ||
| Source:Gartner 2024/10, IDC 2024/9 | China new vehicle | 30.093Mu | 31Mu | 31.5 | |||
| PC | 259.5Mu | 261Mu | 272.2Mu | 11.8% | 3.0% | 1.6% | |
| -13.9% | 0.6% | 4.3% | Source:China Association of Automobile Manufacturers/S&P Global Mobility/2024/4/Digitimes 2024/9 |
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| Source: Trendforce/Trendforce/Nomura/IDC 2024/10 | EV (BEV+PHEV) | 13.884Mu | 17.188Mu | 20.2Mu | |||
| NB | 165.6Mu | 171.5Mu | 179.2Mu | 35.8% | 23.8% | 17.5% | |
| -11.5% | 3.6% | 4.5% | China EV (BEV+PHEV) |
8.292Mu | 11.0 Mu | 13.5Mu | |
| Source: Trendforce/Trendforce/Nomura/Digitimes 2024/10 | 37.8% | 32.7% | 23% | ||||
| Server | 14.802Mu | 14.7Mu | 15Mu | Source: China Association of Automobile Manufacturers/Digitimes 2024/9 | |||
| -18.3% | -0.8% | 1.9%% | |||||
| Source: Nomura/Digitimes 2024/10 | |||||||
| Smartphone | 1,126.2Mu | 1,181.4Mu | 1,223.9Mu | ||||
| -3.2% | 4.9% | 3.6%% | |||||
| Source: Canalys/Counterpoint/Digitimes 2024/10 |
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2024-2025 Summary of Strategic Approach
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⚫ Strong AI Demand
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➢ Comprehensive Product Range: Includes AI, data centers, and general servers.
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➢ Top-tier Clients: Portfolio boasts numerous leading clients.
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➢ Optimistic Outlook: The future remains promising and positive
⚫ Market Expansion
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➢ Vendor Success: The major vendor has successfully expanded its market share in CPUs and GPUs. ✓ Positive Outlook & Optimistic Future: The outlook remains positive and optimistic.
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➢ Resource Allocation: Weikeng continues to allocate resources to strengthen its efforts.
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✓ Supporting Expansion: Helping the vendor further expand its market share.
⚫ Actively deploy trends in the automotive field
➢ Major clients including the "Electronics Big Five“
- ➢ Established an independent, specialized FAE technical team to provide in-depth services in ADAS, IVI, powertrain, and related areas.
⚫ Geopolitical influences such as MAGA (Make America Great Again)
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➢ Logistics Setup
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✓ Customer Production Line Relocation: Aligning with customer production line relocations, including Southeast Asian countries, Mexico, and Texas/USA.
➢ Policy Implementation
- ✓ New Policies: Continuously monitoring the new U.S. government policies and making adjustments to meet customer needs promptly.
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Thank You
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