FocalTech — Interim / Quarterly Report 2017

Jun 21, 2017

June, 2017

www.focaltech-electronics.com

Listed on TWSE

Ticker # 3545

2016 Revenue

NT$ 11 Billion

Market Cap. (May, 2017)

~NT$ 9 Billion

Employee # (May., 2017)

~850

Cash dividend proposed by BOD

NT$ 0.64/share (payout 90%)

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Global Presence
South San Jose
Korea (USA)
Beijing
Japan
Nanchang
Xi’an
Shanghai
Wuhan
Taiwan
Shenzhen Xiamen
R&D / Operation
Sales/Technical Support Location
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Core Competence
Complete
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Product
Portfolio
Large
Strong
Customer
Supply Chain
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Excellent
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LCD Driver IC

Includes SOC, Source driver (SD) Gate driver (GD), Feature driver (SD+TCON), Timing controller (TCON)

Both self and mutual capacitive controllers support 1.5”~15” panels

Supports both α‐Si and LTPS TFT LCD panels

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FocalTech
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Capacitive area type. Fast, reliable and secure

Touch and DDI solution for Automotive/Commercial App.

DDI and Touch solution for rigid and flexible AMOLED

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Complete Solution for Mobile/ IT Human IF
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LCD Driver IC
Active Pen Rx
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Integrated Driver
Controller (IDC)
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Selected Applications Selected Customers
Tablet
Smartphones
E‐ Readers
Wearable Device
Automotive
Laptop
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Hero4: touch screen on the back

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Panasonic

Model Name: UN-JL15T2

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Montblanc

Model Name: Summit

Application: Smart Robot Model Name: XiaoYuZaiJia

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Model Name: G5 Plus Model Name: P10 Plus

Moto

Huawei

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Model Name: Y67

vivo

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Model Name: A1 Plus

Gionee

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Model Name: Redmi Pro

Model Name: ZenPad 10

Xiaomi ASUS

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IDC MP Models
HD
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S G S L G H****

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G H M H X B
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Company Revenue
NT$ MM
Revenue
4,000
3,500 3,202
2,948 2,960 [3,056]
3,000 2,900
2,429
2,694
2,500 2,309
2,161
2,000
1,500
1,000
500
0
15'Q1 15'Q2 15'Q3 15'4Q 16'Q1 16'Q2 16'Q3 16'Q4 17"Q1
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Financial Results
NT$ MM
Gross Profit Net Profit
628 627
580
600 552
536
504
498
432
376
200
200
145
66
93
63
29
‐ ‐8
97
‐56
15'Q1 15'Q2 15'Q3 15'Q4 16'Q1 16'Q2 16'Q3 16'Q4 17'Q1
‐200
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Gross Margin
%
24
23.3
23.0
21 20.5
19.6
18.7
18.2
18
17.4
17.2
15.5
15
12
15' 1Q 15' 2Q 15' 3Q 15' 4Q 16' 1Q 16' 2Q 16' 3Q 16' 4Q 17'Q1
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Amt: in NT$ M

	3 months ended on	2017/3/31	2017/3/31	2016/12/31	2016/12/31	2016/3/31	2016/3/31	QoQ	YoY
	Net Revenue	2,161.1	100.0	2,693.5	100.0	2,308.6	100.0	‐20%	‐6%
	Cost of Rev.	1,663.1	77.0	2,066.6	76.7	1,876.7	81.3	‐20%	‐11%
	Gross Profit	498.0	23.0	626.9	23.3	431.9	18.7	‐21%	15%
	Op. Exp.	481.9	22.3	515.0	19.1	524.5	22.7	‐6%	‐8%
	Income from Op.	16.1	0.7	111.9	4.2	(92.6)	‐ 4.0	‐86%
	Non‐Op. Income & Exp.	(26.5)	‐ 1.2	46.6	1.7	(12.0)	‐ 0.5		121%
	IBIT	(10.4)	‐ 0.5	158.5	5.9	(104.6)	‐ 4.5		‐90%
	Income Tax Income (Exp.)	2.2	0.1	(13.5)	‐ 0.5	5.6	0.2		‐60%
	Net Income	(8.2)	‐ 0.4	145.0	5.4	(99.0)	‐ 4.3		‐92%
	EPS	(0.01)		0.51		(0.34)			‐97%

Note: EPS‐ ‐based on weighted average outstanding common shares.

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Amt: in NT$ M

	As of	2017/3/31	2016/12/31	2016/3/31	QoQ	YoY
	Total Assets	14,131	14,957	14,723	‐6%	‐4%
	Cash Equivalent	4,456	5,571	7,337	‐20%	‐39%
	AR	1,145	1,334	1,118	‐14%	2%
	Inv.	3,031	2,538	2,355	19%	29%
	Total Lia.	3,029	3,519	3,339	‐14%	‐9%
	Short‐term Loans	607	645	245	‐6%	148%
	AP	1,272	1,541	851	‐17%	49%
	Convertible Bonds	0	0	961		‐100%
	Shareholder Eqt.	11,102	11,438	11,384	‐3%	‐2%
	Net CF In (Out)	(1,051)	1,575	543
	CF fm Operation	(796)	1,148	354
	Net worth per share (NT$)	37.38	38.57	38.69
	AR Days	52	48	53
	Inv. Days	153	106	119

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Q1 17’ Results Summary
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• Revenue in Q1 was NT$ 2,161M, down 20% qoq and 6% yoy. Seasonality, NT dollars and weaker demands from low‐end are

• appreciated segment the major contributing factors for this result. Even though discrete drivers and touch controllers saw sequential declines, IDC shipment continued to show encouraging growth on a quarterly basis.

• Gross margin in Q1 stayed at a similar level around 23% compared to Q416’. However, it was 430 bps higher than the same period last year.

• We have had 4 consecutive quarters of profitable operation. Comparing to Q1 last year, the operating profit improved by NT$109M. Owing to unfavorable foreign exchange rate, net income of Q1 turned negative with a loss of NT$ 8 M. However, the loss contracted significantly over the last.

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• Several FocalTech’s LTPS FHD IDC solutions were smartphones using

• announced in Q1. Hauwei’s newest model, Nova Series, is among them.

• Huawei’s latest flagship model, P10 Plus, adopts FocalTech’s WQHD driver IC solution.

 FocalTech’s FT8006 series, which can further simplify the in‐cell panel production process and cost, has started pilot production in March.

 FocalTech’s touch solutions either wearable devices or supporting smartphones with AMOLED panels had reached accumulated shipment of >1 million units in Q1.

• After the sensors into MP last coating‐type fingerprint entering year,

• FocalTech has successfully developed the cover lens‐type sensors, which will start proto‐type production for smartphones in Q2.

• FocalTech held a product launch conference in Shenzhen in April and introduced its optical fingerprint sensing technology to its potential customers.

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• Smartphone shipment in 17’Q2 is expected to grow compared to Q1 as handset makers start to build inventory for their new models. However, demand for low‐end products may be weaker than previous years. The uncertainties we brought up in last investor conference, such as increasing component price or shortage in Flash memories may still be a concern in the smartphone supply chain.

• After the launch of Xiaomi Mix, Samsung Galaxy S8 and LG G6, high‐ end smartphone makers are switching over the display design to 18:9 aspect ratio. This transition is taking place at a record speed. Many old 16:9 designs had been called off, which may temporarily affect the shipment of high‐end IDC product in Q2.

• In the long run, the Company will continue focusing on mid to high‐ end in an to maintain at a product segments attempt gross margin

• healthy level.

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Copyright ©2017 FocalTech Systems Co., Ltd. All Rights Reserved.

The information in this document may contain predictive statements including, without limitation, statements regarding the future financial and operating results, future product portfolio, new technology, etc. There are a number of factors that could cause actual results and developments to differ materially from those contained in the predictive statements. Therefore, such information is provided for reference purpose only and constitutes neither an offer nor an acceptance. FocalTech makes no warranties, express, implied or otherwise, regarding the accuracy or completeness of those information. FocalTech may change the information at any time without keeping recipients updated of any information contained in this document.

www.focaltech-electronics.com