30% share price correction for Orise and Sitronix

30% share price correction for Orise and Sitronix

January 18, 2016

LCD driver IC design houses Orise Technology and Sitronix Technology have predicted a 10-15% sequential drop in first-quarter sales. Both companies share prices have undergone a correction of over 30% recently due to projected sluggish demand from white-box handset customers in China. The correction has come in spite of Orise and Sitronix both stressing their low exposure to white-box handset makers in China.

Orise predicts quarterly sales at NT$1.1-1.2 billion (US$34.1-37.2 millions) a 10-15% drop compared to the previous quarter. However, on year sales growth is expected to maintain over 50%. The first quarter loss is being attributed to big customers adjusting their component procurement strategy by shifting the sourcing of components to in-house. However, once these adjustments have been completed, Orise expects sales to rise accordingly.

Sitronex projects first quarter sales at NT$1.5-1.6 billion, which also equates to a 10-15% on quarter drop. TFT LCD driver IC lines, a new product for Sitronix, are expected to maintain consistent growth and contribute to an overall yearly sales growth of over 40%.

Stironex has acknowledged that gross margins on its TFT LCD driver IC line are relatively low; Sitronex’s 2015 fourth quarter gross margin dropped by 1-2 percentage points as TFT LCD driver IC sales increased. Sitronex has declined to disclose gross margin predictions for the first quarter.

timyeo

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