ChipMOS(IMOS) - 2019 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved total revenue of $173.9 million in Q3 2019, representing a 10.1% increase compared to Q2 2019 [12][13] - Gross margin improved to 21.4% in Q3 from 17.1% in Q2, marking a 4.3 percentage point increase [7][13] - Net profit attributable to the company was $18.9 million in Q3, with net earnings of $0.52 per basic ADS [12][14] Business Line Data and Key Metrics Changes - Revenue from Flash products grew by 22.5% in Q3 compared to Q2, accounting for approximately 31% of total Q3 revenue [9] - DRAM product revenue increased by 10.8% compared to Q2, representing about 17% of total Q3 revenue [9] - TDDI revenue remained flat in Q3 compared to Q2, but TDDI demand helped offset softening TV demand [10] Market Data and Key Metrics Changes - Overall capacity utilization was about 74% in Q3, slightly down from 75% in Q2, with key testing business utilization increasing to 74% from 69% [8] - Memory product revenue represented about 38.5% of total Q3 revenue [8] - The company noted strong customer demand levels in most areas, expecting this trend to continue into Q4 [7] Company Strategy and Development Direction - The company aims for organic revenue growth of 8% per year and targets a gross margin of 17% to 22% [23] - CapEx is set at 20% to 25% of annual revenue, with plans to reserve a portion for processing or building new facilities due to full occupancy [23] - The company is focusing on automation and AI to enhance efficiency and gross margin while maintaining headcount [38] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for Q4 based on strong customer demand and a solid market position, with October revenue reported to be 8.2% higher than September [30] - The company is cautiously confident about DDIC revenue in Q4 despite soft TV demand [11] - Management indicated that they are benefiting from the recovery in the Flash business and expect continued growth in NAND flash revenue [10] Other Important Information - The company paid a cash dividend of NT$1.2 per common share on August 30, translating to $0.764 per ADS [7] - Free cash flow for Q4 is expected to be negative, ranging from $5 million to $10 million [43] Q&A Session Summary Question: What will CapEx be in Q4? - CapEx for Q4 is expected to be around $55 million [22] Question: Is there a bullish outlook for TDDI? - The company is performing better than competitors and sees steady demand in Flash memory and DRAM [25] Question: How is the relationship with Micron? - The company is regaining business from Micron as they bounce back [27] Question: What is the expected dividend payout ratio for next year? - The target payout ratio is set at 50% to 60% of earnings [32] Question: What is the situation in China regarding facilities? - The Shanghai facility is improving, and the company is providing services to DRAM customers there [34]