Asustek puter (ASUUY) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net revenue for Q2 2023 was NT $107 billion, representing a quarter-over-quarter growth of 5% but a year-over-year decline of 7% [3] - The company returned to profit with a net profit of NT$ 1.2 billion after two quarters of losses, resulting in an EPS of NT $3.5 per share [3] - Gross margin improved from 8.1% to 12.5%, and operating margin improved from -3.6% to 1.1% [5] - Non-operating income totaled NT$ 1.2 billion, with investment income of NT $571 million [6] Business Line Data and Key Metrics Changes - PCs accounted for 64% of revenue, components for 34%, and phones for 2% [8] - The System Business group saw a decline of 5% to 10% year-over-year, while gaming PCs maintained a market share of over 25% [28] - The Open Platform Business group experienced a 5% decline year-over-year, with motherboard shipments growing by 10% but graphics card shipments declining by 12% [31] - The AIoT Business group revenue grew by 60% year-over-year [34] Market Data and Key Metrics Changes - Revenue from Europe accounted for 30%, Asia for 48%, and the Americas for 22% [9] - European demand has returned to normal levels after a low base last year due to geopolitical conflicts [9] Company Strategy and Development Direction - The company is undergoing a reorganization of its PC-related business units to enhance coordination and respond better to consumer demand [17][18] - Focus on AI-powered PCs and AI servers as significant growth opportunities [22][23] - The company aims for a CAGR of 15% for commercial PCs and 40% for servers by 2027 [24] Management's Comments on Operating Environment and Future Outlook - Management noted a gradual improvement in revenues and profits, with expectations for stable growth in the second half of the year [15][11] - The outlook for 2024 is optimistic, driven by improved economic conditions and a replacement cycle for PCs [55] Other Important Information - The company has been recognized for its sustainability efforts and received multiple awards for its initiatives [38] - The ROG Ally handheld gaming device has seen strong market demand, contributing to revenue expectations of NT$ 5 billion to NT$10 billion per quarter [48] Q&A Session Summary Question: How is ASUS responding to new PC import restrictions in India? - ASUS is working with local OEMs and participating in local PLI programs, ensuring that new restrictions will not affect its business in India [40] Question: What is the outlook for AI servers and how will ASUS respond to chip shortages? - ASUS has strong relationships with suppliers and aims for over 40% CAGR in AI servers, with a target of 500% growth over five years [41][42] Question: What distinguishes AI-powered PCs from regular PCs? - AI PCs focus on improving inference capabilities, requiring dedicated computing units for enhanced user experiences [43][44] Question: What is the current share of revenue for the server product segment? - Servers currently account for a low single-digit percentage of revenue, with ambitions for significant growth in the future [57] Question: Will ASUS maintain its goal of 10% higher growth compared to the market? - The company aims to outperform market growth by 10 percentage points, supported by its in-house R&D capabilities [58] Question: Will R&D expenditure increase with new business investments? - R&D expenditures will be controlled based on operational goals, with potential for increased investment in new business units [61][62]