Innolux (348) investor relations material

Executive summary

• Display business faces challenges from weak consumer sentiment and rising component costs, while non-display business shows steady growth and improvement in shipments and earnings.

• Transformation strategy focuses on reducing earnings seasonality, improving performance, and implementing asset-light operations with plant disposals planned for 2026.

• Market consensus expects stable EPS from FY 2026 to FY 2028, with positive momentum and upward revisions in forward-looking earnings estimates.

Financial highlights

• Non-display and non-commodity revenue reached 55% in the first half, both with double-digit gross margins.

• Gross profit margin improved from 14.4% in Q1 to 14.6% in Q2 2026, significantly higher than 8.4% in Q2 2025.

• Net profit attributable to owners was NT$4,532 million in Q2 2026, up 178.1% quarter-over-quarter and a turnaround from a loss in Q2 2025.

• EPS for the first half was TWD 0.77; basic EPS for Q2 2026 was NT$0.57, up from NT$0.20 in Q1 2026.

• Depreciation and amortization at TWD 7.5 billion; CapEx at TWD 2.3 billion.

Outlook and guidance

• Long-term strategy focuses on increasing high-margin business, optimizing product mix, and maximizing shareholder return through higher ROE and lean capex.

• TV shipments expected to be flat or slightly up year-over-year, with focus on 50-inch and below segment for cost advantage.

• Monitor segment sees strong demand for high-end and OLED models, with high-end monitors making up over 50% of shipments.

• Notebook demand expected to slow in the next 6-9 months due to inventory pull-in and high memory prices, but long-term AI PC cycle seen as a positive.

• Industrial demand remains steady, driven by Edge AI and ecosystem products.