Compal Electronics (2324) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached TWD 237.2 billion, up 19% sequentially but down 3% year-over-year, with notebook PCs accounting for 73% of sales and non-PC segments at 27%.

• Net income for Q2 2024 was TWD 3.29 billion, up 43% quarter-over-quarter and 35% year-over-year, driven by operational improvements.

• First half 2024 net sales totaled TWD 436.8 billion, a 4% decrease year-over-year, while net income rose 35% to TWD 5.58 billion.

• EPS for the first half of 2024 was TWD 1.1, up from TWD 0.8 a year ago.

• Consolidated financials for H1 2024 were reviewed with a qualified conclusion due to some subsidiaries not audited independently.

Financial highlights

• Gross margin for Q2 2024 was 5%, up both sequentially and year-over-year; operating margin improved to 1.7%.

• Non-operating gains in Q2 were TWD 186 million, with investment gains offsetting forex losses.

• Cash and cash equivalents at Q2 2024 stood at TWD 86.6 billion, representing 19% of total assets.

• Inventory days reduced to 35 in Q2 from 49 in Q1; accounts receivable days at 81, down from 84 a year ago.

• Book value per share increased to TWD 28.7 at Q2 2024.

Outlook and guidance

• Q3 PC revenue expected to remain flat quarter-over-quarter; non-PC focus on profitability with EMS business reducing.

• Server revenue projected to grow over 20% for the full year, automotive high single digits; strategic goal to shift revenue mix to 60% PC and 40% non-PC by 2026 or 2027.

• Full-year PC revenue expected to be flat year-over-year; ongoing margin improvement targeted.

• No significant impact expected from new IFRS standards effective in 2025 and beyond.