Nanya Technology (2408) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales reached NT$9,921 million, up 4.4% quarter-over-quarter and 41.2% year-over-year.

• Gross margin improved to 2.9% from -2.9% in Q1 2024, driven by higher ASP.

• Net income loss was NT$813 million, including NT$657 million in earthquake-related losses; EPS at NT$-0.26; book value per share stood at NT$54.14.

• Operating loss narrowed to NT$2,319 million from NT$2,918 million in Q1 2024.

• Targeting shipment of 2nd gen 10nm-class 8Gb DDR4 and 16Gb DDR5 in 2H 2024.

Financial highlights

• Operating revenue for H1 2024 was NT$19,423,980 thousand, up from NT$13,451,954 thousand year-over-year.

• EBITDA was NT$1,734 million (17.5% margin), up 50.1% QoQ and 161.7% YoY.

• Net loss for H1 2024 was NT$2,022,973 thousand, an improvement from NT$2,455,561 thousand in H1 2023.

• Cash and cash equivalents increased to NT$65,491,350 thousand as of June 30, 2024.

• Free cash flow was NT$-2,940 million in Q2 2024, negative due to increased receivables and inventories.

Outlook and guidance

• 2024 bit shipment expected to increase more than 20% YoY, mainly due to a low base in 2023.

• HBM/DDR5 and AI-related products expected to drive DRAM market recovery in H2 2024.

• CapEx for 2024 is projected at NT$26 billion, with 50% allocated to equipment and 50% to construction and other uses.

• CapEx will increase in the second half of 2024, with depreciation expected to decrease significantly by end-2025.

• Operating margin is unlikely to turn positive in Q3, but net margin may approach breakeven with continued effort.