Solomon Systech International (2878) H1 2024 earnings summary

Executive summary

• H1 2024 revenue fell 27.4% YoY to $61.9m and attributable profit fell 43.3% to $7.5m; shipments declined 3.7% YoY to ~170m units but rose 6.6% vs H2 2023.

• Profit improved vs H2 2023 as product strategy reduced slow-moving inventory provisions; management cited supply-chain stability, inventory control and product innovation as operational supports.

Financial highlights

• Revenue $61.915m vs $85.334m YoY; gross profit $19.843m vs $27.941m; gross margin 32.0% vs 32.7%.

• Profit attributable to owners $7.471m vs $13.165m; basic and diluted EPS $0.30 vs $0.53.

• R&D costs $8.0m, down 24.5% YoY; R&D/revenue 12.9%, up 0.5 percentage point. Selling and distribution expenses rose 46.1% to $1.9m; administrative expenses rose 22% to $4.6m.

• Net operating cash flow was $14.031m vs $28.724m; cash and cash equivalents ended H1 at $96.069m vs $80.339m at year-end 2023.

Outlook and guidance

• H2 pricing pressure is expected to persist amid high rates, trade friction and policy uncertainty; foundry prices are expected to hold or decline, with low likelihood of increases.

• Priorities include R&D for higher-value products, automotive applications and medium/large electronic paper; management expects R&D outcomes over the next couple of years.

• Small-size four-colour display labels are expected to begin trial production soon; segment volume and pricing are expected to rise upon mass production.

• Human-interface display platform production is scheduled for H2 2024; automotive driver IC mass production targets 2025, as does a mini-LED backlight IC for automotive applications.