Solomon Systech (International) Limited Makes Significant Progress in 2020 Annual Results

Mar 23, 2021 21:32 JST

Source: Solomon Systech (International) Limited

Revenue Achieves a Double-digit Growth
Gross Profit Soars 68.1%

HONG KONG, Mar 23, 2021 - (ACN Newswire) - Solomon Systech (International) Limited (the "Company"; SEHK: 2878) announced today its annual results of the Company and its subsidiaries (collectively, the "Group") for the year ended 31 December 2020, recorded an encouraging results of turnaround with a profit attributable to owners of the parent of US$11.7 million, the turnaround in the year 2020 was mainly attributable to the increases in the average gross profit margin and the gross profit amount from the change in product type mix recorded in revenue and decrease in operating expenses. Total revenue achieved a significant increase of 12% to US$121.3 million. The Group's total shipments recorded a steady growth of 22.9% to approximately 379.4 million units. Gross profit jumped by 68.1% to US$35.8 million year-on-year. And the gross margin reached 29.6%, representing a growth of 9.9 percentage points. The overall book-to-bill ratio was 1.4.

Financial Highlights:
-- Revenue increased by approximately 12.0% to US$121.3 million.
-- Gross profit was US$35.8 million, jumped by 68.1%.
-- Gross margin was 29.6%, increased 9.9% points.
-- Profit attributable to owners of the parent was US$11.7 million, turnaround from loss of US$27.3 million.
-- Earnings per share was 0.5 US cent (3.9 HK cents).
-- Book-to-bill ratio was 1.4.
-- The Board proposed a final dividend per share of 0.8 HK cent (approximately 0.1 US cent) for the year ended 31 December 2020.

Business Review
The Advanced Display ("AD") products include PMOLED displays, bistable products, micro-LED/mini-LED products and OLED lighting products. During the period under review, the COVID-19 pandemic (the "Pandemic") has triggered the demand for healthcare products worldwide, which was translated into increased orders for portable healthcare devices and related applications for the Group's PMOLED display driver ICs, and thereby has changed the mix of the AD products. The total unit shipments of the AD products during the period under review registered a double-digit growth of around 82.2% to approximately 245.8 million units.

To capitalize on the growing potential of smart home appliances market under the rising trend of Artificial Intelligence of Things ("AIoT"), the Group has successfully achieved related design-in projects, including smart electric toothbrush and smart thermostat electric kettle, etc.

In view of dynamic shifts in global overseas retail market conditions, the Group shifted its focus to promote its new bistable display driver IC for medium-sized ESL panels of 2.6 inches to 4 inches used at mega stores in the second half of 2020, eyeing on the markets of Europe and the U.S. Over the years, the Group has made significant progress through strategic collaborations with leading companies. In the reporting period, the Group has received orders that paved the way for applying mini-LED technology to mass production.

The Group's Large Display ("LD") products include large panel TFT LCD display driver ICs developed for TVs, monitors and other applications. Revenue from TVs products had also slowed down in the first quarter of 2020 due to the Pandemic, which was rebounded in the second quarter owing to strong work-from-home demand. At the same time, high speed point-to-point ("P2P") display driver IC for the 165Hz high refresh rate gaming monitor and 8K TV markets was launched during the reporting period. The Group has developed a foundry-sourcing strategy, so as to cope with capacity constraint of LD product lines and facilitate its future business growth.

In addition to AD and LD products, the Group also offers another range of products, which includes: Mobile Display ("MD") products such as In-Cell TDDI ICs, TFT display driver ICs and MIPI bridge ICs; and Mobile Touch ("MT") products including LCD touch controller ICs (Out-Cell/On-Cell), etc. The unit shipments of this category of products saw an increase of approximately 6.8% year-on-year to around 54.7 million units. The revenue target of this category of products was achieved by seizing the opportunities in this period. Notwithstanding the Pandemic has impacted the demand of consumer electronic products worldwide in 2020, the demand for mobile devices in China and the consumer sentiment have gradually recovered starting from the second half of 2020, which ultimately helped boost revenue from MD in relation to TDDI and DDI.

Furthermore, demand derived from specific customer segments, such as video games related products, in contrast boomed due to the Pandemic. The MT IC, the product line which supported game consoles, was one of the product lines that most benefited in the reporting period. As a result, the sales forecast for the reporting period could be achieved in conjunction with a number of design wins in these segments.

Prospects
Despite the fact that the lingering uncertainties in the global economy and supply chain may continue to weigh on the Group's business as a whole, the AD business is expected to continue its strong growth. A number of new products and design win projects are expected to start contributing to the Group's revenue. For instance, its custom ICs are going to be widely used in digital signage benefiting both the AD and MD businesses.

For AD products, the Group's key innovation of the PMOLED (Touch + Display) TDDI IC, SSD7317, is anticipated to enter mass production in smart home appliances and contribute to the revenue stream. The Group also strives to capitalize on the growth potentials of smart home appliances and AIoT with grayscale displays. Meanwhile, Group's bistable display driver IC business, bolstered by the constant development in retail automation and wide commercial applications spanning across logistics and signage demonstration, is set to continue its strong growth momentum in 2021. The Group has put in efforts in developing a new generation bistable color display IC that supports multiple colors, so as to unleash new potential for business growth. The Group's resources will be devoted to working with market leading micro-LED/mini-LED panel manufacturers to develop more new ICs with technological breakthroughs plus fulfilling the market needs. These new products are expected to be launched in the first half of 2021.

The Group's LD driver IC business, the P2P product focusing on gaming monitors will be in demand with high growth potential in 2021. The major challenge is the capacity support on wafers for the overall large size DDI products. The Group will strive to fully utilize the wafer usage and backend capacity, not only to meet the needs of customers, but also achieve the Group's long-term business goals.

For MD business, the Group's MIPI, TDDI and DDI products will be in demand due to the signs of China's economic recovery and 5G adoption. Customers have placed orders early with a view to securing the provision of support. MD business will continue to grow and to prosper with enhanced capacity and the support from the cohesive factory partners in 2021.

Mr. Raymond Wang, Chief Executive Officer of Solomon Systech (International) Limited, said, "Although economies worldwide have been impacted by the Pandemic, thanks to the contribution efforts of our employees and management team, we have experienced a business turnaround, that has been welcomed by our stakeholders, at the same time increasing average gross profit margin and a decrease in operating expenses.

In line with our business development strategy, we adopted the Chinese name 'Solomon Systech (International) Limited' as the dual foreign name of the Company in late 2020. The Chinese name 'Solomon Systech (International) Limited' is indicative of our core businesses, and highlights the Company's leading position within the semiconductor industry.

Going forward, we believe the unique positioning of our Company will enable us to gain an advantage as we face current economic circumstances. Staying in step with today's dynamic high-tech revolution, we have created a tactical plan on stimulating the developments of micro-LED, Electronic Shelf Label, high-speed interface and the P2P display driver IC for the high-end 8K TV markets in the years ahead. With our strong balance sheet, we are well placed to successfully overcome the current economic downturn period and to take advantage of new opportunities in the future. We will continue to lead the semiconductor industry by optimising stakeholders' interests and maximise value for them."

Media Enquiry:
Carol Hui
Corporate Communications Manager
Solomon Systech (International) Limited
Tel: (852) 2207 1672 / 6177 7344
Fax: (852) 2207 1372
Email: carolhui@solomon-systech.com

Ivy Chen
Account Manager
Porda Havas International Finance Communications Group
Tel: (852) 3150 6720 / 6355 8773
Fax: (852) 3150 6728
Email: i.chen@pordahavas.com

Source: Solomon Systech (International) Limited
Sectors: Electronics