TAIFLEX Scientific Co. Ltd (TAIFLEX) has enjoyed an annual profit growth of 47% in the 1^st and 3^rd quarters. Looking at the fourth quarter, the shipment of flexible board substrates drops from its peak, while revenue from solar backplanes is expected to grow slightly, compared with the previous quarter, due to the rush for installation by the end of the year. Looking ahead, the demand for flexible board substrates is expected to continue into the first half of 2018 due to the extended sales period for new US models. TAIFLEX has currently invested in improving the aluminum plastic film production line, which is expected to drive growth in 2018.

       According to TAIFLEX’s product structure in the previous quarter, flexible board substrates accounted for 73%, while solar backplanes accounted for 27%. In terms of performance in the 2^nd quarter, flexible board substrates reported a growth of 21.3%, while solar backplanes reported a growth of 18.7%. TAIFLEX’s revenue and profit hit record highs in the 3^rd quarter; consolidated revenue was at NT$3.224 billion with a gross margin of 20.25% and a net profit after tax of NT$280 million, with 45% growth. Consolidated revenue in the 1^st to the 3^rd quarter was NT$8.314 billion with a gross margin of 19.20% and a net profit after tax of NT$574 million, with a quarterly growth of 47%.

       Looking at the fourth quarter, flexible board substrates peaked in the 3^rd quarter, in particular there was a higher percentage of flexible board substrates supplied to Taiwanese manufacturers than supplied to Apple. Among flexible board substrate clients, Apple accounted for 40% of the revenue, which is expected to drop from its peak to 12% in the fourth quarter, compared with the 3^rd quarter. In terms of solar backplanes, considering China leader requirements, solar installments under the poverty alleviation program, and the rush for installment by the formal promulgation of US Section 201 by the end of 2017, revenue from solar backplanes is expected to grow slightly in the fourth quarter by 4.8%.

The main growth momentum for the next year remains flexible board substrates. With the later sale of iPhone X this year and its extended sales period due to availability, sales of flexible board substrates are expected to support growth in the first half of 2018.

       In terms of new products, TAIFLEX develops aluminum plastic film that can be applied to mobile lithium battery power packs. The product’s coating process is not significantly different from the existing TAIFLEX process, resulting in a small barrier to entry for TAIFLEX. Currently, over 80% of aluminum plastic film are supplied worldwide by Japan. Taiwanese manufacturers have a relative entry advantage. The main source of growth is from China. TAIFLEX is to produce and sell aluminum plastic film in China. Currently, TAIFLEX has invested in adjusting the production line and expects a higher contribution next year. (Source: Money DJ)