ENNOSTAR (3714) Q2 2024 earnings summary

Executive summary

• Q2 2024 net revenue rose 18.3% sequentially and 13% year-over-year to TWD 6.606 billion, the highest in six quarters.

• Net loss attributable to the parent narrowed to TWD 302 million, improving 35.3% sequentially and 66.9% year-over-year.

• Gross margin improved to 15.3% from 12.2% in Q1 2024 and 4.8% in Q2 2023.

• Strategic focus on advanced automotive display, professional lighting, and smart sensing increased high-value product revenue share to about 50%.

• Consolidated financials for H1 2024 were reviewed with a qualified conclusion due to some subsidiaries' unaudited statements, though these are not significant to the group.

Financial highlights

• Operating margin was -4%, a 5.3% improvement from the previous quarter.

• EBITDA margin rose to 12.7%, up from 11.4% in Q1 2024 and 2.7% in Q2 2023.

• Net loss for H1 2024 was TWD 1,092.73 million, compared to TWD 2,431.81 million in H1 2023.

• Cash and cash equivalents at quarter-end were TWD 14.76 billion; net cash after borrowings was TWD 11.73 billion.

• Inventory turnover improved from 83 to 77 days in Q2, but increased to 83 days for H1 2024.

Outlook and guidance

• Q3 revenue expected to exceed Q2, with stronger profits anticipated as non-GAAP losses subside.

• Sensing revenue in Q3 projected flat or slightly lower sequentially, but up double digits year-over-year; full-year sensing revenue to grow double digits.

• Professional lighting revenue expected flat QOQ in Q3, but up over 30% YoY; full-year growth also over 30%.

• Display revenue to remain flat in Q3; more significant growth expected in 2025.

• The group continues to focus on capital management, working capital, and investment planning to support future growth.