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Weltrend set to grow on successful China layout

Weltrend set to grow on successful China layout

Weltrend Semiconductor Inc. (2436) has long charted China’s financial market field and is about to enter a harvesting phase. It is rumored that the company’s encrypted chips have been approved for imminent mass production. Institutional investors are also bullish on Weltrend’s Q2 sales which will benefit from analog IC products and SDIO and POS consumer products. Market insiders point out that Weltrend shares stabilized on increased volume and, with institutional investors buying, there are opportunities for the stock to make steady gains.

Weltrend operations improved quarter by quarter last year posting Q4 revenue of NT$495 million for quarterly growth of 1.6%. The company was affected by the off-season in Q1 2014 and posted consolidated revenue of NT$405 million or a quarterly drop of 18%. The company’s primary business went from profit to a loss of NT$9.31 million last quarter but extracurricular business injected net income of NT$54.82 million for a 10 quarter high and net income per share of NT$0.25.

Weltrend posted April 2014 revenue of NT$153.26 million for a monthly growth rate of 3.90% and an annual growth rate of 4.39%. Cumulative January-April 2014 revenue was NT$558.67 million for an annual growth rate of 3.81%.

It is understood that Weltrend has long charted China’s financial market field and the industry recently reported the good news of Weltrend’s encrypted chip passing verification after entered their client’s validation phase at the end of 2013. After Chinese New Year, the company successfully penetrated China’s two major banking systems with official mass production soon to follow. This project is expected to become major momentum in supporting Weltrend’s revenue growth this year.

In addition, the market reported recently that Weltrend successfully penetrated the smart wearable device market. Weltrend’s MCU successfully obtained adoption by a smart watch that combines telephony and pulse and blood pressure monitoring. Small shipments began at the end of last year and this product will inject new momentum into operations this year.

Weltrend posted consolidated 2013 revenue of NT$1.83 billion, consolidated net income of NT$127.11 million, an annual growth rate of 307.76%, and EPS of NT$0.54. Weltrend’s board of directors resolved to distribute a cash dividend of NT$0.18 per share.

Weltrend’s noteworthy operations growth this year has attracted aggressive buying on the part of institutional investors. Market insiders forecast that Weltrend shares will bottom out near its 26-week moving average and have an opportunity to move up after a period of consolidation.