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Edited Transcript of 2360.TW earnings conference call or presentation 30-Apr-19 6:30am GMT

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Update time : 2019-05-09 17:34:12

Q1 2019 Chroma ATE Inc allowance Call

Taoyuan Hsien can 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Chroma ATE Inc allowance conference exclaim or presentation Tuesday, April 30, 2019 can 6:30:00am GMT

TEXT translation of Transcript

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Corporate Participants

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* Jui-Ying Chieng

Chroma ATE Inc. - delegate department Director

* Paul Ying

Chroma ATE Inc. - VP of Finance & Administration Center

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Conference exclaim Participants

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* George Chu

Fubon Securities Investment Services Co., Ltd. - leader of Non-Tech Research

* Jeffrey Ohlweiler

Macquarie inquiry - Asia technique Hardware Analyst

* Jerry Su

Crédit Suisse AG, inquiry piece - Director

* Jerry Tsai

JP Morgan follow & Co, inquiry piece - inquiry Analyst

* Po-Tsung Huang

Yuanta Securities Investment Consulting Co., Ltd. - Analyst

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Presentation

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Operator [1]

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Welcome, everyone, to Chroma's 2019 First area allowance conference Call. (Operator Instructions) And though your information, a webcast replay will exist available within can an hour after the conference is finished. amuse watch www.chroma.com.tw/investor/index beneath the Investor Relations section.

And now I used to alike to introduce the CFO, Paul Ying. Mr. Ying, amuse begin.

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Paul Ying, Chroma ATE Inc. - VP of Finance & Administration center [2]

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Thank you, Jason. This is Paul Ching, the CFO of Chroma ATE. hail to the first area econmic free though Chroma. This conference will exist conducted can chiefly English. during the Q&A section, you're hail to utilize Mandarin Chinese or English to ask, besides I deliberate I'll answer according to the word that you are using.

So let's commence it from the presentation material, I deliberate we sent out this afternoon. We will exist starting from the glide #12, which is the condensed consolidated allowance statement. From here, you can watch that first area of 2019, the sales revenue peak row of Chroma consolidated and that it used to exist TWD 2,742 billion. And this denote a 21% autumn down compared to endure year first quarter. And chiefly the biggest -- the distinction will exist the consolidated sales of MAS, which has dropped by 55%. And though the parent company, consolidated sales of testing machinery business, it autumn down by 14%. And nevertheless the new materials affair autumn down by 7%. And though the total margin, we enjoyed 48%, which is a record high. And the absolute quantity is the TWD 1,317 billion. And this represents a 16% drop, nevertheless compared to the peak line, it's owing to the increasing of the total margin ratio.

And though the expense, you can also watch that we controlled fare well, compared to endure year first area above a Y-o-Y base, handsome similar. consequently the operating allowance is the TWD 289 million, denote a 48% fall compared to endure year. consequently the net allowance though the first quarter, it goes to the TWD 297 million. Compared to endure year first quarter, it's a 30% drop. And that denote an earning per segment above the basic basis $0.72 compared to endure year $1.06. Again, this is a 32% drop.

And to the condensed rest sheet, if you watch can this page, you can also watch that it's pretty though to the endure year fourth quarter. consequently the total assets, the quantity is handsome similar. And owing to the slow season effect, consequently you can watch that inventory turnover is a piece high and also the accounts turnover, again, with the identical classify of consequence compared to endure year fourth quarter. And again, the answer above equity and answer above assets is still single-digit owing to the first quarter, again the slow season effect.

So there you can watch the liberate coin run though the first area is about TWD 387 million. And this is the consolidated basis highlight.

And if we proceed to next page, which is the quarterly highlight though the first area of 2019, we can watch that parent company, the sales revenue reaches TWD 1,541 billion. This is a 9% down above a Q-over-Q base, and 22% down above a year-over-year base. The total margin, maintaining upper 50%, reached to 55%. And this is 8-quarter high, which is, management is handsome satisfied with this total margin. The operating margin reaches can the 19%, also can the expectation classify of frame. And the net allowance reached to TWD 296 million. This is 38% down above a Q-over-Q base and 31% down above a year-over-year base.

And again, the first area can a high row will exist owing to the slow season, which is the Chinese New Year period. The first area sales revenue meditate handsome low. The total margin, again, reaches the highest can the past 8 quarters. consequently this is the highlight though the first quarter.

If we proceed to the glide #15, we can watch that the first area condensed allowance statement though the parent company. Again, the sales revenue, TWD 1,541 billion, represents a 9% fall by Q-over-Q base and 22% fall by year-over-year. And you also can watch that from the total margin portion. You can watch that 55% total favour attain can the TWD 845 million. handsome much identical though the fourth area of endure year.

This is -- sole represents a 4% drop. Compared to the first area of endure year this is a 17% drop. And again, if you watch can the fare level, you also can watch that we affirm the fare flat handsome stable. consequently that we can understand the TWD 289 million though operating income, and reached can the 19%, which is a 4% growth above a Q-over-Q base, besides 31% fall above a year-over-year base.

For the net income, again, it's TWD 296 million, and compared to the endure quarter, it's a 38% drop; and compared to the endure year first quarter, that will exist a 31% drop. And again, the allowance per segment above the basic will exist $0.72 and compared to the endure year, it's a 32% drop.

If we watch can the next page, which is the rest piece highlights and the econmic ratio. Again, it seems that still above the slow season consequence though the inventory turnover and accounts receivable turnover will exist a small piece higher than the endure year. consequently can there, you also can watch that answer above equity and answer above assets stayed can the only digit area, which is we expectation if we can improve the profitabilities, then it will proceed to the double-digit can the next little quarters. And though the liberate coin flow, though the first quarter, we enjoyed alike TWD 428 million. And this is the highlight though the rest piece though the parent company.

Then we can proceed to the next slide, will exist glide #18. can this slide, you can watch that the produce mingle and also the consolidated sales breakdown. Here you can watch that the, though the first quarter, the Chroma consolidated sales reached can the TWD 2,742 billion. And it comes from the Chroma consolidated testing machinery business, which is mentioned though TWD 2,023 billion. This represents a 14% -- 15% fall above a Q-over-Q base, and a 14% fall above a year-over-year base. And full crossover above the industrial applications from the testing instruments to the semiconductor and photonics to Turnkey Solutions, it full dropped from 17% to somewhere alike a 10%, still owing to the consequence starting from endure year fourth quarter, I deliberate full the atmosphere from the commerce trouble among the China and the United States. consequently a piece of hesitate can the expansion and also can the new buy of the -- or procurement though the machinery slowing down. I deliberate this is the endure consequence above that above the first area of 2019.

And another factor though Chroma to fall is the MAS. if you watch can the MAS, first area of this year, it sole goes to the TWD 274 million. Compared to the endure quarter, it dropped by 71%. Compared to the endure year first quarter, it dropped by 55%. consequently that manner the MAS is can among of the scheme base classify of a business, and it's can black. though new material business, well, stably, well, customers transferred the utilization of the gold cord to the copper wire, consequently it dropped from the first area peak row TWD 395 million by 7% above a year-over-year base, and 22% above a Q-over-Q base. consequently can there, you also can watch that though Q-over-Q base, the total consolidated Chroma peak row dropped by 30%, and above year-over-year base comparison it dropped by 21%.

So that's the total breakdown of the peak row from a consolidated point of meaning of Chroma. consequently if you watch can the 2019, I deliberate we guide alike this. Well, firstly, the Chroma first area consolidated sales revenue represents a repel above also Q-over-Q base or Y-over-Y base above 30% and 21%, respectively. The consolidated total margin still can affirm above a higher level, which is a record high above 48%.

For 2019, though the year 2019, we still deliberate that testing machinery affair sales will exist picked up from the second area and impress into mountain seasons impartial alike our normal classify of seasonality. And the testing machinery affair is expected to fetch quarter-over-quarter. though those overseas activities alike U.S. market, European and the Japan market, will commence to elect up from the second area after a short-term stone from the U.S.-China commerce war. And owing to the 5G impartial demand, we deliberate that the IC system flat testers machinery will exist started to contribute can second half. nevertheless those photonics will exist continuing to utilize from the great sale and optical fiber demand increase. And though the Turnkey Solutions, mainly will exist chiefly contributed can the second half. And though MAS, though the automation process business, will exist commence to elect up can the second half though well.

I deliberate this is our overall guidance though the 2019. And thanks though your listening. And now we cave though the questions. Anyone?

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first issue is coming from Steve Huang of Yuanta Research.

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Po-Tsung Huang, Yuanta Securities Investment Consulting Co., Ltd. - Analyst [2]

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Paul, Jennifer (foreign language) the guidance (foreign language) earlier this year can the guidance glide (foreign language) earnings, (foreign language) or exist no lower than '17 and '18 level. (foreign language)?

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Paul Ying, Chroma ATE Inc. - VP of Finance & Administration center [3]

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(foreign language)

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Po-Tsung Huang, Yuanta Securities Investment Consulting Co., Ltd. - Analyst [4]

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(foreign language) seasonality (foreign language) parent company, the total margin (foreign language) margin (foreign language) parent company, the margin (foreign language).

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Paul Ying, Chroma ATE Inc. - VP of Finance & Administration center [5]

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(foreign language) breakdown (foreign language) margin (foreign language) produce mingle (foreign language) aggregate stated total margin. (foreign language) margin (foreign language).

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Jui-Ying Chieng, Chroma ATE Inc. - delegate department Director [6]

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(foreign language) automation (foreign language) total margin (foreign language) robotic (foreign language) cope with (foreign language) total margin (foreign language) managing the R&D and talent.

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Po-Tsung Huang, Yuanta Securities Investment Consulting Co., Ltd. - Analyst [7]

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Okay. consequently can Q1 the parent company (foreign language).

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Jui-Ying Chieng, Chroma ATE Inc. - delegate department Director [8]

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(foreign language) battery jail (foreign language) automation adding though a project-based classify of the business.

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Po-Tsung Huang, Yuanta Securities Investment Consulting Co., Ltd. - Analyst [9]

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Okay. consequently this is parent company, internally (foreign language).

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Jui-Ying Chieng, Chroma ATE Inc. - delegate department Director [10]

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(foreign language)

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Paul Ying, Chroma ATE Inc. - VP of Finance & Administration center [11]

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(foreign language)

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Po-Tsung Huang, Yuanta Securities Investment Consulting Co., Ltd. - Analyst [12]

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Okay, okay (foreign language) incrementally good (foreign language) being done impartial consequently (foreign language). Incrementally (foreign language).

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Paul Ying, Chroma ATE Inc. - VP of Finance & Administration center [13]

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(foreign language)

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Po-Tsung Huang, Yuanta Securities Investment Consulting Co., Ltd. - Analyst [14]

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(foreign language)

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Jui-Ying Chieng, Chroma ATE Inc. - delegate department Director [15]

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(foreign language) spot (foreign language) diversify (foreign language) diversify (foreign language). This is Southeast Asia (foreign language) originate (foreign language).

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Po-Tsung Huang, Yuanta Securities Investment Consulting Co., Ltd. - Analyst [16]

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Okay. Okay. (foreign language) planning (foreign language) execution.

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Jui-Ying Chieng, Chroma ATE Inc. - delegate department Director [17]

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(foreign language)

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Po-Tsung Huang, Yuanta Securities Investment Consulting Co., Ltd. - Analyst [18]

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(foreign language) guidance?

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Jui-Ying Chieng, Chroma ATE Inc. - delegate department Director [19]

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(foreign language)

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Paul Ying, Chroma ATE Inc. - VP of Finance & Administration center [20]

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(foreign language) though scheduled (foreign language).

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Po-Tsung Huang, Yuanta Securities Investment Consulting Co., Ltd. - Analyst [21]

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(foreign language)

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Paul Ying, Chroma ATE Inc. - VP of Finance & Administration center [22]

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(foreign language)

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Po-Tsung Huang, Yuanta Securities Investment Consulting Co., Ltd. - Analyst [23]

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Okay, okay, okay (foreign language)

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Paul Ying, Chroma ATE Inc. - VP of Finance & Administration center [24]

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(foreign language)

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Po-Tsung Huang, Yuanta Securities Investment Consulting Co., Ltd. - Analyst [25]

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(foreign language)

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Jui-Ying Chieng, Chroma ATE Inc. - delegate department Director [26]

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(foreign language)

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Operator [27]

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And the next issue is coming from Jerry Su of Crédit Suisse.

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Jerry Su, Crédit Suisse AG, inquiry piece - Director [28]

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Paul, Jennifer (foreign language) presentation, according to guidance (foreign language) to oversee the (foreign language). This system beyond, can application (foreign language) drives down the (foreign language) optical fiber (foreign language) piece (foreign language) optical fiber (foreign language) MAS (foreign language) guidance (foreign language).

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Paul Ying, Chroma ATE Inc. - VP of Finance & Administration center [29]

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(foreign language) marketing (foreign language) with a new application (foreign language).

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Jui-Ying Chieng, Chroma ATE Inc. - delegate department Director [30]

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Okay. (foreign language) the photonics (foreign language) photonics (foreign language) overall (foreign language). Okay, though the other driver, impartial optical fiber (foreign language) year to engagement (foreign language) optical fiber (foreign language) projected order. [So this is alike a contract] (foreign language) mass produce (foreign language) mass produce order (foreign language) infrastructure (foreign language) upgraded (foreign language) optical fiber (foreign language) related higher optical fiber (foreign language) optical fiber (foreign language) optical fiber (foreign language) photonics (foreign language) cope with the contributions (foreign language) abolish the orders (foreign language).

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Jerry Su, Crédit Suisse AG, inquiry piece - Director [31]

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(foreign language) optical fiber (foreign language)?

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Jui-Ying Chieng, Chroma ATE Inc. - delegate department Director [32]

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(foreign language) quarter-on-quarter (foreign language) photonics. (foreign language) optical fiber (foreign language).

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Jerry Su, Crédit Suisse AG, inquiry piece - Director [33]

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(foreign language)

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Jui-Ying Chieng, Chroma ATE Inc. - delegate department Director [34]

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