Despite the Coronavirus Outbreak, revenue growth of world’s leading own brand turnkey test and automation solution provider, Chroma ATE Inc (TPE: 2360) surged up by 45% in the month of March.
While other countries are facing a slowdown due to the pandemic, Taiwan has vigilantly prepared itself to fight the virus. They used technology to trace cases and already had a stockpile of medical equipment to handle the outbreak.
Taiwan is one of the leading producers of information and communication technology products. Government has always backed the high-tech enterprises with its funding so that the nation rises as a technological powerhouse. With the support of government and all research institutes, private sector was aided with research and development and were made to explore new technologies. Hence, it is observed that all Taiwanese firms had a sales surge in the month of March despite the COVID-19 outbreak.
Now, talking about Chroma ATE Inc,
- Sales Revenue: $ 2,053 million, was up by 33% year on year.
- Reported Net income in Q1 2020 was NT$ 471 million, it was up by 59% year on year.
- The major growth in March was contributed by the Semiconductor, photonic sector which depicted a growth of 4% quarter on quarter and 78% year on year.
- Chroma ATE’s earnings per share was up by 57% in the last twelve months. Reported EPS in Q1 2020 was $1.13 as compared to $0.72 in Q1 2019.
- The free cash flows which gives the company the opportunity to re-invest was up by 14%. Reported free cash flows as in Q1 2020 was 442 million compared to 388 million in Q1 2019.
- Debt to Equity ratio was down by 1% when compared to Q4 2019. Reported Debt to equity ratio as in Q1 2020 was 8% than that in Q4 2019 was 9%.
- PE ratio for Q1 2020 was 30.7% which is considered as higher when compared with other companies in the electronic industry which has an average PE Ratio of 15.1%.
With consideration to the PE ratio it is quite evident that the market is willing to pay more and that the investors are quite positive towards the company. Moreover, the debt to equity ratio is also less which means that it has almost negligible impact on the PE ratio. The market expects that Chroma would perform better than other companies in the industry.
According to a market survey, in 2019 more than 11 million photovoltaic inverters were globally shipped. This in turn creates a huge demand for testing. Currently India is also in need of PV testing. One of the leading companies, TUV Rheinland India have started using Chroma stimulators to develop its test capacity. These testing systems deploys Compulsory Registration Scheme (CRS) which helps generate reports easily and improves efficiency of the test. Also, these can be customised as per the needs of the customer. PV testing demand in India has not only increased sales revenue for chroma but have also increased the geographical coverage for the company.
With the onset of Industry revolution 4.0, the convergence of AI and IoT would definitely redefine the future of automation. Looking at the pace at which these technological changes takes place companies need to match up to the changing trends. These technological developments increase the demand and sales for semiconductors, photonic testing solutions. To correspond to these demands Chroma has constantly been updating and customizing its products and services to fulfil the customer requirements and resolve testing related problems.
To detect particles that are 3nm small, an In-line Nanoparticle Monitoring System has been developed by Innovative Nanotech which are being delivered to the foundry customers.
Also, to serve the customers and ensure health and safety of communities, Chroma have implemented an Immediate Delivery Program which provides Hipot testers to medical device manufacturers in US and Canada through a fast track process so that we can battle the pandemic.
Fundamentals of the company have been showing an upward trend. The government has always been backing up high tech firms which is an additional point of advantage to both the company and investor. Also, the company has been increasing its geographical coverage by providing testing solutions across different countries. Chroma has been updating and customizing its products and services to correspond to the market demands. Looking at the fundamentals and business outlook of Chroma the investors may consider this as a good option to invest.