Primax Electronics Ltd. (4915 TT / 4915.TW) announced today its consolidated September revenue of NT$6.31 billion, which decreased 13% year-on-yea(YoY), but is a 6% month-on-month (MoM) gain. Accumulated YTD sales amounted to NT$51.28 billion, up 5% YoY. 

Total 3Q revenue amounted to NT$17.67bn, up 7.4% quarter-on-quarter(QoQ). Affected by key components shortage, consumer audio products order had further delayed the shipment to 4Q. Our major customers continue to ensure component supply, and expect the component supply situation will ease off in 4Q21. We anticipated 4Q revenue will show significant quarter-on-quarter revenue growth and mark this year highest quarter revenue  if component supply can meet our schedule. Looking forwards, 2H21 gross margin and operating margin are likely to improve compared to 1H21, while 2H profit are expected to be higher than 1H21.

Work from home (WFH) demand including PC, gaming, and consumer sales continued their growth, although at a slower pace compared to 1H 2021. The positive news is that while WFH demand may be slowing down, MFP demand is seeing a double-digit YoY growth as businesses resume normalcy and employees are gradually returning to their workplace. For camera modules, car electronics is the bright spot as ADAS camera modules for EVs remain strong, while smartphone camera module revenue and mix is on the decline. Visual technology sales are likely more flattish on a YoY basis, as Primax is now aggressively cutting low-margin and non-profitable product lines. Audio products will enter high seasonality in 2H21, however, component shortages will remain as key challenge.

Looking forward to 2H 2021, Primax expects profit growth to outstrip revenue growth from optimizing our product and customer mix, which would translate to an improvement in gross margin and operating margin. Profitability from Intelligence Interface segment will remain stable from the PC and gaming segments and a growing demand from MFP. Profit from Visual Technology segment will show substantial YoY growth, thanks largely to rising car ADAS contributions. Profit from the Audio segment will grow significantly half-over-half (HoH) backed by improving client mix and increasing the ratio of high-end premium audios. 

Primax continues to strengthen its Three-Senses-In-One Strategy with the expansion of new smart devices to inject growth momentum. Primax will increase the proportion of high value-add new products mix gradually each year, with emphasis on areas such as AIOT and Smart Access.

• Visual Technology segment: ADAS for EVs would likely show a multifold growth thanks to an US EV customer. Primax is also focusing on increasing its higher margin non-smartphone camera module mix to improve margins.
• Intelligence Interface segment: PC and gaming peripheral demand remains intact, while MFP demand is picking up. Also, high growth is expected from new businesses such as smart home and docking.
• Audio segment: Chiefly due to consumer audio and video conference demand, coupled with newly initiated projects, audio profitability will improve significantly on a YoY basis.

Primax is also upgrading its manufacturing capabilities by moving towards Smart Manufacturing via Industrial 4.0 concept. We also expect our Thailand manufacturing site to be operational by the end of 4Q 2021.