Ronda Electronics (stock code: 3698) reported revenue of NT$890 million in November, marking a 5.1% decline from October. For the first 11 months of 2017, the company's consolidated revenue reached NT$11.17 billion. Despite the seasonal slowdown in the fourth quarter, Ronda has been focusing on innovation, particularly in developing new products such as Mini LED backlights, automotive lighting solutions, 3D sensors for face and iris recognition, large touch screen IR modules, and UV curing technology. Several of these products are currently being tested with customers and are expected to be integrated into access control systems, security cameras, and wearable devices in 2018.
Throughout the year, Ronda has been optimizing its product mix and focusing on higher-margin lighting orders, which has led to a drop in overall revenue but an improvement in gross profit margins. The company’s earnings per share for the first three quarters stood at approximately 0.17 yuan. While the fourth quarter is expected to see a slowdown due to seasonal factors, the full-year performance is still projected to outperform the previous year. The company is also accelerating its investment in Mini LED and Micro LED technologies, with plans to launch mass production of Mini LED backlights in 2018.
Although the company’s profitability improved this year, it still fell short of expectations. However, Ronda remains optimistic about its 2018 outlook. It is currently working with multiple clients to develop Mini LED backlight products for large IT devices like notebooks and monitors, with market availability expected by the end of 2018.
In terms of application expansion, Ronda has been adjusting its product portfolio, focusing on higher-value lighting orders and exploring niche markets. Its UV products have entered the top five nail machine brands in the U.S., while its IR infrared modules with dual biometric functions have found applications in mobile devices, laptops, access control systems, and surveillance equipment.
On the manufacturing front, Ronda’s new plant in Chenzhou, Anhui, began construction in the third quarter of this year and is expected to be completed in mid-2018. Future capacity adjustments will involve moving some production from Suzhou and Taiwan plants to Zhangzhou, with the overall plan to be finalized next year. The Luzhou plant will focus on downstream lighting assembly and packaging, while the Suzhou plant will handle the MOCVD front-end process. The Hsinchu plant will retain some packaged production for high-end products and new developments.
Ronda has also been vertically integrating its LED operations within the AUO Group, covering upstream epitaxy, die production, and downstream packaging and module manufacturing. In recent years, the company had focused heavily on lighting, which accounted for over half of its business. However, due to declining demand and fierce competition, the proportion of lighting has dropped to around 40%, while backlights now make up 60%.
During the third quarter, despite strong backlight shipments, the cautious approach to lighting orders resulted in lower-than-expected revenue performance. Some product issues also impacted gross margin and costs, leading to a quarterly EPS of only 0.08 yuan. The cumulative EPS for the first three quarters was approximately 0.17 yuan.
In October, revenue fell to NT$940 million, down 4.7% month-over-month and 17.6% year-over-year. The total revenue for the first 10 months of the year reached NT$10.28 billion, a decrease of about 11% compared to the same period last year. The fourth-quarter revenue is expected to be lower than both the previous quarter and the same period last year, but the company anticipates continued improvements in gross margin and overall profitability.
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