TEL (8035) Results Comment – Stunning Record High OP – Might OPM Flatten from FY18?
Key Points
- Strong FY16 results were well above consensus. TEL, despite capacity constraints, announced Q4 earnings which were 8-11% beyond consensus expectations. OPM for FY16 hit a new high of 19.5%, exceeding the previous FY07 high of 18.6%. OPM for Q4 alone was an impressive 23.6%.
- FY17 guidance is also ahead of consensus: by 11-13% for sales, and by 20% for OP, for an OPM of 22.0%. TEL plans to maintain a 50% dividend pay-out ratio for the third consecutive year.
- Previously, TEL said it had no plans to raise capex strongly in FY17. Now, it plans to boost capex by 2.1x YoY (a more accurate adjusted figure would be +68% YoY against the most recent guidance, as some capex was delayed in FY16, in order to raise the scale of the projects to now be implemented in FY17).
- Global FY16 market share for key product areas rose: Etching +2ppts to 23%, Thermal processing +5ppts to 59%, Cleaning systems +2ppts to 20%.
- For CY17, TEL assumes the NAND market will expand by 25-30% YoY and DRAMs by 5-10%, with Logic / Foundries demand remaining at near record levels.
Tokyo Electron is a supplier of semiconductor production equipment ("SPE") and flat panel display ("FPD") selling through global network that spans Japan, the U.S., Europe and Asia. Co.'s principal products are coater/developers, plasma etch systems, thermal processing systems, single wafer deposition systems, cleaning systems (auto wet station, single wafer cleaning system, pre-clean system and scrubber system), wafer prober, FPD coater/developers and FPD plasma etch/ash systems. In addition, Co., through its subsidiaries, is engaged in the provision of transportation services, insurance services, as well as the support services for Co.'s photovoltaic cell ("PV") production equipment.
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