Advantech : Reports FY2016 EPS of NT$8.96

2/23/2017

Advantech (ticker: 2395.TW) today announced the following preliminary results for the fiscal year ended December 31, 2016:

•Revenue was NT$42 billion, up 10.5% YoY
•Gross profit was NT$17.11 billion, up 11.6% YoY
•Net income was NT$5.868 billion, up 10.9% YoY
•Diluted earnings per share was NT$8.98, up 10.9% YoY

In US dollar, Applied Computing Group (ACG) was the best performed business group in 2016 with17% YoY revenues growth, following by Industrial Automation Group (IAG) with 5% YoY revenues growth. In geographic overview, North-East Asia was the best performed region with 19% YoY revenues growth, following by Greater China and Europe region, revenues up 7% and 6% YoY respectively in 2016. 'Looking forward the outlook in the first half of 2017, we expect stable demand in Europe and Greater China, while North-East Asia might continue outperforming. The demand in emerging markets experienced gradually recovery since 2H16. However, the demand is relative milder in North America, which might cause business uncertainty in the first half of 2017.' said Eric Chen, CFO and Vice President of Advantech.

Chaney Ho, President of Advantech added that overall business development in 2017 will be focused on three main strategies including the intensification of Sector Lead reorganization, deployment of new regional business units (RBUs) through joint ventures with distributors in emerging markets, and additional offices in places such as Spain and Sweden.

KC Liu, CEO of Advantech believes that the venture into the industry of the Internet of Things (IoT) have shown that the entire IoT (B2B) business ecosphere may have high potential, but an economy of scale could not be formed due to the dispersion of applications and lack of scale as well as the small quantity, diversity, and highly-customized hardware requirements. Furthermore, as the current development of Edge Intelligence PaaS (EI-PaaS) in IoT has yet to mature, system integrators still face many difficulties and obstacles in various application industries and therefore they put forward two major strategies of 'using Allied DMS for the construction of IoT hardware resource sharing platform and alliance' and the promotion of the IoT Edge Intelligence PaaS.

KC Liu further indicated that the Allied DMS (Design & Manufacturing Services) will form a professional supply chain through joint procurement and service relations shall be developed through the integration of large-scale system providers. At the same time, small and medium companies shall be invited to the supply chain to form a sharing platform that satisfies requirements for a multitude of small-scale and diversified requirements for customization as well as to provide long-term stable source of supply. KC Liu believes that the operations of the Allied DMS should be treated from two different perspectives - the clients and the industry. For clients, the scale of the platform and products of the Advantech brand will form the corecapabilities in the IoT industry and it will be shared with key account clients in the development of collaborative development and the centralized-kitchen service model; for the industry, the alliance with small and medium companies provides a shared basic R&D, procurement and manufacturing platform to increase the economy of scale and even for JV relationships.
For the promotion of the IoT Edge Intelligence PaaS (EI-PaaS) software platform, KC Liu hopes to integrate Taiwanese institutional energy such as III, ITRI and etc. and establish spin-off companies to focus on the operations of EI-PaaS, which shall provide the industrial IoT cloud service providers with rapid development, deployment and stable operations in cloud platform operations and maintenance services under a monthly subscription model. In addition, the IoT/EI-PaaS industrial alliance shall also be established and it will integrate institutional energy and the Advantech WISE-PaaS cloud service platform to establishEI-PaaS demonstrations in 2017-2018, and open up the EI-PaaS in 2018-2019, as well as invite the edge devices industry and system integrators in the industry to participate in milestone goals such as expansion and construction.