Issue Date：August 3, 2023
- Impact of interest rate, exchange rate, and inflation on the company's earnings, and response measures:
|Impact on the Company's Profit and Loss
|Future Response Measures
|Interest expenses accounted for 0.87% of net sales in 2022, hence interest rate changes do not have significant impact on the Company. If interest rate changes by 1%, the Company will incur additional interest expenses of NT$111,406,000.
|TThe Company maintains banking relationships with numerous financial institutions and has been able to secure borrowings at advantageous rates. The Company also has dedicated personnel assigned to interact closely with financial institutions.
|Gain on exchange and net gain on valuation of financial assets totaled NT$592,360,000 in 2022, which accounted for 1.94% of net sales. If NTD strengthens against USD by 1%, the Company’s gross profit margin will be affected by approximately 0.11%.
|The Company has dedicated personnel assigned to monitor exchange rate changes and assess how these changes affect the Company.
|A 1% rise in inflation rate will increase the Company's expenses by about NT$28,756,000.
|The Company constantly monitors market price changes and maintains sound interaction with suppliers and customers.
- Policies on high-risk and highly leveraged investments, loans to external parties, endorsements / guarantees, and trading of derivatives; describe the main causes of profit or loss incurred and future response measures：
- The Company did not engage in any transaction in 2022 that was characterized as high risk, high leverage investment or external party lending. The Company did, however, trade derivatives for hedging purpose, and assigned dedicated personnel and implemented systems to monitor, manage and assess risks on a regular basis.
- The Company offered endorsements and guarantees mainly for subsidiaries in 2022, and all transactions were carried out according to “Lending, Endorsement and Guarantee Procedures.” The Company may offer endorsements/guarantees up to a maximum of NT$22,531,092,000, and outstanding balance at the end of 2022 amounted to NT$3,179,365,000.
- For details on external party lending, endorsement, guarantee and derivative transactions conducted in 2022, please refer to the 2022 audited financial statements and footnote disclosures.
- Financial impacts and response measures in the event of technological or industrial changes：
- Demand for LCD panels is growing not only in volume, but also in terms of technology and application. Since 2017, new technologies such as AMOLED and Mini /Micro LED have emerged to pose direct competition to LCD in the future. Apart from strengthening relationships with panel manufacturers and brands and targeting applications such as laptops, TV, healthcare and vehicles, the Company will also invest in the development of new markets and products as the competitive landscape changes. Non-standardized display array, world's thinnest bezel display array, commercial peep-proof display, curved gaming monitor, in-car unit display, special-shaped backlight modules, energy-saving blue light display, HDR (Local Dimming) display and LCM module are some examples of high-value adding and high entry barrier products that the Company has targeted as means to differentiate, expand and thrive in the competitive display market.
- Rapid development of LCD and LED technologies have enabled large-size LCD displays to penetrate into market segments such as home entertainment, education and business, and LED displays to be widely used for advertisement, digital signboard and public information display. However, the Company still possesses several technological advantages such as laser light source, 4K display and MCLATM (Multi Color Laser Architecture), which enable it to offer high resolution, high brightness and vivid display solutions that are more long-lasting, more stable, easier to install and more affordable at 80 inches and above. Furthermore, the Company is exploring entry into the LED display market through strategic alliance, merger and acquisition; the new technologies acquired will prove useful in offering products needed by the market. As cloud computing and digital contents become popular, the Company is also investing into the development of a digital content exchange platform. Support of suitable digital contents and innovative business models could increase demand for the display industry.
- Expected benefits and risks associated with plant expansions：
Our second plant in Vietnam will be completed in 2023H2, and small-scale trial production follow suit in 2024 Q4. Risk factors, such as capital, project progress, and operational condition, have been assumed in pre-investment assessments to reduce the unfavorable impacts on the company’s operations, and the capital expenditure plan will be timely adjusted according to the actual condition in the future.
- Risks associated with concentrated sales or purchases：
Purchases from the largest supplier accounted for 15.31% of total purchases for the Company and subsidiaries in 2022. In 2022, the Company maintained a strong and long-term relationship with its main suppliers and therefore is not prone to the risk of concentrated purchase. The largest seller of the Company and its subsidiaries accounted for 11.96% of the total sales of the Company and its subsidiaries in 2022. The change in the proportion of sales to major customers in 2022 was due to the growth in shipping volume of home entertainment and smart micro-projector products, as well as the boom of the shipping volume in high-end engineering models after the pandemic lockdown lift.