Issue Date:August 9, 2024
- Impact of interest rate, exchange rate, and inflation on the company's earnings, and response measures:
Variable Factors |
Impact on the Company's Profit and Loss |
Future Response Measures |
Interest Rate |
Interest expenses accounted for 1.31% of net sales in 2023, 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$127,500,000. |
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. |
Exchange Rate |
Gain on exchange and net gain on valuation of financial assets totaled NT$366,954,000 in 2023, which accounted for 1.54% of net sales. If NTD strengthens against USD by 1%, the Company’s gross profit margin will be affected by approximately 0.13%. |
The Company has dedicated personnel assigned to monitor exchange rate changes and assess how these changes affect the Company. |
Inflation |
A 1% rise in inflation rate will increase the Company's expenses by about NT$27,501,000. |
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 2023 that was characterized as high risk, high leverage 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 2023, 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$23,960,147,000, and outstanding balance at the end of 2023 amounted to NT$3,471,354,000.
- For details on external party lending, endorsement, guarantee and derivative transactions conducted in 2023, please refer to the 2023 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.
- The rapid development of LCD and LED technology has allowed the size of LCD panels to extend upward and penetrate into some segmented markets of home, education and enterprises. However, in terms of projection technology, the company has actively expanded various light sources, 4K display technology and intelligent projection to enable the overall image solution When applied to large screens of 80 inches or above, the solution can provide long life, stability, easy installation and adjustment, intelligence and streaming, and green products with environmental protection concepts, bringing not only high convenience of use, but also high resolution , high-brightness and saturated and vivid color performance, meeting the ultimate color and brightness performance in any personal or commercial application situation.
- Expected benefits and risks associated with plant expansions:
The Company second plant in Vietnam has been completed in 2023H2, and mass production in early 2024. 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.
- Risks associated with concentrated sales or purchases:
Purchases from the largest supplier accounted for 8.98% of total purchases for the Company and subsidiaries in 2023. In 2023, 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 11.87% of the total sales of the Company and its subsidiaries in 2023. The change in the proportion of sales to major customers in 2023 was due to the growth in shipping volume of proportion of medium and large size shipments. The growth in net sales and the increase in utilization rate will help to increase gross profit margins and there is no risk of sales concentration.