Nan Mao shares surge on silicon photonics order hopes

Taiwanese semiconductor packaging and testing firm Nan Mao (8150) saw its shares hit the daily limit on July 6, reaching NT$115.5. The surge was fueled by renewed investor interest in the semiconductor packaging sector and optimistic projections for new orders in silicon photonics. The company's strong financial performance in the first quarter, with revenue hitting a four-year high of NT$6.936 billion and net profit soaring 176.3% year-on-year to NT$505 million, further bolstered investor confidence.

Nan Mao has strategically adjusted its pricing, implementing increases for memory and display driver integrated circuits (DDIC) in the second quarter. While the memory market, particularly DRAM, shows robust growth, the demand for DDICs is influenced by broader memory price trends. However, the company benefits from customer stocking for OLED products and steady demand for wearable devices. This pricing strategy, combined with strong market demand, positions Nan Mao for a stronger second half of the year, which is expected to outperform the first half.

The company's first-quarter results highlighted its financial resilience and growth trajectory. Gross profit margin stood at 13.8%, a slight decrease from the previous quarter but a significant increase of 4.4 percentage points year-on-year. Earnings per share were NT$0.72. The positive outlook is further supported by the potential of silicon photonics orders, which analysts believe could significantly expand the company's business scope and revenue streams.