Qualitau Shares Drop in Tel Aviv Despite Profit Rise and Dividend Announcement
Qualitau, an Israeli semiconductor testing equipment manufacturer, saw its stock decline by 3% in Tel Aviv trading on Friday following its quarterly earnings report. The company's market value stands at 1.8 billion shekels, having lost 55% of its value since its peak in March, erasing over 2.2 billion shekels. Alongside the earnings, Qualitau declared a dividend of 3 million dollars (61 cents per share) and approved a share buyback program worth approximately 35.7 million shekels.
In the second quarter, Qualitau reported revenues of 17.9 million dollars, a 27% increase year-over-year. However, operating profit fell by 2.6% to 6.6 million dollars due to a significant rise in operating expenses, particularly research and development and general administrative costs, each increasing by 87%. Despite this, net financing income of 5.4 million dollars contributed to a net profit of 10.8 million dollars, a 67% increase from the same quarter last year. The company attributed the financing income growth to higher cash balances from a private placement and rising interest rates.
The private placement in March raised 225 million shekels from institutional and qualified investors at about 610 shekels per share, nearly double the current share price. Discount Bank's initial assessment suggests Qualitau will be removed from the TA-125 index in the upcoming index update. Analyst Lior Wider noted the company’s operating profit erosion and heavy reliance on one-time financing income.
CEO Yaakov (Kobi) Hershman highlighted ongoing global semiconductor demand growth, expected to exceed 1.6 trillion dollars this year. He reported a current order backlog of 54 million dollars, slightly down from 60.9 million dollars a year ago, attributing the decrease to shipment timing rather than demand loss. Hershman emphasized China’s continued role as the company’s largest revenue source, accounting for about 41% of total income in the first half of the year.
He also addressed concerns about China’s aggressive semiconductor industry expansion, including technology transfers from Western companies like Qualitau. Hershman stated the company is monitoring the situation and will take necessary steps to protect its intellectual property. He noted that ongoing US-China trade tensions have placed some Chinese customers on restricted lists, though restrictions on one client have been eased. Despite these challenges, Qualitau has maintained business volume with the Chinese market.
