Qisda Corporation (2352) Earnings Call Transcript & Summary

Hello, investors. Good afternoon. Welcome to Qisda Corporation, the Second Quarter Results of 2025 Investor Conference. This conference is chaired by Chairman, Peter Chen; President, Joe Huang; and our CFO, Jasmin Hung. Also co-chaired by GM of each business group of Qisda Group; GM of Information Technology Business Group, Daniel Hsueh; GM of Commercial and Industrial Business Group, Yu-Chin Lin; GM of Medical Business Group, Harry Yang; GM of Business Solutions Business Group, Joshua Tzeng; GM of Networking and Communications Business Group, April Huang. This conference is estimated to take 1 hour. The agenda is as follows. First, Jasmin will bring us the 2025 second quarter financial results and business outlook and followed by Chairman, Peter Chen; and President, Joe Huang, to bring us the business update and outlook, followed by GM of each business group to share the highlights of each business group. And later, we will enter Q&A session. [Operator Instructions] Before we commence, we want to remind every investors to pay attention to the safe harbor notice as the content are subject to risks. Please spend some time to read through the content on Slide 4, safe harbor notice. Thank you. Next, I will hand over the microphone to CFO, Jasmin, to bring us the second quarter of 2025, the financial results and business outlook.

Hello, investors. I am CFO of Qisda Group, Jasmin Hung. First, I will give a briefing. I will introduce briefly about Qisda Group established in 1984. We have 41-year history and mostly deploy in information technology, medical, smart business solutions and networking communication. Current capital is TWD 19.3 billion and estimated to have a share capital refund on October 7 and to have stock relisting and our share capital would return to TWD 15.8 billion. Other than 4 major business deployment, and we also have manufacturing sites, sales offices and R&D centers for manufacturing, mostly located in Taiwan, China and Vietnam. For self offices, we have more than 200 locations worldwide. For R&D centers located in Taiwan and China, and we have 26,000 employees worldwide. And in recent years, we have won many awards. In 2025, we have won 7 consecutive years Best Company to Work For HR Asia and 3 consecutive years AREA Award and FinanceAsia, Asia's Best company in 2024. And in the first half of 2025, revenue reached TWD 103.2 billion. In the revenue breakdown, Asia accounted for 52%; Americas, 30%; Europe, 17%. Let's take a look at 4 business groups. The purple blocks are the high-value-added business group, we invested in recent years. Medical, TWD 14.8 billion. We have medical services, equipment and consumables and dialyzer. BSG accounted for 17%, reached TWD 17.6 billion. We have IT intelligence partners and AI computing, cybersecurity, edge to cloud integration, digital transformation. And the second one is OT intelligence. We have green energy, automation, industrial computer. NCG accounted for 10%, reached TWD 10.2 billion and purple blocks are the high-value-added businesses and exceeding TWD 10 billion scope for original IT reached TWD 54.8 billion, mainly displays reached TWD 38.6 billion and the entire distribution, the original business and the new businesses each accounted around 50% of total revenue. All right. Let's take a look at the second quarter financial results. First, let's talk about exchange rate, the appreciation of NTD, what's the impact to Qisda Group. Just like most of the enterprise in Taiwan, exchange rate also influenced Qisda Group, and there are 3 major topics to talk about it. First, revenue; second, operating income; third, exchange rate on non-op income. First, Qisda in our previous conference, we have shared that we have used many currencies in previous conference, mostly USD, euro, RMB, NTD, Japanese yen and Brazilian real. However, USD accounted around 60% of our total revenue, 60% to 65%. So the depreciation of USD and appreciation of NTD will have impact to our revenue. This is the first aspect. And second, for inventory and material costs. For most of the inventory and materials, we paid in USD, but most of the listing companies in Taiwan use NTD on their functional financial statements. So when they paid in USD, it has to be converted into NTD on inventory and material. And they have paid a couple of months ago. So during the depreciation of USD, the purchased material would be much more pricy a couple of months ago, and that would impact the ratio of our costs in USD, and that would bring the short-term impact. After digesting the inventory level and much more stable currency, this situation will be alleviated. And the third part is non-OP income. We have mentioned that we have hedging policy in Qisda Group with appropriate hedging measures, the non-OP exchange rate, it would be benefiting our performance. So overall, from the revenue perspective, we have mentioned despite the impact on the depreciation of USD. However, in the second quarter, revenue grew 7% Q-o-Q and Y-o-Y through the revenue growth. It could compensate the impact brought by the exchange rate. For gross margin, revenue grew, although impacted by the exchange rate, gross margin still surpassed 16% for 9 consecutive quarters. Revenue performance Q-o-Q-wise, 4 major business all grew and with double-digit growth in BSG and NCG. And Y-o-Y, IT, medical and BSG is on an upward trend with double-digit growth in Medical and BSG. For NCG, it remained flattish. For gross margin and op income amount, both decreased Q-o-Q and Y-o-Y due to the significant appreciation of NTD in the second quarter. And profit attributable to Qisda was TWD 0.38 billion with an EPS of TWD 0.18. For each business group, IT revenue reached TWD 27.8 billion, up by TWD 0.8 billion, up by 3%. Revenue slightly grew Q-o-Q and Y-o-Y. Gross margin and OP income amount remained flattish Q-o-Q, but decreased on Y-o-Y because of exchange rate. High value-added businesses revenue reached TWD 26.7 billion, up by TWD 3.4 billion, up by 15%. Revenue grew double digits on Q-o-Q and Y-o-Y basis. OP income margin and OP income amount increased both on Q-o-Q and Y-o-Y basis. Medical revenue grew on Q-o-Q basis. OP income margin and op income amount also increased. Revenue grew 20% Y-o-Y. OP income amount decreased on Y-o-Y basis. Mostly the revenue grew. However, the operating income amount decreased. There are a few factors. First, for hospitals, it has expanded Phase 2, and it has been completed in last December. And in the first half, we have pre-invested in the deployment of talent and equipment and so forth. And in the second half, it would enter a full functioning operation situation. So we have invested the advanced investment. And the second factor is that our drug store mostly located in Southern Taiwan and being influenced by frequent flooding situation, and that also impact the first half performance. For BSG, Q-o-Q revenue grew 18%. OP income -- margin and OP income amount increased and revenue grew 30% Y-o-Y. OP income amount also increased. NCG Q-o-Q revenue grew 26%. OP income amount decreased. Revenue remained flattish Y-o-Y. OP income amount decreased on Y-o-Y basis. And the first half revenue reached TWD 103.2 billion, up by TWD 6.4 billion, up by 7%. Profit attributable to Qisda was TWD 0.84 billion. EPS was TWD 0.44, impacted by the exchange rate compared to last year same period, only down by TWD 0.03. The entire revenue other than NCG declined 6%. Other business group grew and for Medical and BSG achieved double-digit growth. Let's go through the consolidated statement of comprehensive income. The second quarter revenue reached TWD 53.4 billion, up by TWD 3.6 billion Y-o-Y, up by 7% compared to the first quarter, up by TWD 3.7 billion, up by 7% Q-o-Q. Gross margin reached 16.1%. Operating income, TWD 762 million. OP income margin was 1.4%. Net non-OP income, we have mentioned, other than having a one-off disposal, otherwise, the number should be negative because we will bear the burden of interest and so forth. And we nearly have TWD 50 million and because of the -- this is the result of evaluation, so the profit before tax was TWD 712 million. Net income attributable to Qisda was TWD 356 million and EPS was TWD 0.18. Let's take a look at the consolidated statement of comprehensive income for the first half. The revenue reached TWD 103.2 billion, up by TWD 6.4 billion, 7% Y-o-Y. Gross margin was 16.7%, up by 0.3 percentage point Y-o-Y. Operating income was TWD 1.7 billion, down by TWD 352 million Y-o-Y. Net non-OP income in the first half of 2024, it was because of the one-off disposal of our subsidiary. It has TWD 33 million. Net income attributable to Qisda in the first half was TWD 839 million. EPS was TWD 0.44 slightly went down by TWD 0.03 Y-o-Y. For consolidated balance sheet highlights, total assets reached TWD 196.8 billion compared to the previous quarter, TWD 205.2 billion, down by TWD 8.4 billion. This is because of our many assets was accounted in USD in our overseas subsidiaries. And at the end of the quarter, we will reevaluate so the depreciation of USD would impact our total assets. For the equity, it was TWD 57.3 billion compared to the first quarter, TWD 63.6 billion, down by more than TWD 6 billion. This is also the impact of the reevaluation due to the depreciation of the USD, and it will reflect it on equity and being reevaluated impacted by the fluctuation. And the financial debt remained the same as the first quarter since the total asset decreased, so the financial debt ratio increased. It was 39%. Let's take a look at cash conversion cycle. It was 94 days compared to the first quarter, down by 4 days. And this is the quarterly trend of our financial trend. You can refer to the content on this slide. Revenue-wise, up by 7%, reached TWD 53.5 billion in the second quarter. Operating income impacted by the exchange rate down by 24%. Gross margin remained around 16%. For the second quarter financial trend on a Y-o-Y basis, you can refer to the content on Slide 15. Let's take a look at business group revenue trend, quarterly trend. High value-added business group, the total revenue reached TWD 26.7 billion, up by 17% Y-o-Y. Medical reached TWD 7.7 billion, up by 20% Y-o-Y, hit record high. BSG, TWD 9.5 billion reached up by 30% Y-o-Y, also hit record high. NCG revenue went up quarterly. Revenue was TWD 5.7 billion. IT high value-added business group, revenue reached TWD 3.8 billion. IT Original reached TWD 24 billion. Let's take a look at gross margin performance. The yellow column is the gross margin range. It is not the revenue growth rate. The second quarter medical gross margin range was 20% to 25%, slightly went down. BSG was 15% to 20%. NCG was 15% to 20%. IT high value-added business group was 20% to 25%. IT Original, 10% to 15%. This slide, you can refer to content of revenue breakdown by business, the quarterly performance. In the next slide, we have listed the listing company of Qisda Group, the financial performance and the general performance. For IT, we have 2 subsidiaries, DataImage, revenue and net income slightly went down. For SIMULA, revenue went up, and alleviate the loss. For medical, we have 4 subsidiaries. BenQ Medical, revenue went up by TWD 330 million, net income down by TWD 20 million. ConcordMed enjoyed growth on revenue and net income. Norbel revenue went up. Net income went down by TWD 13 million. BSG from DFI to Grandsys, all enjoyed significant growth on revenue. For net income, DFI up by TWD 83 million was highest in the same period in 2 years. AEWIN also hit highest in the same period in 2 years. Ace Pillar net income was -- went up by TWD 48 million. MetaAge revenue went up by TWD 1.4 billion. However, net income went down by TWD 111 million. It was affected by the evaluation of the gain of the financial assets. Grandsys net income up by TWD 27 million. NCG, we have Alpha, Hitron and IDT. And in the first half, they were both in deficit.

Next, we will have Chairman, Peter Chen, to bring us the third quarter outlook.

Hello, investors and friends from press media. Good afternoon. I am Chairman, Peter Chen. First, our CFO has brought us the financial performance in the second quarter. We have seen the performance. It is not ideal. Our revenue compared to the same period last year, we enjoy a growth. The revenue is not a big issue. In the second quarter, we all know that before finalizing the tariff, we have enjoyed the pull-in effect. And it also generates 2 effects. The first one is the revenue in the second quarter looks better than usual. However, the inventory level also went up. Unfortunately, we also encountered the exchange rate fluctuation, the appreciation of NTD in April to June, the higher the inventory level, the impact would also be higher, especially not only on amount, it also affect the period -- the length of time. The higher the inventory level, it takes longer to digest it, and it would impact longer. The revenue went up. The EPS was TWD 0.18, and that was the cost. And we've also seen a question, the appreciation of NTD was 1%, how it's going to impact revenue. We estimate 1% appreciation of NTD, revenue would went down 0.7% and gross margin would went down by 0.2 percentage points. And it would also be based on the company structure, the portfolio, our hedging policies. We have to be fully prepared. And we have to manage our inventory level. to manage and control the position to control the cost of hedging, so to control the impact on the total amount. The revenue in the second quarter was not ideal. It is mainly because of the appreciation by 6% to 7% of NTD. We have managed properly, and we didn't have great impact, and we have measures to control the effect. This is about the situation of the second quarter, and you may pay great attention to the performance of the second half of this year. We have mentioned that before finalizing the tariff, the advanced order -- partial orders that's supposed to happen in the third quarter, they have been placed in the second quarter, and it would evidently impact the potential revenue performance in the third quarter, the number of the third quarter because partial orders has been placed in the second quarter. The third quarter, our current observation for manufacturing industry, the third quarter is a traditional peak season. However, the performance of the third quarter might be around the same as the second quarter, maybe slightly better. This is because of the advanced order effect in the second quarter. And the visibility of the fourth quarter remains low, especially in Taiwan, Section 232, the security -- the list of national security tariff. The entire influence would be greater to companies in Taiwan because semiconductor and ICT were listed, the tariff for those industries used to be exempted. The final results supposed to be announced in mid-August, how it's going to impact semiconductor. What's the final number on the tariff. They remain obscure. And for the entire -- after finalizing, how it's going to impact the consistency of terminal price. It will be much more evident because semiconductor and ICT accounted 75% of the total industry in Taiwan and the ratio in the U.S. is also high. So it would cause impact to the consumers. It would influence the terminal price, and it would be more evident. So in the fourth quarter, it would definitely be influenced by the finalized tariff of -- based on the Section 232 and also influence the purchasing power and consuming willingness. In May, June and July, we can see that purchasing amounts were weakened. The possibility of weaken the purchasing ability it would reflect in the fourth quarter, there is a high chance. So the visibility in the fourth quarter remains low. We're still observing. The Section 232 is supposed to be finalized. The tariff should be finalized in mid-August. And in the second half, the revenue performance should be better than the first half, but not much better, especially there are too many uncertainties to the performance of the net income. And Qisda Group would hold the proven attitude to respond to the future challenges and manage the impact to our net income. This is the -- my perspective to the overall industry and the tariff. For each business group and the operational aspect, I will hand over to our President, Joe and GM of each business group to bring us more detailed information.

Hello, everyone. I'm President of Qisda Group, Joe Huang. Our Chairman has brought us analysis to the tariff issue and exchange rates. Everyone paid great attention to the U.S. tariff. This is also what we paid our attention to. Around 27% to 28% of our revenue were exported to the U.S. And among them, based on Section 232 around 90% of product, the tariffs were waived. And since the policy is constantly changing, for the tariffs for the environmental changes, we put great effort to build a resilient supply chain and respond to the external changes. We're seeking out other places, Southeast Asia, America, especially Mexico, other manufacturing sites. And we will keep looking for other places in response to the tariff changes. For the orders in the third quarter, the visibility remains low. It used to be the peak season. However, it doesn't seem like that at the moment. For each business group, IT since tariff issue bring uncertainty and also we are meeting the trough. However, for industrial computer and edge AI, market demand remains strong. It is positive. For MCG, emerging markets still enjoy the advanced order effect and remains healthy. For IT industry, it is entering the lead time for the peak season, and we anticipate a yearly growth despite market uncertainty. For medical, we continue to proceed listing procedures of hospitals. Other than that, we have also expanding the biomedical science scope and continue to expand pharmaceutical channels. As to BSG focusing on computing power, software and services and smart automation, it also seems to be positive. NCG, the increasing shipment of emerging market would bring us the estimated yearly growth in the third quarter and we will pay great attention to the impact brought by the tariff policies and to seek out the manufacturing site in other places. And I will hand over to each to GM of each business group to bring us to highlight of the second quarter and outlook of the third quarter and then enter the Q&A session. First, I will have GM of ITG, Daniel Hsueh.

Hello, everyone. I am Daniel Hsueh, responsible for the performance of ITG. Here's to bring the highlight of the second quarter and the outlook of the third quarter. The second quarter, the global display market compared to the same period last year declined. Commercial market had a low demand and greater impact in the U.S. market due to recession. Home display market sales also went down in the second quarter. However, Qisda display cells and revenue compared to the previous quarter and same period last year, we enjoy a growth. And for high-end products, the sales amount continued to grow. The first half, the total sales amount of [indiscernible] grew 30%. The third quarter outlook, each brand of display will increase the strength in expanding sales globally due to the impact of tariff uncertainties of display market remains high. However, Qisda display the sales amount and revenue in the third quarter is estimated to grow, and we will keep pursuing a dual growth on Y-o-Y and Q-o-Q basis.

Next, I will have GM of CIG, Yu-Chin Lin.

Hello, everyone. I am GM of CIG, Yu-Chin Lin. Next, I will share and report the second quarter highlights and the outlook of the third quarter. In the second quarter, for projector, we have embarked mass production of new models, however, impacted by the tariff, we began to shift manufacturing locations and had a 2-digit decrease Y-o-Y. For industrial and commercial product customers, due to the grace period, they pulled in orders in the second quarter and the revenue was better than expected and grew 1 digit Y-o-Y. The demand for automobile industry, we experienced a decline for 3 consecutive quarters, and our customer turned conservative in managing their inventory level revenue dropped in double digit compared to the same period last year. And the outlook of the third quarter with the completion of shifting manufacturing locations and also the mass production phase of new models. The revenue in the third quarter supposed to enjoy a growth on a Q-o-Q basis due to the advanced pull-in of our industrial and commercial product customer in the second quarter, the market demand in the third quarter might turn conservative, and we will keep observing. For new automobile product, CPU modules is in mass production phase and creates new revenue stream. And we have experienced 3 consecutive weak quarters. And in the third quarter, it's supposed to come back and we will gradually increase the production capacity of the new models. And the latest news, the U.S. said 20% tariff on Taiwan good. For -- and this decision does not affect the plans of shifting manufacturing site to Taiwan and Vietnam.

Thank you. Next, we will have GM of Medical Business Group, Harry Yang.

Hello, investors and friends from Press Media. I am GM of Medical Business Group, Harry Yang. I will bring you the second quarter of our entire Medical business group. The entire medical revenue grew 20% Y-o-Y. Medical device grew 38% Y-o-Y, and we have 4 major product lines. The first one is the healthcare retail channels, which includes BenQ Hearing Aid store and BenQ Healthcare brick-and-mortar channel, and we are actively expanding new stores and increasing operation synergy and to create more contribution on revenue and profits. And we have embarked on in-store shops. We have our original hearing aid store to establish in our original drug store. This is called in-store shops, and we are actively working with other cosmetic stores. We have also had many strategic collaboration. We're actively working with Korean companies, for example, [indiscernible] store. We have also worked with Japanese cosmetics companies. This is about the healthcare retail business. And the second part. This is what we have been deeply cultivated. Dialysis, we have spent the recent 2, 3 years in China and experienced product ramp-up. We also distribute development in Southeast Asia. Other than that, we also expand our original product line to enter the pet dialysis industry because of the population of pets is higher than that of human and the demand for pet dialysis is also increasing, and we're actively deploying and enjoy great outcome. Other than that, we're also extending our production line to water filtering system. And the third one is image using our original ultrasound technology. We have deeply cultivated in Southeast Asia, especially in Thailand, we enjoyed great outcome. We worked with many Thailand hospitals, and this is our original ultrasound product. And using the technology, we also applied it to the new products. We have used it in low intensified focused ultrasound. We have also enjoyed some outcome. And in the fourth quarter, we will embark the shipment and also expand the new production such as fish echo sounder. And for medical devices, equipment and consumables, this has been the major product of Medical Business Group, especially in operating table and we have manufactured an interproduct ramp-up in China. And other than our original product, we're also deploying some equipment in operating room such as surgical robots, which has a wide variety of product portfolio. And we focus on robot arm to guide the operation to help physicians to guide them, and we have already begun the shipment of the application to neurology and this is the 4 major production line. And for the third quarter, we will continue the momentum of the second quarter. The overall performance is supposed to be optimistic. Thank you.

Thank you, Harry. Next, we will have GM of BSG, Joshua Tzeng.

Hello, investors and friends from Press Media. I am GM of BSG. The second quarter revenue grew Y-o-Y and Q-o-Q in the 3 major areas. First, Enterprise Smart IT. We will continue to optimize current businesses and operational performance of overseas subsidiaries in the second quarter had elevated and domestic market, market of sales and services of security, public cloud, application platform and related software and hardware gradually picked up. And for Industrial Smart IT. For industrial PC, we focus on the vertical application in industry and enhanced product and service shipping speed and quality and integrate across enterprise effort on R&D and manufacturing resources, establishing one-stop product and service platform through product planning and for cybersecurity market, urgent order placed by market in the U.S. And in the second quarter, the shipment continued to grow, we accelerated ODM project sample mission and develop collaboration opportunity with customer. As to smart automation, revenue benefits from the effect of M&As and successfully muscled into supply chain of tire and equipment, semiconductor and robots. And for OMO online and offline virtual and physical integration, we continue to enhance AI-enabled retail SCO and self-service kiosk solution implementation in multiple countries. In the third quarter, we focused on computing power, software and service and smart core businesses development, continue to provide advanced smart solution and revenue in the third quarter is estimated to grow on a Y-o-Y basis.

Next, we will have April.

Hello, I will bring you the report on NCG performance. The revenue in the second quarter was TWD 5.694 billion, up by 26% Q-on-Q, remained flattish Y-o-Y. We estimate to be able to mitigate the loss compared to the first quarter. However, impacted by exchange rates, net income performance was not better than the first quarter, and we will continue to put effort in improving the performance. In the third quarter, the consolidated revenue due to the increasing shipment in Indian market and successive completion of verification of new customers such as [indiscernible] 4.0 customers. We estimate the revenue in the third quarter is supposed to enjoy a yearly growth. And for new business and new products, in India, we work with our customer to deploy FR2, frequency range 2, LBR, low-band receiver, to allow FWA, fixed wireless assets, to be as fast as optical fibers and estimate simple submission in the third quarter. This will be our future driver and to deploy data center after Computex Taipei, we have demonstrated liquid cooling system. And we will work with Broadcom on 1.6 terabyte switch, and we will demonstrate the sample model in the fourth quarter. This is the second quarter of 2025 Qisda Corporation financial performance and outlook of the third quarter, we will enter the Q&A session. [Operator Instructions].

Hello, investors and friends from Press Media, I am Peter Chen. We will begin our Q&A session. And the first question is the appreciation of NTD, how it's going to impact our revenue, our loss and gain? I have answered that before, but I will repeat them in detail. Based on our internal analysis, the 1% appreciation of NTD, the revenue should -- went down by 0.7% and gross margin would drop by 0.2 percentage points. And the second question -- and the following question, we should have CFO to answer them. The second one is the hedging policy for the third and fourth quarter in responding to the uncertainties, how we are going to strengthen our measures? And the third question is regarding our payout ratio. The dividend was 1.11, representing a 100% dividend payout ratio. And it is estimated that this year, we will suffer on revenue performance. And I will have CFO to answer this question. And the following question is the reason of the high income tax. We have answered that in previous conferences. And the following question is the progress of our IPO process. And I will have Jasmin Hung, our CFO, to answer those questions.

Regarding hedging policies, we have shared that the revenue and net income on OP income were impacted. However, non-OP income through hedging policies, we enjoy again. So the overall performance after offsetting we will have a mitigated impact. And in the future, the third and fourth quarter, we have this policy to adopt natural hedging. For those risk exposure, we will adopt this policy. And of course, it would have costs. Other than that, this kind of short-term impact would exempt it on inventory level and term over date and it will be impacted by the exchange rate. And the turnover days of our subsidiaries, if it's longer, the impact would be greater and we will have stricter review to reduce the amount of inventory and the days -- and the turnover days. However, due to the tariffs and manufacturing in Vietnam, we have stocked up and the inventory level went up by TWD 3 billion Y-o-Y and encountered by the tariff and exchange rate. However, we will continue to execute risk management. Second question, payout ratio. In recent years, we have adopted a higher payout ratio. However, I could not give a specific answer about what's happening next year. It has to go through the board resolution. However, without major M&A activities, our capital expenditure should remain the same and the payout ratio should be higher. However, at the moment, I could not offer much more. And the third question is regarding Income tax. Income tax, the calculation of income tax is not based on the profit before tax on financial report. It's based on the tax report, the taxable income. This is the first highlight. And the second highlight, we have more than 200 subsidiaries worldwide using different currencies. If each country enjoy a higher profit in that quarter, it will also have higher tax. In recent quarters, we have a brand called BenQ. In the recent years, the profitability is pretty good. So the tax paying ability is also stronger. This is the second highlight. And the third highlight it is difficult to calculate by the PBT on financial reports. There are some accounts on non-OP income that is difficult to be included. For example, FVTPL sometimes it's negative, sometimes it's positive, but it has nothing to do with the income tax rate. When it's positive, you might feel the income tax is lower vice versa. And there are more than 200 subsidiaries under Qisda Group and the income tax rate is around 28% to 30%. And the fourth question is regarding hospital IPO progress. We have had a hearing process on Hong Kong Exchange and finished filing process, which is difficult. However, that is the first milestone we have completed. And for now, as a matter of fact, thank you, hospital, we are contacting the institutional investor. We are entering the underwriting phase. And now we are contacting investors for underwriting. And for other parts, you can refer to the material on Hong Kong exchange news, and you can download prospectus, and they have very strict regulation for IPO. So you can check the material on the Internet. And those are the 4 questions I needed to answer.

And the following question is regarding the gross margin of IDT is evidently better than Alpha Network and Hitron. And what is the reason? I will have the GM of NCG, April, to answer this question.

Hello, everyone. Regarding this question, the major reason is the differences in business model for Alpha Network and Hitron. Alpha Network mostly offer ODM services and focusing on hardware and some trades we offer software services, but mostly our customer will take care of their services. And Hitron is the combination of hardware and software. For IDT it's different, other than products, we also offer the service of implementation of software and also the maintenance services. So the business model is different. If we -- so based on the business model of IDT, the gross margin is reasonable. And of course, it's going to be higher than Alpha Network and Hitron. However, if we compare Alpha Network and Hitron with other company in the same line of work, the gross margin is actually reasonable. However, currently, the economic scope of Alpha Network is Hitron needed to expand and also to find the unique value of our services. And we have been reporting the new business opportunities in Southern Asia, especially in India. And we will expand the effect in the future. And recent quarters, we have expanded the deployment of data center to use the core compatibility to maximize our unique values. This is the optimation of the profit of Alpha network and Hitron.

The next question regarding Smart Medicine. There's a question regarding which subsidiary is responsible for Smart Medicine industry? And what's the influence on the revenue of Qisda Group. I will have Harry Yang, GM of Medical Business Group to answer this question, and I will add more information later.

Investors and friends from Press Media, hello. Regarding this question, for smart medicine in our business group. Many subsidiaries have included this part. For example, BenQ Medical. We have IQOR, Intelligence Quality Operating Room. We have ultrasound and diagnosis systems. These are our original production line. And since we have detected this trend. And we have a joint venture with Market Tech and established market top smart solution and it focused on smart hospital. And from the management system, the medical record dashboard and the tracking system for our patients. We also have AI smart medical image assistance system and the high-end equipment and radiation and digital dental services. These are the overall, our smart medical services. And market top smart solution is responsible for this part. And the overall operation situation is pretty good. Other than Taiwan, we have deployed in Southeast Asia, especially in Thailand, working with hospital in Thailand, and we keep expanding. Thank you.

For smart medicine, I want to add more information. For BenQ Medical, the major surgical table, surgical light and medical pendant, those are the equipment in operating room. And many years ago, we have proposed a IQOR system to present the overall smart operating room. The operation process could be very complicated and easy to make mistake. And we have pre-operation and in-operation and post-operation to draft. If any mistake occur, it could cause medical conflicts and many physicians, they need to pay great efforts in drafting those reports and how to execute remote teaching through Internet, how can we share with other hospitals and to share technology to encourage discussion. These need to be addressed. So the IQOR system is to fully incorporate the intelligence into the procedure. Through AI, it could generate the -- all the reports needed. All the standards will be clear. It would not make mistakes, there will be no mistake happen in the operation. Those were done through the smart operating room solutions. Other than that, during pandemic, our hospital management was strict, also under many regulations and controls and it's more difficult to operate the hospital. During 2020 and '21 and 22nd, we have spent some money in Nanjing and Suzhou Hospital to -- for a transformation to make it a smart hospital. Many companies have visited our hospital. For the grant environment in China, they have fully implemented AI technology. So our completion of our smart hospital is high. In the recent 2 to 3 years, you can see our investments. And currently, we have faced many medical resources issues in Taiwan. For example, nurses, the talents are not sufficient. Without those talents, we cannot provide quality services. Through smart hospital, we can spend more time on taking care of patients instead of spending on administrative jobs. So we demonstrate high intelligence of our smart hospital. This is why our IPO process went smoothly because of our great feedback. And our group, either in Taiwan or in China. Many of our partners have visited our hospitals. Since we are an ICT-based company, to invest in hospital, we have to make differences. We have to demonstrate intelligence to exemplified intelligence. For example, other than those benefits we have mentioned, when they discharge from the hospital, they could also use point payment either a couple of dollars to $10,000 through kiosk machine, they can enter the correct number and they can use any kind of payment tool to pay and discharge. And this is rare worldwide. And we have mentioned market top smart solution. We could exemplify the application of smart medicine and to fully implement those technology. And many people have visited our hospital and see our great results and request our services. And I think we can also assist each company to implement the AI technology and move toward to smart hospital and spend more time on patients and to fully maximize the talent of our professionals. This is the future trend. We have seen that many years ago and start to invest. And the next question is regarding the current deployment and operations situation of BenQ. And I can offer information and why I am aware of the situation. It's not because I'm the Chairman. It's because of starting from 2006 to 2013, I worked for BenQ. And we were separating branding and ODM businesses. And I work as the GM of TPC, Technology and Product Center responsible for all the technology product and organizational structure. Through the lesson learned from the Siemens events, we have been through many adjustments in BenQ in how to define our brand and how to move forward to high-end products. We have many professional approaches through years of efforts. Currently, for IT products, it accounted for the majority of our products, such as display and projector. For projectors, we have been ranked top 3 worldwide. For display, we have entered gaming industry pretty early on, that's why we have enjoyed the results of this investment and it has been moving toward to the high value-added segments. Although it is not listed yet, so it is not evident for the external persons to see the result of BenQ. Revenue, over TWD 10 billion and profitability was stable and gross margin has been healthy. And in the future, it is possible that we would have organizational rearrangement and other arrangements. However, the development of this brand, BenQ, has been working independently after 2006 and it has many products, and it is leveraged as top partners in Taiwan. They have the resource via Qisda Group. So they have gained assistance in the industry. With the great experience and know-how, they apply it to maximize the value of the product and on selling the products, and they have generated various products to offer the whole projector system to apply the AI technology and to simulate the indoor golf courts for practice. Currently, in North America, it has accounted for over 30% of market share and has great profitability. So moving toward high-value-added sectors and to maximize its value. In the past years, the performance has been better and better. So that is the overall performance of BenQ. Now it's almost 3:00 p.m. We have answered most of the questions today. Thank you.

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