Qisda Corp
TWSE:2352
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Qisda Corp
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Hello from investors. Good afternoon. Welcome to the Third Quarter of 2022 Investor Conference of Qisda Corporation. I am IR of Qisda Corporation, Vincent. This conference will be hosted by our Chairman, Peter Chen; and President, Joe Huang; and our Chief Financial Officer, Jasmin Hung, jointly hosted by General Manager of our business groups. General Manager of Information Technology Business Group, Daniel Hsueh; General Manager of Commercial and Industrial Business, Yuchin Lin; General Manager of Medical Devices Business Group, Harry Yang; General Manager of Business Solution Group, Michael Lee; General Manager of Networking and Communication Business Group; April Huang.
The conference will take around 1.5 hours. The agenda is as follows. Jasmin will go over a company profile and financial results of the third quarter of 2022. And Joe Huang, our President, will share business update and outlook with Peter Chen, our Chairman; followed by General Manager of each business group will bring a summary of each business group's performance, and we will continue with Q&A session.
Before we commence, as a reminder, please take a look at the safe harbor notice on Page 4. As the discussion in this conference might contain forward-looking statements that are subject to risks and uncertainties. Please refer to what appears on Page 4.
Hello. Good afternoon, everyone. I'm CFO of Qisda Corporation, Jasmin. I will bring you the company profile. First, I will introduce Qisda Group briefly. We are a global technology group with businesses crossing various business sectors, information technology, medical, smart business solutions and networking communication. We have 199 consolidated companies and 60 listed companies in Taiwan, more than 30,000 employees worldwide. As to global presence, our manufacturing sites are based in Taiwan, China and Vietnam. We have more than 200 sales offices. R&D sites, mainly based in Taiwan and China.
Revenue breakdown by geography. Asia accounts for 43%; America, 33%; Europe, 22%; Other 2%. As a matter of fact, revenue of last year is TWD 222 billion and this year is TWD 183.7 billion. And we have announced our revenue in October. And the total revenue has over TWD 200 billion.
Moving forward to business groups. The purple [ boxes ] are high value-added business groups. First, Medical Business Group. The revenue of the first 3 quarters is TWD 1.8 billion, account for 8%. We have medical services. We have 2 hospitals in Nanjing and Suzhou. And this year, we have acquired Concord Medical Corporation to offer medical services. We also offer equipment and consumables, operating table, ultrasound, intra-oral scanner. In recent year, we have actively investing in dialysis.
BSG accounts for 13%, reached TWD 23.5 billion, focused on IT intelligence, high-performance computing, network security, cloud integration and digital transformation. As to OT Intelligence, we focus on green energy and industrial computers and OMO online and offline integration services.
As to NCG, account for 13%, reached TWD 24.4 billion, focused on LAN/MAN, wireless broadband, digital multimedia and enterprise mobile solution services. As to our core business group, IT accounts for 61%. As a matter of fact, we are actively investing in high value-added products. And the performance has reached TWD 15.7 billion, account for 9%. Others, BenQ material reached TWD 9.7 billion. Other than polarizer, it also produced functional film, advanced battery materials.
As to the third quarter financial results, last Friday, we have announced some key data. As you can see, net income attributable to Qisda and EPS both hit record highs in the third quarter on a single quarter and year-to-date basis. The second highlight is we have announced on April 1, our subsidiary disposed 100% share of BenQ Hong Kong Limited, and it is completed on September 30. The gain is approximately TWD 5.3 billion. This is recognized in the third quarter's performance.
The cash dividends from BenQ Taiwan. After capital reduction process, Qisda Corporation has received TWD 3.9 billion in cash dividends. BenQ Hong Kong Limited disposal has contributed to Qisda strongly. As to the performance of 2022. We have received firm investment, totaled TWD 3.9 billion in cash dividend, among which TWD 0.9 billion is booked as dividend revenue under nonoperating income. Of the TWD 3 billion from consolidated and equity subsidiaries is booked as a deduction in investment cost.
As we received cash dividend, it cannot be accounted under our income. It can only be booked as a deduction. As to the financial result of the third quarter, decreased by TWD 1.19 billion Y-o-Y. The overall income of Qisda is quite high. As the increase located in nonoperating income, there should be accrual amount of employee bonus based on IFRS, resulting in approximately TWD 0.6 billion, which is booked as a deduction of operating income.
As to Business Group, Medical and NCG revenue both grew more than 30% gross margin and operating income margin increased Y-o-Y. Operating income amount also grew more than 200%. As to BSG, one-digit growth at 4%. However, gross margin and operating income margin increased Y-o-Y. Also, operating income amount increased by 30%.
As to IT business, slightly decreased by 2% as we suffer from sluggish market. Especially for monitor demand is decreasing, decreasing by 15% and gross margin, operating income margin as well as operating income amount decreased.
Commercial and Industrial IT product, both revenue and profitability grew. Monitor suffers greatly from the sluggish market. For the first 3 quarters, both revenue and operating income hit record heights. Revenue hit TWD 183.7 billion. Net income attributable to Qisda reached TWD 7.88 billion. Both Medical, BSG, revenue, gross margin and operating income are increasing. For IT, Monitor business suffered from the slow market.
Moving forward to consolidated statement of comprehensive income. Revenue in the third quarter is TWD 60 billion, up by TWD 2.8 billion or 5%. Group margin, 14.4%, flattish from last year. Operating income is TWD 0.78 billion. Deduction from bonus of employee, TWD 0.6 billion. And reducing revenue of IT, TWD 0.5 billion. Nonoperating income, TWD 10.6 billion, resulting from disposal of BenQ Hong Kong Limited. Net income, TWD 7.3 billion. Net income attributable to Qisda, TWD 6.3 billion, up by TWD 7.9 billion. EPS of the third quarter, TWD 3.24 up by 2.53 Y-o-Y.
Accumulated performance in the first 3 quarters, revenue grew by TWD 183 billion, up by TWD 19.6 billion or 12% Y-o-Y. Gross margin, 14%, slightly slid by 0.7% Y-o-Y. Operating income, TWD 4.3 billion, down by TWD 1.2 billion Y-o-Y. Nonoperating income contributed from disposal of BenQ Hong Kong Limited, TWD 5.7 billion. Net income, TWD 10 billion. Net income attributable to Qisda, TWD 7.8 billion, up by TWD 0.56 billion or 8%. EPS TWD 4.01, up by TWD 0.29.
As to this slide is for your reference. Basically, we break down the revenue and operating income in the first 3 quarters and the third quarter for your reference. We know everyone values growth margin of Qisda. So we provide this chart for your reference. Horizontal axis revenue scale. Vertical axis, gross margin range. Let's take a look at high value-added business.
In the first 3 quarters, both in medical and IT business, group margin located at 20% to 25%. Revenue in the first 3 quarters between TWD 100 million to TWD 200 million. As to BSG and NCG with bigger scope, more than TWD 20 billion, gross margin located between 15% to 20%. As to BenQ material located at 15% to 20%. Deducting from high value-added product business performance under IT.
The gross margin performance is around 5% to 10% revenue in October is announced. After adjusting the number, you may see the possible growth of Medical and IT with high value-added products. Gross margin should remain the same. Revenue should grow to TWD 20 billion. BSG and NCG gross margins should remain the same. Revenue should grow to TWD 30 billion. Material, gross margin should remain the same so as revenue.
Revenue scale is promising in all business group. Consolidated balance sheet highlights on a Q-o-Q basis. Cash equivalent was TWD 34.7 billion, benefiting from the amount of disposal of BenQ Hong Kong Limited. Inventory was TWD 53.3 billion compared to performance in June, down by TWD 2.8 billion. We keep working on inventory management. Total assets, TWD 217 billion. Total liability account for 69%, slightly went down from that in June by 3%. Key financial ratios basically remain the same. Days needed Q-o-Q basis basically declines.
Moving on to revenue breakdown by business. I want to highlight high value-added product business accounted for 40% in total revenue. Please refer to the information of this slide. As to high value-added revenue trend, in the third quarter, we have explained performance of each business group in the third quarter. Overall revenue have reached 47% of the total revenue, which is approaching the goal of over 50% of total revenue and yearly performance is 43%.
As to Qisda Group's listed company results. On the left is the first 3 quarters of 2022. In the center, 2021 first 3 quarter performance. Most of our subsidiary performed greatly and hit record high. with some exception, such as MetaAge with the decline resulting from disposal of nonoperating profits so as IDT.
In general, EPS under IT achieved great performance. BenQ Medical, Concord Med have also contributed to company's overall revenue. Here, I want to highlight this is the performance of our subsidiaries. The profit of consolidated companies is included in key stats profits. And secondly, you might be confused whether or not we will recognize the cash dividends as revenue.
We will not because we have recognized the profit of each company quarter-by-quarter. So cash dividends is just cash returned to Qisda Corporation, lowering investment cost. As you can see, consolidated company not only contribute to cash flow in our overall profits.
This is our third quarter financial performance. As to business update and outlook, I will hand over a microphone to our President, Joe Huang.
Hello, everyone. Good afternoon. This is Joe. This is the vision set by Peter for 5-year goals, which is high value-added business will account for more than half of the revenue by 2022. And as said, we have reached 47%. In the near future, we should be achieving this goal. As to Qisda's winning strategy.
As Peter has been emphasized on the 4 major pillars, I will not repeat here. The goal remains unchanged. Under the 4 major pillars of our winning strategy, which are focused on adding values. This is our unchanged objective, which can be divided into strategic and policy aspects.
We will keep focusing on strategic investment. We want to create small blue oceans, profitable pools keep contributing to our values. In the past quarter to last month, we have been investing in medical sectors. We have invested Concord Healthcare and BlueWalker for Green Energy and UPS and Web-Pro for medical consumables and equipment. We also invested TCIG for precision medicines. In the past months, we have been invested in so many products, and we will keep investing.
And the second part, we want to keep lean and focused. No matter it's about product, service or assets, we will keep focusing, moving toward under the major pillars. Last, organizational optimization. This is not about talent. This is about product. We want to create an environment with consistent culture, consistent language, consistent protocols to enhance synergies to allow companies to align with company policies. For example, we have combined Ace Pillar, Guru and MetaAge. We will keep gathering our resources to keep a consistent culture and to maximize the value.
On the right side, this is about operation as to balance supply with demand. I think we all know the market performance under IT is decreasing. Also, the time needed for sea freight has changed from 12 to 13 weeks to 5 to 7 weeks, which increased inventory level. So we will be under inventory clearance pressure. So we need to focus on the inventory management to enhance cash flow. Secondly, we're facing challenges of material shortages under BSG and automotive business. This will impact our revenue and our inventory levels. We will keep working on this.
The action on the left refer to increasing our profitability. The last item on the right is China-plus-One strategy under pandemic strike, we need to have other base other than China. Manufacturing in Taiwan is still costly for lower competitive product. We will manufacture in Vietnam. Alpha Network has already shifted their manufacturing in Vietnam, picking up the pace of supply chain. For now, it is on track. This is our value infrastructure under 2 categories, 6 foundations, we want to keep adding value to our company.
As you may pay attention to the performance in the fourth quarter. Now we are under the challenge of wars, pandemic [indiscernible]. To be honest, the IT performance is impacted by those unfavorable conditions. And we will evaluate prudently, hope to outperform in the business. This is our goal under this unstable environment. As to growth, allow me to recap. We need to review the performance in the past. High value-added business has grown 23% in the past. As to Medical business, grew 3%; BSG grew by 16%; NCG grew more than 40%. One item did not appear here, Commercial and Industrial business group grew by 47%.
So we hope to sustain the performance in the third and fourth quarter to keep stable performance under IT, to keep the momentum from the third quarter all the way to the fourth quarter. This is the general direction of our outlook. Other than business, we also paid close attention to environmental sustainability growth. We have put great efforts in ESG. Now we will play a video to show you our performance under ESG.
[Presentation]
Okay. There were 3 subsidiaries won 10 awards last year. This year, we have 7 companies won total 16 awards. Under the leadership of Peter, we will keep working on winning more awards for ESG. We hope all of our subsidiaries can won the award more than 20, 30 awards in the future. Thank you. Next, I will hand over to Peter.
Hello, friends from investors and media. We're very honored to have you joining the Third Quarter Investor Conference. Great thanks to Joe, who was appointed as President of Qisda in April. We have reported before, we want to [indiscernible] with working with his assistance. We can have better growth in revenue, also pursuing ESG. I'm very glad to have him. You may concern about some topic. First, Jasmin has provided analysis of our financial results. We have set a goal in 2014, and I have shifted from BenQ to Qisda. I felt strongly about the importance of high value-added product transformation.
I'm on the 9-year with 3 rounds of Board of Directors. We hope to achieve over 50% revenue under high value-added products in this year. This is the goal that we set at that time. We hope to achieve the goal to have contribution from HVA products, over 50% of our total revenue from 2006 to 2013 for both BenQ and Qisda. We are facing difficulties. But basically, we have achieved the objective.
In the third quarter, high value-added product revenue has reached 47% in total revenue, and I can foresee, in the fourth quarter, the performance will be right around 50%. And the high value-added product revenue, you may read from news media for industrial development. The medical growth is significant.
This has been reflecting the effort and results from our hospital in Nanjing established in 2008 after we have established another hospital in Suzhou. In the past, since 2017, the business has grown healthily and has been contributing to the revenue. With a deeper meaning, you may see high value-added products. Medical business owns the highest gross margin. Many IT companies in Taiwan has entered medical market, but no one like us break into this business. Not only in Taiwan, we have managed business operation in China, and we have to face cultural impact.
We have conquered many difficulties. And we are confident that this will be the sector with the highest value. Hospital profitability will grow slowly, gradually. Last year, we also invest in [ Guangxi Guiguan ] Hospital, and we will keep investing in the hospital business. Also, the hospital offered a platform and a channel to communicate with the participants in the hospital. And to the hospital, we can see what would the participant need. There are over 60,000 persons, doctors, nurses. We want to know what the doctor wants, what the nurse wants. As we know better about demand, we can optimize our products and sell them to hospitals and clinics. So this sector has grown notably this year.
Even under the stagnant environment, we still get sick. As struck by pandemic last year, many hospitals in China has been impacted by COVID. In Taiwan, most of us we work from home. Clinics are forced to shut down. This is the same in both Taiwan and China. If you want to visit a doctor, you will need to go through multiple tests, not only quick tests, but also PCR. There are many, many limitations. Also local government, they have different policies for us to follow.
In total, hospital performance and medical business performance, we enjoyed 78% in the second quarter. In the third quarter, we enjoyed 50% growth Y-o-Y. And we are moving toward high value-added products development. And this year, under NCG, most of our subsidiaries are performing well. Last year, suffering from shortage of material of semiconductor, we didn't achieve satisfactory order fulfill rates. This year, overall revenue and profit are better than last year. So as you can see this year, our IT products, such as monitor. When I returned in 2014, we manufacture 1.4 million pieces. Nowadays, we achieved more than 2 million pieces. We manufacture high-end products, such as gaming or professional monitors for printing industry, but we have been impacted by the slow market.
Since September or even earlier, second half of last year we can see the demand is lowering from consumers. And as you can see, not only monitor, also notebook and PC are suffering from the same phenomenon. As we have mentioned, medical, [ ALT ] and NCG are our main focus on [ HVA ] performance. And we have achieved pretty good results this year. For the companies of Grand Fleet Alliances, they have reached more than TWD 7 EPS. Most of them are earning. This is why we're using the grand fleet strategy using the strength to achieve transformation. In this environment, we create win-win situation, we boost growth. We remove limitation to boost the growth in revenue and profitability growth.
In the fourth quarter, for the single quarter, high chance that we will achieve the goal, and we have precisely achieved the goal at the end of 2022. Next year, maybe around March, in the online conference, we will reveal how many years we can achieve the next phase objective, which is over 50% profitability contributed from HVA business, which is rather difficult as we have to take 100% of profit and loss and investment ratio and purchasing price allocation in consideration. If the gain is not overpowering the cost, we might bear the loss. This is the ultimate goal of high value-added transformation.
So next year, we will enter next phase of goals for high value-added business to achieve more than 50% profitability and to express the second phase, strength in profitability as a return to all of your support, your long-term support. This is the first highlight summarized from our vision adjustment. Secondly, you may concern greatly about the performance in the fourth quarter. And this year, we predict the performance in the fourth quarter should be worse than the third quarter, especially in IT business. In October, revenue was TWD 18.9 billion, flattish from last year.
In September, compared to last year, it was worse performance. And we can predict confidently the performance in November and December would definitely be worse than at in last year. In the third quarter, it is on upward trend. But in the fourth quarter, it will decline. And of course, we are enjoying the revenue growth in HVA products. Meanwhile, revenue declined under IT business. So it happened that we achieved the 50% mark. We didn't do it under a specific strategy. So we have predicted this situation many years ago. We had advanced disappointment in HVA business. We are not worried. We sustained the growth in IT business.
But for long term, for long run, for an inevitable forces, we allocated resource in HVA to face the challenge. In the fourth quarter, we will definitely suffered from a lower seasonality, which is even worse than the third quarter. You might recall almost in every Board of Director, we highlighted on the performance. And you can see -- you can review all the prediction we made have come to reality. We're not happy to see that.
But looking forward to the performance next year, we also predict a low performance in the first and second quarter. We don't know yet, which will be the trough. But in general, we don't see a promising first half next year. The best scenario is the trough located in the first or the second quarter next year and hoping a gradual picking up in the third or fourth quarter. We also wonder how long will the war proceed.
We have been impacted by energy crisis, especially in Europe in wintertime. Why is that? If you have friends or subsidiaries in Europe, you will know most of the money, most of the resources are supporting on daily expenditure, gas, oil. The price is soaring. They have invested so many money to support their lives. They don't really have extra income to pay for IT products, and it will worsen. I've heard many families, they're preparing woods to get over the winter time. We don't know yet how big would the impact be. The economy is fragile. No one knows what will happen.
The winter has yet to commence. How to get through the challenge in winter time. We need to be mentally prepared hoping for an upturn. What is the [ better feel ] in the following quarters, which is inventory level. You can see the inventory level at the end of the third quarter of all companies. Worst performance is around 5 to 6 months, inventory turnover. You might wonder what's our performance, which is around 2 months, which is not good. I'm not satisfied with that.
But compared to general performance, we're doing okay. Around all the business group, we are working on clearing inventory. In the fourth quarter and the first quarter next year, we are competing on the speed of clearing inventory. We're suffering from rising costs of materials and shortage in supply chain and port congestion so the cost is high. From an accounting point of view, we have to absorb the cost of inventory turnover. So the ability of inventory clearance will be a key index for the next year. If you clean inventory faster, the price will be fresher.
If you reduce inventory level, you will not be affected by the price drop of high inventory level. So this is the main focus of competitiveness. We will focus on clearing inventory and thanks to more than half of our inventory belong to medical or industrial, computer. The inventory is not the same as under IT business, the inventory pressure is less. We hope to have better performance on inventory level next year and to speed up inventory management.
Overall, I have been encouraging our executives. We have to be fully prepared for the coming winter. No one knows if we can welcome an upturn in the second half of next year. What if not? We might need to suffer for more than 2 to 3 years. We hope this will not occur. But we wish to be fully prepared in advance. So if you have any other question, after a brief summary, from our General Manager of each business group, you may submit your questions.
Thank you, Peter. So we have all General Managers from business -- each business group to provide summary of performance in the third quarter. First, Daniel, General Manager of Information Technology Business Group.
Hello. I am Daniel. The major product line is monitor. Global monitor market in the third quarter is declined. And the focus is to improve inventory level. The sales level compared on Q-o-Q basis is decreasing. The demand is slowing. We have pretty conservative outlook for the fourth quarter. And the good supply [indiscernible is still weak. Our manufacturing is still lowering. So we have a conservative perspective for the fourth quarter. Thank you.
Next, Commercial and Industrial Business Group, Yuchin Lin.
Hi, I'm GM of CIG. I will highlight some points benefiting from the shortage of material alleviate besides satisfying the demand in Q2 and Q3. As to industrial and business projector and automotive module, delivery is better than expected. The growth in the third quarter is 46.6% Y-o-Y. Solid state lightening projector compared to traditional projector has reached 35% growth. Next year, we're moving forward to 40% goal. Besides current industrial projector as to portable projector, pocket-size projector has mass produced gradually. For lunch box size projector, are expecting to produce next year in the second quarter.
Looking forward to the fourth quarter. We are under stress of Ukraine and Russia [indiscernible] Japanese yen has depreciated by 25%. Euro has depreciated by 15%. We expect purchasing power would decline. Inventory management and clearance might be longer than expected. As to high-resolution projector demand is decreasing, low-resolution projector remain the same. Due to the material shortage of semiconductor, it has limited our revenue, but the orders remain good.
The revenue of projector should grow by 20% compared to last year. As to commercial, industrial touch panel, the demand remains well, and we will secure the material to fulfill the orders from our customer. As to automotive module, we have more and more clients. The delivery amount would grow step-wise. This is the report for industrial and commercial use, follow-up by Medical Device Business Group.
Hello, everyone. I'm Harry Yang, GM of Medical Device Business Group. Here, I would like to point out the performance in the third quarter. In overall hospital performance, we grew by 33%. For medical equipment, we grew by 52%. The first production line, anti-epidemic product, including masks, ethanol solution. The outbreak is around May to June and has been growing rapidly. This is the second quarter performance and the momentum maintained in the third quarter.
The production line is performing strongly. The second production line is traditional medical, consumables and equipment. In the second quarter, as you know, we will avoid to visit hospitals to avoid operation. Limited operation and restriction of tests. The traffic in hospital has reduced more than 50%. So the market is lowering. But in the third quarter, we enjoy a pick up. Adding the overseas performance other than China and Taiwan, many places have lifted the restrictions. As to medical equipment and consumables, the demand is growing, especially in Southeast Asia, South America, Central and Eastern Europe.
And the third production line is dialysis. You may know we have distributed very deeply and wide in dialysis. BenQ Technology has produced more than 4,000 artificial kidneys and acquire certification in the third quarter. This would be a big momentum for the future. The production line in Taiwan is to provide Southeast Asia and Taiwan because the big market in China, it is provided by the factory in Shanghai. And we want to provide product in one-stop environment. [indiscernible] has commerce manufacturing in [indiscernible] factory. The entire production line is in place for dialysis business. We expect it to be the strongest among the medical business group.
Last, we want to mention the newly acquired companies under hospital and BenQ Medical. First, medical management, it is very important for us to break into a hospital to assess hospital, to open up the channel to the hospital for our production lines through acquiring Concord Healthcare. We commenced the production in dentistry. Next phase will be ophthalmology. We also invest a pharmacy in [ Jinghua ]. [indiscernible] pharmacy owns 7 branches.
You may think pharmacy in Taiwan, annual revenue is over TWD 200 billion. we should seize the opportunity in this market. In the future, you can see the direction of our distribution will be like this. Looking forward into the fourth quarter, medical demand is growing steadily. The fourth quarter should remain the same momentum in the third quarter. And I would like to share the future road map of Medical Group. We would like to expand our current business, our equipment and consumables. Second, we want to start to invest in future trends.
We have invested TCI Gene. Why will we make this investment? In the future, gene detect and gene diagnosis would definitely be a major trend. We should not wait until we are suffering from diseases to receive medical health care. This is definitely the focus of future medical growth. This is why we invest in TCI Gene. We want to break into precision medicine. This is our distribution in the future. We will deepen and widen our investment, hope to deliver a better result.
Next, GM of Business Solutions Group, Michael Lee.
Hello, I am Michael. I would like to briefly introduce the business solutions. There are 3 categories under this group. In the third quarter, it is -- there are IT intelligence and OT intelligence. And the third one, the hottest topic, online and offline services. And in the third quarter, both gross margin and OT income has reached record highs. In the fourth quarter, we would like to keep the momentum. In the future 2 quarters, we want to improve our profitability and gross margin.
And our CFO has already given us a goal. We want to improve that. And for new infrastructure, the need remains strong, including transportation and military infrastructure and networking security remains strong. And from the end of the second quarter to the third quarter, we enjoy a pickup in restaurant and retail. The purchase power has grown more than 20%. And it is the same worldwide. Online purchase has grown. This is seen globally also in the demand for hotel.
Until the third quarter, our BV value remains above 1.2. We will sustain the goal in the first quarter. We want to find unsung champions to work with. For IT intelligence, we want to work toward cloud business. We enjoy more than 100% growth. As to infrastructure, globally, in every country, it began to produce locally and the demand on infrastructure is growing. And we hope the war to stop as fast as possible. We want to rebuild the market in the East Europe.
Last, we will have General Manager of Networking and Communications Business Group, April.
Hello, everyone. Under NCG, we have Alpha Network, Hitron and [ IDT ]. As you know, NCG is enjoying the benefit of material shortage. Revenue is growing quarter-by-quarter. In Q1, it is declining on a Q-o-Q basis. In Q2, we enjoy the growth on a Y-o-Y basis, especially the growth in June. As to the growth in the third quarter, it is notable. It is up by 38% Y-o-Y. The performance year-to-date has growth on a Y-o-Y basis. It has reached a record high in the performance of Alpha Network.
As to gross margin, the performance year-to-date is around 18.7%, up by 2.7% Y-o-Y, although we're suffering from uncertainties in the market. In general, gross margin has improved 2.7%. And the reasons is contributed from the new market development, Hitron. The production is focused in North America. The projector market is focused on America business. But since last year, Hitron has focused on expanding the market, mainly for the collaboration with Alpha network.
In the past, Hitron only post wire broadband product. After collaboration with Alpha Network, it started to produce wireless router products that can break into non-North America markets and has been keeping -- developing for more than 1 to 2 years. The new market growth for Hitron is significant. Market in North America grew by 15% Y-o-Y. In other regions, it should overpower the performance in America business also benefiting from scaling economics. Hitron had 2 factories, but this year focused on the manufacturing and Vietnam factory. And the price of each projector is lower than when we only have 1 factory in China.
Also the improvement of model mix. As to exchanger, we enjoy high exchange rates. As to cloud development for Hitron, we have reported before. Cloud development this year is really good. Based on the model mix improvement, our gross margin improved accordingly. EPS has reached 1.28. It is better than the whole year performance last year. As to the new market distribution and the collaboration between Alpha Network and Hitron Tech, we are optimistic about next year's growth. As to the fourth quarter, should grow on a Y-o-Y basis.
[Operator Instructions]
Thank you for the detailed presentation. I would like to know more about the tax rate in the third quarter.
Okay. So we have mentioned the disposal of BenQ Medical Limited. The gain is TWD 5.3 billion, and it is recognized in 2 parts. One is non-OP income, TWD 8.8 billion but we have to pay tax, whether in Taiwan or China for more than TWD 3 billion under one-time disposal.
I would like to add my information. I'm Lisa from [ e-Link ]. It seems like onetime exposure should pay for more tax. But under normal circumstances, what would be the usual tax rate?
As a matter of fact, the usual value tax rate is around 20% to 25%.
Okay. Do we have more questions?
Obviously, we have delivered pretty clear messages. We have keep this in mind to deliver a better profitability to all of you as a return to your long-term support. I have been in this position for more than 9 years. This has always been an unchanged goal. In the previous online conferences, we have shared that the sluggish market is to eliminate those who are underprepared. In the past years, we have fully prepared. We have distributed into some high value-added business, the 3 pillars. So we will have more strength and higher [ ability ] for the environment.
The medical growth should remain in an upward trend. As to NCG Group, as mentioned before, the first half of the year seem to be optimistic. The third quarter and fourth quarter should play an important role to deliver high momentum. As to Commercial and Industrial Business, industrial application industry has been performing really well. Some of the company in the second half of this year have performed greatly.
Compared to IT business, whether in revenue or income, we have great confidence. Despite the unfavorable condition, we want to express our spirits in advanced deployment. The product portfolio should outperform other company in the business. Some might joke on the nature of our stock like buying our stock is like investing in ETF. Not a lot of company have invested so deeply in Medical Group. The revenue would be higher than 2020.
In ALT area, the revenue growth is growing year-by-year. Under the Grand Fleet alliance, many companies are growing fastly. If to maximize revenue, income will increase accordingly so as gross margin. Our recent goals is to enhance gross margin as some of our companies are suffering from talent shortage, some unsung heroes, unsung champions. They don't have enough resources. They cannot acquire human resource of freshmen because most of them are absorbed by semiconductor industry.
We have more than 30,000 employees and they are experienced. By joining our Grand Fleet of alliances, you may enjoy the human resource to boost growth in this high competitiveness [ telemarket ]. This is the strength of our Grand Fleet, to unite, to complement with each other to get through the challenges in the weak market.
In the past year, through M&A, we have acquired many new companies. We have some more strategies, and we will utilize them where appropriate whether it's organic or inorganic operation, whether it is non-OP income or OP income. We have prepared many strategy, many new company. We want to deliver a strong performance to all of you by strengthening the Grand Fleet of alliance under Qisda, and to support high value-added transformation. This is crucial for the entire business growth in Taiwan.
We expect Medical business to be the next strong pillar for Taiwan. As to low Earth Orbit Satellites, we focus on the investment in this business. More than 50% in the world is now covered by 4G and 5G technology. So we have to rely on low Earth Orbit Satellite for the communication. Our position in Networking and Communication business should enhance. Other companies are just entering this field, but we have commenced for a while, and we still have room for growth.
Whether for software and hardware or domain knowledge, we have been ahead of others. Others are breaking into smart hospital, but we have been working on smart hospital already. So in the future, if the restriction is lifted, we welcome you to visit our smart hospitals. We have invested many resources in establishing smart hospitals to build business model, to promote medical services and infrastructure and we want to improve the performance of hospitals in China. This will benefit not only patient but participants in the hospital. Doctors and nurses will also enjoy the benefits of smart hospital. They can get rid of traditional medical records as they went digitalized.
Participants, especially nurses, are working hard for the hospital. They might need to take night shifts and face the shortage of human resources. Through the technology of smart hospital, we can ease their burden and increase the service quality for the patients. This is what we have been working for in the past years.
This year, until the third quarter, EPS, TWD 4.01. The fourth quarter is expected to be challenging, but we will keep working on keeping the momentum in the fourth quarter to provide an acceptable result in the fourth quarter. For the next year, as mentioned, with early preparation, if the market is not as good as expected, we could still maintain our momentum and performance results for all of you. And I would like to encourage executives to keep this in mind.
Do we have more questions?
I'm Warren from [ Sino Trade ]. I would like to ask the cash dividend for cash dividends.
I would like to hand over to our CFO. For now, we value the most on cash. This is a common concern. Let's hear what our CFO might offer.
Basically, in recent years, we maintained a stable dividend ratio. We hope to maintain the ratio stably. But under the circumstances of our ongoing M&A activities, I believe most of our investors would like us to use the capital on better investment to deliver better equity. In general, we want to keep general performance as last year. Last year, cash dividend was TWD 2.5. Recent stock value is not good, it has dropped to TWD 24 to TWD 29, and Qisda maintained around 9%. We have to keep an overall good performance in general. We are grateful for our non-OP contribution, not only on profitability, only on cash flow, especially under this condition.
To keep general performance as last year would be very difficult this year. Under the sluggish market, we believe there are still many good investment opportunities. And we will keep looking for good partners to invest to join our Grand Fleet alliance. And this strategy has been highly recognized by other companies. We will hold on to good partners for investment. We will actively acquire them to incorporate them into our Grand Fleet alliance, and we want to accelerate the growth of revenue and profit.
We have a winning strategy. We have great operation. We have good know-how. We are accelerating our strategy in M&A. We want to deliver a good operation performance, and we will maximize the value of our strategy and to create great cash dividend for our investors. We will put our greatest efforts to satisfy all of you. Thank you.
Do we have more questions? If no, under the interest of time, it's almost 3:30. We expect to have 3 online conferences and 1 in-person conference, and we are especially grateful for all of you to participate in today's conference, and we hope the results we delivered in the third quarter is satisfactory. Thank you very much.
Thank you for joining Qisda Corporation's Third Quarter 2022 Investor Conference. Thank you.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]