This report does not constitute a rating action. Overview Key strengths Key risks Wide product lineup with recognized brand that secures profits, albeit at low levels Exposure of many core businesses to fierce competition and risks of substitution and innovation Likelihood of financial support in an emergency from parent Hon Hai Precision Industry Co. Ltd. Significantly limited growth potential of core businesses in comparison with peers, as many are already matured Limited near-term recovery in earnings in the small- and medium-size LCD business as it experiences operating losses EBITDA margin likely remaining below industry average amid challenging conditions Significantly vulnerable financial profile due to weak cash flow and heavy debt Sharp will likely make some profit in the next year
