Welcome to the E Ink Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. The webcast replay will be available after today's conference. Joining me today are Chairman Johnson Lee, CFO Lloyd Chen, and Finance Center Senior Director Patrick Chang. Now, let me turn the call over to Lloyd.
Hi. Good day, everyone. Before we start, let's take a quick look at the safe harbor statement. All right, next page. All right. Let me talk about the profit and loss statement for second quarter and for the first half first. For the second quarter, sales revenue was around TWD 4 billion. Operating profit was TWD 318 million. Net income was TWD 1.4 billion. EPS was TWD 1.23. Talking about the first half. The first half sales revenue, operating profit, and even the net income was the best first half in the past 10 years. Also, it's worthwhile to mention that the operating income has been higher than gross income since last year. That's for the profit and loss statement. Next page. For the operating profit.
The first half operating profit was 3 x growth year-over-year from TWD 338 million to TWD 1.3 billion due to the strong demand from market through e-reader, e-note, retail, and signage. Next page. Talking about the profitability, especially on ROE and ROA. First half ROE and ROA have been rising since 2017. First half this year, 2021 ROE was around 8%, and first half ROA was 5.3% respectively, which already more than 60% of 2020 whole year ROE and ROA. It shows the growing profitability and how we efficiently utilize shareholder equity and assets to generate the profit at E Ink. Next page. Now, let's look at the asset side. Basically, positive increasing trend on cash assets, total assets, even the net asset value per share, as you can see from the screen. All right, next page. For cash flow.
Cash was decreased from TWD 13 billion to TWD 9.7 billion because we converted cash to financial investment and also to CapEx on ePaper production line to meet strong market demand. The total financial assets plus cash was increased to around TWD 30.7 billion by second quarter this year. That's for the cash flow. All right. Apart from those financials, I also would like to talk about some achievements that we had in second quarter. I think in April, we had remarkably successful exhibition at Touch Taiwan 2021. It attracted lots of attentions from supplier, customer, and even competitor and investors during the Touch Taiwan in April. Also in April, an ePaper Industry Alliance was established. At the beginning, we invited more than 60 companies to construct and refine ePaper ecosystem to broaden ePaper application and also to explore more diversified ePaper business opportunities.
At end of this year, we are aiming to have more than 100 participants. Our goal in 2021 is to invite more than 200 members. Also, as you already know, that E Ink became the largest strategic shareholder in Nuclera, through the spin out of digital microfluidics from E Ink, our American subsidiary. Apart from those accomplishments, we also got some recognition from some media. The first one is EdTech Digest. Basically, it's a digital media to offer insights, updates, interviews into the rapidly evolving world of education technology. That's why they named themselves as EdTech, education technology. Their The EdTech Awards is a program in awe of education technology, recognizing the biggest names in EdTech, and newer talents who are shaping the future of EdTech. E Ink was named as one of the 2021 top 10 finalists in the emerging technology solution category.
This is an award for company and people in and around education for outstanding contribution in transforming education. That's for the media in the States. We also got the recognition from two Taiwan local magazine. The first one is a magazine called Business Next. Basically published 2020 Taiwan High Value Enterprise Top 100. E Ink was ranked as the 67th place out of more than 1,100 publicly listed companies. We are also the fourth place from the optoelectronics industry. It not only recognize our achievement on financial performance, but also recognize our innovation, upgrade capability, and rapid growth, even under COVID pandemic. Last one, is a very credible magazine locally in Taiwan. It's called CommonWealth. It also published their comprehensive annual Top 2,000 Survey. Basically, this survey is published every year. We were on the 206th place out of Taiwan's top manufacturing companies.
Also recognized us 62nd place under the category of profitability. That's updates for our accomplishment in the second quarter. Next page. For ESG and corporate sustainability, once again, we were [rated as a top 20,000] corporate governance evaluation among Taipei Exchange-listed company for the fourth consecutive year. Apart from that, we also accomplished one achievement in second quarter. We were the first company contracted, and we have accomplished 10% installed renewable energy in Taiwan. Under recent COVID-19 outbreak situation in Taiwan, we donated COVID-19 testing facilities to the local government, showing our social responsibility. Also for the three ESG indexes in Taiwan, we are selected as the top 10 constituents on three ESG indexes in Taiwan, including Taipei Exchange ESG IT Elite Total Return Index. Another one is Taipei Exchange ESG Growth Total Return Index.
The last one is Taipei Exchange ESG Index. Those indexes recognize our performance on both profitability and also the ESG. That's for the ESG and sustainability. I think recently, the COVID-19 outbreak at Yangzhou under Jiangsu Province. Our Yangzhou factory actually is facing a complex COVID-19 containment measures, activities from local government such as movement restriction, lockdown, and even temporary suspension of the production. All will impact our shipment and revenue, especially the August sales revenue. We have been working very hard how to mitigate those shipment and revenue impact, and endeavor to accelerate the shipment in order to meet stronger customer demand when the situation gets better. That's a quick update about our Yangzhou factory. Next page. I'm going to talk about our innovation for the smart life. Our technology and product innovation basically lead to the smart life style.
It means more product diversification and more business growth along the way. You can see from the screen, quite a lot of ePaper products and applications are there. Better color performance, as I mentioned earlier, and larger sizes, and note-taking function. We expect that it will trigger a wave of new device purchases on e-reader and e-notes. Basically, it enables not only paperless office, but also digital learning. There's also a trend to integrate larger size ePaper display for laptops and even large size paper-like secondary monitors. Recently, as you can see from the screen, the Japanese company, Fujitsu, launched a new generation of e-note, QUADERNO, with better performance. Another Japanese company, Ricoh, has revealed world's thinnest and lightest 42-inch portable digital whiteboard with applications across the medical, construction, and office settings. That's about the e-note and e-reader.
As for the IoT applications, our technology and product can be used from, once again, paperless office and also factory, transportation, and even to aviation. One of our growth engines on ESL on retail, the growing momentum has been carrying forward from 2020 to 2021. One of our system integrator partner recently announced that it would expand its ESL technology with Walmart Canada, I am going to talk more on ESL. Next page. In conclusion, E Ink is continuing to engage with supplier and customers, try to lead to the smart life style. Next page. It is our retail expertise. As the leading innovator of ePaper technology, E Ink's Spectra 3100 all-in-one driver IC basically won Computex Taipei 2021 Best Choice Award. This is the full color next generation on ePaper platform for both on ESL and signage.
With this newly announced all-in-one driver IC, it enables Smart Retail 2.0, which makes new features, as you can see from the screen. The first one is it makes text edge sharper, brings better power efficiency, and integrates encrypted algorithm for data security, and also enables sparkling flashing mode with more interactive images to offer more flexibility to retailers during the promotion campaign. As you can see from the screen, there's a tech with the sparkling flashing mode. It's the example I'm referring to. Furthermore, the key feature I just mentioned, low power consumption, it aligns with the United Nations ESG that helps companies meet their ESG considerations for sustainable development and environmental friendliness. That's for our retail expertise. Last but not least, we're going to talking about our continuous growth. E Ink is aiming to replace paper. Our vision is to make surfaces smarter.
That's one of our slogan internally. We even try to go beyond that with this longer-term vision. We endeavor on the continuous growth. It not only focuses on business growth by engaging with more suppliers and customers to build a more robust ecosystem, but also ask for integrated supply chain to meet the stronger customer demands. Along with the growth, of course, innovation, efficiency, and effectiveness are the key elements on being involved.
Once again, ESG with the long-term corporate sustainability as equally important as the corporate profitability. That is my update for the second quarter. Thank you very much, and we can move to the Q&A session.
We are now in the Q&A session. Please press Raise Your Hand icon on the sidebar if you would like to ask a question. When we take your question, please remember to unmute yourself. You can also ask questions through text in the question box on the sidebar. The first question comes from [Harvey Zhou]. You may ask the question.
Hi. Can you hear me?
Yes. We hear you, Harvey.
All right. Thank you so much for taking my question. I just have some quick one. In your opening remark, you mentioned that the overall impact from the COVID-19, Yangzhou. I'm just wondering, could you please give us some quantitative impact on your maybe August revenue? I also see that in your July sales, the overall momentum actually seem quite fine and grew 20% month-on-month. I know that in the third quarter is normally the module peak season for E Ink reader and E note. I'm just wondering if we see a much softer top line momentum in August, can we still expect the maybe third quarter to see some growth on the top line level? How can we imagine the overall outlook for your top line into the second half of the year? Thank you.
Okay. Thank you, Harvey. I think the question is about the Yangzhou situation of the impact by the COVID. At this moment, the Yangzhou city is still at lockdown. It started, I think, in early August, it's been almost three weeks now. It does impact our revenue in August because of the shutdown. Mostly, we made all our module in Yangzhou. E Ink business, a big portion of our revenue comes from the ePaper module. It does get affected. Since it's been three weeks now, roughly three weeks or so, we believe the situation should improve because they took drastic measure in locking down the city. It's really going to impact our August revenue, it doesn't mean that the orders are canceled. It just means that it's going to be delayed in terms of shipment.
If everything goes back to normal, hopefully soon, and we believe it should be because yesterday there was, I think, six people that was infected, and the day before it was three, and the day before that is also six. It's already in the single digit in terms of people affected with COVID in Yangzhou. We believe that it should be back in production, hopefully by September. If that is possible, then we believe that we need to catch up in September and maybe all the way through December to catch up the loss of shipment during that period of August right now. Overall, in terms of revenue, I do believe that in August, it's going to be impact, but for the whole year, there might be impact. It really depends on when the shutdown is over or when the shutdown of city is over.
Overall, second half is always better than the first half in general for a year. We believe that this year, this should continue on as well.
Okay, great. I can actually say that maybe as you mentioned, if we really do catch up on the production, pent-up demand push all into the September month. Also you mentioned that second half is normally better than the first half. Can I assume that if we do catch up on the production into the September month, our third quarter sales could come through the core even with the impact in the August month because of the COVID-19 restriction?
Right. The plan is once the shutdown is over, we're going to start shipping the module. Some of them were actually pre-built in the early days of August. We don't believe that we can catch everything up in September to cover the August timeframe, but it may take until October or even go all the way down to December, depending on how quickly this pandemic is over in Yangzhou. At this moment, we believe that it's going to take us roughly at least three months to catch up the loss of shipment in August.
Okay. Okay. That's very good. Thank you so much. I'll go back to the queue.
Okay. All right. Take care.
Next question comes from [John Xu]. You may ask your question.
Hi, can you hear me?
Yes. Hi, John.
Yeah. Hi. Good afternoon, everyone, and the gentlemen. One question, because I also attend Chinese version an hour ago, and you mentioned that the capacity actually will still be pretty tight in next year, particularly in your material business. Can I assume that next year, the material business will outgrow the module business, and therefore, actually, your gross margin fluctuation will be stabilized? We won't see the pretty big significant margin fluctuation in next year? That's my question. Thanks.
John, thank you. Thank you for this question. In a general sense, yes. As we sell more E Ink materials, hopefully there is going to be less fluctuation in terms of margin. I think this year is actually a very special year. Everything was in shortage, either ICs and TFTs. As we look today and looking forward, we believe the situation will not be over, but it will be better than the first half of this year. Looking forward, as we expand our FPL, that is what we call it internally, FPL, our E Ink materials, we are expanding that capacity as it gets ramped up. Yes, we should be selling more E Ink materials down the road. I think the key we are mostly concerned about is how quickly we can ramp up our new facility up and running.
At this moment, when we're looking at the demand side, the demand is quite strong, and it needs us to ramp up our facility a lot quicker than we expected to. Yeah, that's a bit of pressure on the team. Of those E Ink materials are made into module by E Ink, it needs to be determined because we're still in that phase of negotiation with our customer for next year. Yeah, that's the situation. On an earlier call, there was actually a question about our expansion of a new facility in our Hsinchu office. We're building a new building in Hsinchu that we can put in more production equipment into it will take until 2023 before the facility is ready. We have next year, we still need to get over with.
Okay, I see. Regarding your module business, actually, in the next year, the module assembly business still in China. Maybe next year, you still cannot diversify your production base. I mean, in your module business.
Yeah. In terms of the module side, we're also seeing strong demand on that side as well. We really have to see how that's going to affect our revenue down the road. If we continue to sell more modules, of course, our revenue will be a lot higher than selling just E Ink material. There's also a transition that's happening at E Ink, where it's moving from black and white to color. We're still wait and seeing that sense how that will pick up in terms of volume for next year.
Okay, thank you. One more question is that, can you remind me that in terms of the gross margin, the material business is better than the module business? Thank you.
That's actually quite a tough question. We usually don't comment too much about the margins. You can probably tell from Q2 this year that there's an increase of price from TFTs, an increase of price from ICs, which our supplier are doing super well. I look at their financial report, from Sitronix to UltraChip to Himax to AUO and Novatek, they're all doing really well, and I'm happy for them. We didn't really transfer that increase of cost to our customer. We kind of just absorb those costs. Down the road, if the situation doesn't really improve and it's really going to hurt our bottom line big time, then we will consider raising our prices. At this moment, we think it's still okay.
Whether older products will have better margins, it's really hard to say because when we do our pricing strategy, there's a lot of things involved. It's not just how much money we can make out of each module, but it's really about applications. About when we think about that application, whether it's a higher volume, which usually goes with a lower margin, or it is a smaller volume, but then it will have a reflect with a higher gross margin. It really depends on the application.
Okay. Thank you very much. I will go back to the queue. Thank you.
Thank you.
All right. We noticed a question online. It's about the reason of lower gross profit margin in second quarter. I think Johnson already answered that question.
Okay. We don't have any questions online now. Thank you for joining us today. Good day and goodbye.
Take care. Have a good weekend.
Thank you.