Machine tool manufacturer Hiwin Technologies Corp (上銀科技) is likely to post a narrower sequential decline in sales this quarter following a 18.39 percent fall in the previous quarter, but a solid recovery will not come until the second quarter of next year, analysts said.
The Taichung-based company, which manufactures precision machinery components such as ball screws and linear guideways, is forecast to report consolidated sales of NT$2.86 billion (US$98.2 million) this quarter, down 4.98 percent from last quarter’s NT$3.01 billion, Fubon Securities Co (富邦證券) said in a report yesterday.
The company’s earnings per share is likely to be NT$1.89 in the December quarter, compared with NT$1.99 in the previous quarter, Fubon said in the report.
Because of a rapid decline in orders at downstream machine tool makers, Hiwin on Nov. 5 reported weaker sales of NT$928.39 million last month, down 10.97 percent month-on-month and 32.05 percent year-on-year.
Among its major revenue drivers, linear guideways accounted for 62 percent, ball screws 23 percent, industrial robots 10 percent and 5 percent for other items.
During an investors’ conference held on Nov. 13, Hiwin maintained a conservative view over the near term, adding that it was not immune from clients’ inventory correction and weaker demand from China.
Therefore, the firm forecast its sales for this month and next month would be similar to last month’s, Credit Suisse analyst Jerry Su (蘇厚合), who attended the meeting, said in a note on Nov. 14.
Given increasing inventory buildup at its subsidiaries and transportation issues, Fubon said Hiwin’s current weakness would continue until the end of the first quarter of next year, while Credit Suisse said the company would take longer to process these inventories, considering the weak prospects in Europe and China.
However, Fubon analyst Stanley Lo (羅新) said he predicted Hiwin would see signs of an early rebound in the first quarter of next year, given that downstream machine tool manufacturers are already expecting an upturn from the second quarter of next year.
“We project that a recovery in the machine tool market on the near-term horizon will boost linear guideway and ball screw sales,” Lo said in the report.
In addition, Fubon said it expected future growth due to Hiwin’s broad presence in the Cartesian robot market, after the company said it planned to begin production of several new projects and new applications from the second quarter of next year to deepen its penetration in the industrial robotics market.
However, Credit Suisse disagreed and said in Su’s note that it would be difficult for Hiwin’s new products to offset the overall demand slowdown.
“It will take at least a few years for Hiwin to see a significant revenue contribution from these high-end applications, given quality and reliability concerns, a lack of high precision component production know-how and a lack of capability to design its own controller or integrate a complicated system,” Su said in his note.
Shares of Hiwin rose 0.92 percent to NT$210 in Taipei trading yesterday, declining 14.63 percent so far this year, the Taiwan Stock Exchange’s data showed.