Sat, Aug 31, 2013 - Page 14 News List

Advantech buys majority stake in LNC

DIVERSIFICATION:The company now has a 77 percent stake in the CNC controller maker and said it will buy the rest later. It still has plenty of assets to buy more firms

By Kevin Chen  /  Staff reporter

Industrial computer maker Advantech Co (研華) continued its shopping spree yesterday with the acquisition of a subsidiary of Pou Chen Group (寶成) that supplies controllers for computer numerical control (CNC) and injection molding machines.

The company said in a filing to the Taiwan Stock Exchange that it has bought 38.5 million shares of the 13-year-old LNC Technology Co (寶元數控) at NT$14.72 per share, for a total purchase price of NT$566.7 million (US$18.9 million).

The purchase will give Advantech a 77 percent stake in LNC Technology, the filing said, adding that the company aims to purchase the remaining shares eventually also.

Advantech — which mainly supplies embedded computing, industrial automation and applied computing products in the industrial PC field — said the investment would strengthen its presence in the intelligent control and robotics field, while helping make it a leading automation brand in the Greater China region in years ahead.

The latest deal came after Advantech said on Aug. 14 that it was buying a 70.2 percent stake in AdvanPOS Technology Co (鈞發) for NT$319.46 million to tap its point-of-sale (POS) device market.

The recent purchases are not expected to financially burden the Taipei-based company, which had NT$26.8 billion in total assets, including NT$2.67 billion in cash and cash equivalents, at the end of June, its balance sheet showed. Total liabilities were NT$9.81 billion as of June 30.

Advantech has extended its reach into smart-life and factory automation applications in recent years to diversify its business portfolio. It has also pinned hopes on mergers and acquisitions (M&A) to help accelerate its progress in the highly fragmented industrial PC market.

Analysts say M&A, in addition to corporate reorganization, is part of the company’s efforts to double its annual revenue in the next five years to US2 billion from the estimated US$1 billion for this year.

“We estimate acquisitions could add an additional 3-5 percent revenue per year in 2014-2018,” CLSA analyst Cheng Chao-kang (鄭兆剛) said in a note on Aug. 15.

Cheng said Advantech is aiming to penetrate into new sectors such as energy, transportation, logistics and healthcare in order to broaden its addressable market to US$25 billion from the current US$13 billion.

In the first seven months of this year, the company’s cumulative revenue totaled NT$17.04 billion, up 8.16 percent from the same period of last year, while net profit totaled NT$1.99 billion in the first half of this year, or earnings per share of NT$3.5, up 13 percent from the same period last year.

KGI Securities Co (凱基證券) analyst Lisa Chen (陳玫芬) forecast the company would report a net profit of NT$4.66 billion, or NT$7.55 per share, on revenue of NT$30.36 billion, up 10.2 percent from last year’s NT$27.55 billion.

Supported by solid demand from North America and China as well as a positive view about the company’s reorganization, KGI raised its target share price on Advantech to NT$156 from NT$117, Chen said in a note on Wednesday.

Shares in Advantech were unchanged at NT$152 yesterday. The stock has risen 24.08 percent so far this year, compared with the broader market’s 4.19 percent increase over the same period.

This story has been viewed 3599 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top