Electronic parts supplier BizLink Holding Inc (貿聯), which will be included in the Taiwan index of the MSCI Global Small Cap Indices later this month, is expected to see revenue grow 5 percent this quarter from last quarter on increased orders for components used in games consoles and servers, analysts said.
Falling copper prices will also provide positive input to the firms’s share price in the near term, after market frenzy about the firm’s electric car business cooperation with Tesla Motors Inc evaporated following reports about three fires involving Tesla’s Model S in five weeks, they said.
Analysts’ remarks came after BizLink, which supplies wire harnesses to Tesla, released its latest sales figure last week, which showed the firm’s revenue totaled NT$5.82 billion (US$197 million) in the first 10 months of the year, up 20.64 percent year-on-year and larger than the whole of last year's NT$5.7 billion.
Revenue for the October-to-December period is likely to reach NT$1.92 billion (US$64.8 million), an increase of 5.5 percent from the NT$1.82 billion during the last quarter, Yuanta Securities Co (元大證券) analyst Liu Szu-liang (劉思良) said yesterday in a client note.
However, Taishin Securities Investment Advisory Co (台新投顧) analyst Sun Chuan-shu (孫傳恕) said that revenue would increase just 0.5 percent sequentially to NT$1.83 billion, after signs of a slowdown in clients' orders, although the company has secured orders of server components from Dell Inc to help improve its product mix and profit margin, according to a separate note.
Liu said that the price of copper has declined 15 percent this year, pushing down BizLink’s raw materials to manufacturing cost ratio to 50 percent in the first half from 70 percent last year.
BizLink, which also produces electrical connectors and cable assemblies for consumer electronics and computer products, saw its share price rise 1.88 percent to NT$108.5 yesterday.
Its stock has jumped 223.88 percent since the beginning of the year, compared with the broader market’s 6.27 percent increase over the same period, mainly lifted by Tesla’s stock price increase this year.
BizLink has worked with Tesla, the world’s largest electric vehicle maker, for seven years and was one of 14 companies that won an excellent partner award from the US firm last month.
However, over the past month, BizLink has seen its share price correct by nearly 8.8 percent, underperforming the TAIEX’s 2 percent rise.
Liu said that this was because investors have come to the conclusion that electric vehicles seem to be losing their appeal. This was evidenced in Tesla’s weakening sales momentum.
Moreover, the electric car business accounts for a modest 3 percent of BizLink’s total annual revenue, he said.
BizLink reported NT$270.2 million in net profit during the first half of the year, or NT$3.58 per share, compared with NT$138 million, or NT$2.07 per share, during the same period of last year, the company's data showed.
Yuanta forecast that the company would report revenue of NT$7.11 billion and net profit of NT$657 million, or NT$8.28 per share, this year. That is higher than Taishin's estimates of NT$7.03 billion in revenue and NT$7.72 in earnings per share.
For next year, Yuanta said revenue will grow to NT$7.93 billion, with net profit of NT$785 million, or NT$9.89 per share, compared with revenue of NT$8.07 billion and EPS of NT$10.84 forecast by Taishin.