Mon, Nov 18, 2013 - Page 13 News List

Bike shares posted as highs

ROLLERCOASTER:Analysts say with a slow season in China and poor US and European markets, bike manufacturers are likely to see a decline in revenue

By Kevin Chen  /  Staff reporter

The nation’s two largest bicycle makers have posted their highest levels of earnings per share in their corporate history over nine months, with strong sales in China.

However, analysts said both Giant Manufacturing Co (巨大) and Merida Industry Co (美利達) would see revenue decline this quarter when the industry enters its slow season, urging them to adjust product mix with higher average selling prices and profit margins.

Last week, Giant reported a net profit of NT$2.64 billion (US$89.1 million), or earnings per share of NT$7.05, for the first nine, up 13.87 percent year-on-year.

In the first three quarters, the company's total revenue increased 2.37 percent to NT$42.11 billion, with sales in China rising 28 percent year-on-year, while those in the US fell 2 percent along with a flat performance in Europe, according to company data.

Sales to Japan were down 30 percent year-on-year in the first three quarter, largely because of the yen's depreciation, but those in Taiwan grew 20 percent plus a 13 percent increase for the South Korean market during the nine-month period, data showed.

Deutsche Bank said in a note last week that Giant is likely to see revenue fall by 11.8 percent to NT$13.15 billion from last quarter and net profit to decline by a sequential rate of 16.7 percent to NT$771 million, or NT$2.06 per share, as the market in China has entered the slow season, while poor market conditions in the US and Europe remain.

The German bank said next year would be a good year for Giant, amid signs of improved market demand and good customer feedback to new models, including a high-end road bike model “Propel” and a differentiated mountain bike series featuring 27.5 inch (69.8cm) wheels.

Giant’s cross-town rival Merida also released its figures last week, showing its net profit rose 42.04 percent year-on-year to NT$2.26 billion, or earnings per share of NT$7.92, during the nine-month period, on sales of NT$18.73 billion, up 5.75 percent from a year earlier.

However, revenue for this quarter could fall 11.6 percent quarter-on-quarter to NT$6.81 billion, HSBC Securities said.

JPMorgan Securities forecast the firm's sales to drop 9.2 percent to NT$6.99 billion as the visibility of Merida's Chinese own-brand business has declined along with the slowdown of growth momentum in the past couple of months.

Giant shares fell 2.68 percent to NT$200 on Friday. Merida’s stock price fell 1.41 percent to NT$209.5.

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