Fri, Aug 21, 2015 - Page 13 News List

China demand may drive Swancor business growth

POSITIVE PROSPECTS:Amid a market turndown, a wind turbine parts manufacturer expects gross margin improvements, despite flat second-quarter revenue

By Lisa Wang  /  Staff reporter

Swancor Industry Co Ltd (上緯), which manufactures wind turbine rotor resin, is expecting increasing installations of offshore wind turbines in China to drive the company’s business growth.

“We are seeing demand for new wind turbines slowing in the current quarter after a subsidy program ended in China, but demand for replacing old wind turbines and new offshore wind turbines will help sustain our business,” Swancor chairman Robert Tsai (蔡朝陽) told investors.

“We expect shipments in the second half to grow at a similar pace compared with that of the first half,” he said.

Wind turbine installations in China are expected to reach capacity of 23 gigawatts this year, the same as last year, Swancor said, citing forecasts by market researcher Global Wind Energy Council.

China is the world’s biggest wind turbine market, with new installations accounting for 45 percent of the world’s 51 gigawatts last year, according to the researcher.

Swancor is the biggest wind turbine rotor resin supplier to China’s largest wind turbine manufacturer, Goldwind Science and Technology Co Ltd (金風科技). The Xinjiang-based company contributes between 60 and 70 percent of Swancor’s total revenue.

Swancor expects revenue for the second half of the year to be flat from the NT$4.7 billion (US$143 million) in the first half of the year, while gross margins might improve from 21.75 percent last quarter, thanks to lower raw material costs after supplies stabilized, Tsai said.

In the first half, net income jumped 30.4 percent to NT$434.77 million, or NT$5.08 per share, from NT$333.39 million, or NT$4.28 per share, in the same period last year, the company reported last week.

Swancor said it is scheduled to operate two offshore wind turbines in Taiwan in the third quarter of next year and another 30 wind turbines in the fourth quarter of 2019.

Swancor won a contract from the government in 2012 to build offshore wind turbines with a total capacity of 200 megawatts.

The company expects to book NT$75 million in government subsides this quarter after the construction of a wind anemometer in Miaoli County.

Swancor expects to generate the first revenue from the new business next year.

The company has formed a new US$17 million joint venture with Formosa Plastics Corp (台塑) to tap into the carbon fiber business.

The carbon fiber is to be used in wind turbines and the manufacture of automobiles, it said.

The company yesterday scrapped a project, citing volatile stock prices, adding that it may resume fundraising projects next year.

Swancor planned to issue 3.5 million new common shares to raise NT$700 million.

Swancor shares in Taipei trading dropped 0.75 percent to NT$199.5 yesterday.

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