Tue, Aug 25, 2015 - Page 13 News List

Manufacturing upgrades benefit suppliers: study

Staff writer, with CNA

Taiwan’s industrial automation suppliers have benefited from an aggressive global push to upgrade manufacturing facilities, according to research by a US-based brokerage.

The brokerage said that Taiwan’s industrial automation stocks have “retreated” since the second quarter of the year as macroeconomic weakness has resulted in softer sales, providing a good re-entry point to buy select stocks due to their lower share prices.

“We view the current macro slowdown as a good opportunity to selectively buy industrial automation stocks,” said the US brokerage, whose name cannot be disclosed because it was offering specific forecasts that could influence the market.

“While the global industrial automation market is dominated by players from Europe, Japan, and the US, Taiwanese players are catching up in some key components and entry-level robots thanks to cost advantage, customized products, and better localized service,” it wrote in a research note on Sunday.

On the other hand, growth for Taiwanese companies focusing on factory automation has slowed since last year due to their high reliance on China, as well as a boost to their key rivals in Japan from the depreciation of the yen, the US brokerage said.

“However, with easing yen depreciation and stabilization in China’s PMI [purchasing managers’ index], we expect these companies to resume gaining market share. Moreover, most of them enjoy higher operating profit margins than their Japanese rivals,” the brokerage said.

The brokerage maintained its “overweight” ratings on Delta Electronics Inc (台達電), Airtac International Group (亞德客), Advantech Corp (研華) and Ennoconn Corp (樺漢).

It also kept its “equal-weight” ratings on Chroma ATE Inc (致茂電子) and Adlink Technology Inc (凌華科技), but stayed “underweight” on Hiwin Technologies Corp (上銀).

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