Wed, Mar 29, 2017 - Page 12 News List

Tesla’s Model 3 to be a boon for Hota net income: Daiwa

By Kuo Chia-erh  /  Staff reporter

Hota Industrial Manufacturing Co (和大工業), which supplies automotive components to Tesla Inc, is expected to see net income grow further this year, benefiting from Tesla’s launch of a new electric car, the Model 3, Daiwa Capital Markets Inc said last week.

Tesla is to begin production of its lower-priced Model 3 compact sedan in the middle of this year and start shipments next year, the US-based company’s Web site showed.

“Hota is expected to receive at least a 60 percent order allocation for the Model 3 and remain the sole components supplier for the Model S and the Model X,” Daiwa analyst Helen Chien said in a report last week.

Hota is expected to benefit from an increase in orders from its major clients this year, including BorgWarner Inc and Punch Powertrain NV, the report said.

Hota’s earnings per share are forecast to rise to NT$6.15 this year, compared with last year’s NT$4.78, Daiwa said.

However, gross margin might erode due to the higher revenue contribution of the less expensive Model 3, which has a lower margin compared with other Tesla vehicles, Chien said, without providing additional details.

In the first three quarters of last year, Hota’s gross margin improved slightly from 35.38 percent to 35.76 percent, company data showed.

In a bid to meet increasing demand from its international clients, Hota is building automated production lines at Chiayi Dapumei Precision Machinery Park (嘉義大埔美精密機械園區).

Seven new automated and “intelligent” production lines in Chiayi County are scheduled to begin production by the end of this year, Hota said.

The company is also seeking to build a plant in Miaoli County’s Tongluo Industrial Park (銅鑼科學園區) to further expand capacity, the Chinese-language Economic Daily reported last week.

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