Sat, Sep 09, 2017 - Page 12 News List

Ennoconn wins big orders amid new business push

CUSTOMER SERVICE:The Hon Hai subsidiary is also considering the US for new factories to better serve its clients there, who contribute about half of total revenue

By Lisa Wang  /  Staff reporter

Ennoconn Corp (樺漢科技), a subsidiary of Hon Hai Precision Industry Co (鴻海精密), yesterday said it has won big orders to supply electronic gaming machines this year as the company pursues revenue growth through new businesses.

“We have made major progress in our new entertainment unit. We have secured twice the number of orders our peers have received in about 10 years,” Ennoconn chief executive officer Steve Chu (朱復銓) told investors yesterday. “This progress alone will greatly help drive the company’s [revenue] growth next year.”

‘SMART’ GROWTH

Ennoconn, the nation’s second-largest industrial computer maker, in May said that it was seeking growth momentum from three areas: electronic gaming machines, embedded systems and “smart” meters.

The company started to ship gambling equipment — such as slot machines — to clients in Las Vegas this quarter and expects the growth to magnify next year in tandem with the shipment increase, Chu said.

PARENT’S FOOTSTEPS

To better serve customers, the company is scouting sites for factories in the US, following in its parent company’s steps, he added.

The US is the biggest revenue source for the company, accounting for 54 percent of total revenue in the first half of the year.

Wisconsin might not be an ideal choice for the company, even though Hon Hai, also known as Foxconn Technology Group (富士康), has decided to invest US$10 billion on building advanced LCD plants there, he said.

Chu gave an optimistic revenue growth outlook for the second half as its acquisitions of S&T AG and Kontron AG in Germany have started to bear fruit.

“We have strong confidence that the third quarter will be better than the second. Our order visibility is even stronger in the fourth quarter compared with the third,” Chu said.

Ennoconn reported NT$4.42 billion (US$147.3 million) in revenue last quarter. Net profit returned to the black at NT$624 million, or NT$3.42 in earnings per share.

COMPLEX TASK

Chu dismissed concerns that the company’s earnings growth outlook would suffer considering the time it would take to integrate and generate synergies for its cross-border merger-and-acquisition deals, considering the different scales, languages and business cultures involved.

“We are expecting rapid growth next year after combining S&T and Kontron,” he said.

S&T expects revenue to grow 15 percent annually to 1 billion euros (US$1.21 billion) next year, chief executive officer Hanns Niederhauser told investors in Taipei yesterday. The company provides industrial Internet-of-Things solutions such as “smart” meters.

Kontron, an industrial computer brand acquired earlier by S&T, swung into profit in the first quarter, ending three years of deep losses, Chu said.

Ennoconn completed the acquisitions in June, which pushed its revenue up to NT$3.8 billion last month from NT$1.25 billion a year earlier.

In the first eight months of the year, cumulative revenue jumped 64.58 percent to NT$15.09 billion from the same period last year.

NEW DEALS

Ennoconn is still looking for good merger-and-acquisition targets and might announce two or three deals by the end of this year, Chu said.

Those deals would boost profits and enhance its technologies in industrial computing, he said.

Ennoconn shares rose 2.89 percent to close at NT$480 in Taipei trading. The stock has risen 16.5 percent so far this year, compared with the main bourse’s 14.66 percent increase over the period, Taiwan Stock Exchange data showed.

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