The share price of BizLink Holding Inc (貿聯) has been volatile over the past few months amid market concerns about the production of Tesla Inc’s Model 3 and the contraction of the Taiwanese wire harness maker’s gross margin.
Despite posting robust sales of NT$6.53 billion (US$218.7 million) in the first four months of the year, up 105.5 percent year-on-year, company shares have faced a 29 percent price correction since its closing price of NT$294.5 on March 14.
Company shares last week decreased 0.48 percent from the previous week to close at NT$209 on Friday last week, Taiwan Stock Exchange data showed.
The company supplies interconnect solutions covering cable assemblies and wire harnesses for use in vehicles, information technology products, industrial and medical equipment, and other electronic products.
It has been considered a “Tesla concept stock” since it started supplying products to the California-based firm a few years ago, but the slower-than-expected production of Model 3 vehicles has cast doubt on BizLink’s sales growth this year.
The main growth momentum in BizLink’s motor vehicle business this year is expected to come from battery cables for Tesla’s Model 3 vehicles, Capital Investment Management Corp (群益投顧) said in a note last week.
However, Tesla has been struggling to manufacture a weekly target of 5,000 Model 3 units by the end of this quarter.
Last quarter, the US electric automaker produced 2,020 Model 3 vehicles per week, lagging behind its target of 2,500 units due to production bottlenecks that affected its battery output.
“Given the lower-than-expected Model 3 output, the sales growth of BizLink’s motor vehicle business might be capped until the third quarter of this year,” Capital Investment analyst Iris Wang (王美珍) said in the note.
BizLink’s sales benefited from the acquisition of the electrical appliance assembly business of German-based Leoni AG in May last year, and the company’s revenue momentum this year might come mainly from the IT segment’s docking stations, which are adopted by various PC notebook brands to interface between USB Type-C ports and a variety of signals, Wang said.
However, the docking station business has faced gross margin pressure given persistent increases in the price of passive components, copper and memory chips, which could cap BizLink’s earnings growth this year, she said.
“We do not expect a significant recovery in gross margin for BizLink’s electrical appliance business this year,” Wang said, predicting that its gross margin would reach 20 to 21 percent.
The company reported net income of NT$228 million for the first quarter, up 16 percent year-on-year, but down 37 percent quarter-on-quarter, with earnings per share of NT$1.92, which was below the market expectation of NT$2.6.
While first-quarter revenue of NT$4.73 billion beat market expectations thanks to stronger demand for IT products, gross margin reached 19.7 percent, falling short of most analysts’ forecasts, due to rising raw material prices and component shortages, as well as unfavorable foreign-exchange rates.
DEVELOPING TALENT: The electronics contractor is looking to recruit people to work in core tech fields and emerging industries like electric cars and robotics Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, has launched a recruitment drive, offering a monthly salary of no less than NT$45,000 (US$1,485) to university graduates. For those with a master’s degree, the starting pay would be NT$52,000 per month at the minimum, while doctorate degree holders would receive at least NT$60,000 a month, Hon Hai said a statement issued early this week. The latest recruitment drive is aimed at attracting talent in core technology fields — artificial intelligence, semiconductors and next-generation mobile communications — and emerging industries — electric vehicles, digital healthcare and robotics, the
NEW CONSIDERATIONS: An airline manager said the idea is tempting, as demand for air cargo is strong, but issues such as training loaders would need to be addressed Taiwanese airlines might repurpose passenger jets to carry cargo in their cabins to offset lost revenue amid the COVID-19 pandemic. Airlines are considering applying to the Civil Aeronautics Administration (CAA) for permission to transport cargo in passenger cabins after StarLux Airlines Co (星宇航空) last month became the first among the nation’s airlines to offer cargo-only flights using the normal cargo holds of its three Airbus SE A321neo passenger jets. “We are considering whether to increase our capacity by putting cargo on passenger seats,” Starlux spokesman Nieh Kuo-wei (聶國維) told the Taipei Times by telephone. “The advantage is that we can improve revenue,
GLOBAL CUTS: CEO Warren East said the firm’s focus was on strengthening financial resilience, so it would likely reduce salary costs by at least 10% this year Rolls-Royce Holdings PLC is scrapping its targets and final dividend to shore up its finances as the British aero-engine maker’s customers around the world ground planes due to the COVID-19 pandemic. Rolls-Royce, one of Britain’s most historic industrial names, which before the pandemic struck was trying to emerge from a multiyear turnaround plan, has suspended its dividend for the first time since 1987. The company’s engines power Airbus SE and Boeing Co’s widebody jets, but more than 60 percent of that fleet is now grounded, according to aviation data provider Cirium. Rolls-Royce is paid by airlines based on how many hours they fly. Over
PAINFUL CONTRACTION: Passenger loads in February on flights between Taiwan and China, Hong Kong and Macau fell by more than 90 percent compared with December Even with more than NT$450 billion (US$14.85 billion) in financial aid from the Executive Yuan’s expanded relief package, local tourism-related businesses are unlikely to rebound from the COVID-19 pandemic any time soon, a central bank report released last month said. The NT$1.05 trillion relief package includes NT$472 billion in financial assistance for tourism and transportation sectors, such as airlines, hotels, travel agencies, taxis and tour buses. However, a March 20 central bank report said that the effects of the COVID-19 pandemic on global and domestic economies are far greater than that of the 2002-2003 SARS epidemic, despite any benefits from delayed purchases