Ennoconn Corp (樺漢科技), an industrial computer manufacturing arm of Hon Hai Precision Industry Co (鴻海精密), yesterday said it is targeting China’s 461 billion yuan (US$69.6 billion) smart manufacturing market.
The company, which started as a traditional industrial computer manufacturer, has over the past few years expanded into the emerging field of smart manufacturing through a slew of mergers and acquisitions at home and abroad.
The New Taipei City-based company hopes to leverage the strength of Hon Hai, known as Foxconn Technology Group (富士康科技集團) outside Taiwan, to expand its reach in China by introducing smart solutions including hardware, software and services to the 38 Chinese manufacturing “campuses” operated by Foxconn, Ennoconn chairman Steve Chu (朱復銓) told investors.
Each of Foxconn’s business groups has at least 20,000 machines that need to be upgraded and provided with smart manufacturing capabilities, Chu said.
“This is a tremendous project. It will take us two or three years to complete,” Chu said. “We have already started installing Internet of Things [IoT] solutions to collect a pool of data for analysis.”
Such analysis is to help enhance production efficiency, he said.
The company’s factory management and control systems could help reduce consumption of water and power, and help improve factory security, he said.
This is just the starting point for Ennoconn, Chu said.
The company aims to sell smart manufacturing solutions to 15 million Chinese plants as Beijing overhauls factory management under its “Made in China 2025” program, he said.
China’s smart factory market would expand at an annual rate of 75 percent to 461 billion yuan in 2020, compared with 121.8 billion yuan in 2015, Chu said.
“Ennoconn was really small when it was listed on the Taiwan Stock Exchange in 2014. We only had 130 employees at the time. Now, we are ready to penetrate the Chinese market by integrating the resources of our more than 10 subsidiaries,” Chu said.
About NT$1 billion to NT$1.5 billion (US$32.7 million to US$49.04 million) of Ennoconn’s revenue last year came from China, or about 4.29 percent of its total revenue of NT$35 billion, Chu said.
Revenue more than doubled last year from NT$14.47 billion in 2016.
Chu said he expected revenue to grow quarter-on-quarter this year based on clear order visibility.
The company will also focus on strengthening its profitability, he said.
Ennoconn aims to improve its net profit margin to 10 percent in the long term by expanding its offerings to high-margin software services from low-margin traditional industrial computers, Chu said.
Last year, the company’s net profit margin was 5.61 percent, while gross margin stood at 22 percent, the firm said in its annual report.
Kontron AG, a German subsidiary, delivers a much higher gross margin of 40 percent, it showed.
To improve profitability, Ennoconn said it is increasing its offering of branded industrial computers and services, as well as integrated smart manufacturing solutions.
Shareholders yesterday approved a proposal to distribute a cash dividend of NT$9 per share, making for a payout ratio of 60.77 percent based on the company’s earnings of NT$14.81 per share last year.
Ennoconn shares rallied 1.2 percent to NT$423 in Taipei trading yesterday.
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