Pneumatic components supplier Airtac International Group (亞德客) might see downside risks affect sales growth this year amid changing global market conditions, Yuanta Securities Investment Consulting Co (元大投顧) said last week.
Demand weakness is not limited to smartphones, but has extended to other consumer electronics, while the Chinese market still accounts for about 90 percent of Airtac’s total revenue, Yuanta said in a note on Wednesday.
“We remain conservative based on the weak end-demand outlook across Airtac’s major sales drivers, including smartphones, automotive and electronic equipment, and with China’s manufacturing purchasing managers’ index yet to see signs of a recovery,” Yuanta analyst Steve Huang (黃柏璁) said.
The warning came after Airtac held a teleconference on Tuesday to release preliminary results for last quarter, which showed that sales declined 6.91 percent quarterly to NT$3.58 billion (US$116.05 million), while gross margin declined 0.07 percentage points to 46.42 percent and operating margin dropped 1.9 percentage points to 22.48 percent.
Fourth-quarter net profit rose 49.12 percent quarterly to NT$680 million thanks to non-operating gains, but profit was 14.14 percent lower than a year earlier, with earnings per share of NT$3.6, company data showed.
Airtac’s net profit last year declined 13.97 percent to NT$2.84 billion, with earnings per share of NT$15.02. Sales were up 13.97 percent to NT$15.6 billion, but gross margin dropped 3.72 percentage points to 48.28 percent and operating margin fell by 3.54 percent to 26.66 percent.
The firm plans to allocate NT$2 billion to NT$2.5 billion to expanding capacity at its plants in Taiwan and China.
Airtac has production bases in Tainan; Foshan, China; and Ningbo, China, company data show.
Sales and profit could rise this year thanks to an improved mix of pneumatic components, a higher equipment utilization rate for pneumatic products and a better economy of scale for miniature linear guideways, Airtac said.
However, Jih Sun Securities Investment Consulting Co (日盛投顧) is cautious about the effect of US-China trade tensions on the company’s capacity utilization outlook.
“Airtac’s sales for the first half of the year will be lower than for the same period last year due to US-China tensions and inventory adjustments at major Chinese customers, but, assuming a recovery in capacity utilization, Airtac’s sales will markedly improve in the second half of the year,” Jih Sun analyst Wayne Chen (陳有裕) said in a note on Friday.
Jih Sun forecast that Airtac’s sales would increase 2.8 percent this year and profit would grow 5.6 percent from last year.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to
The US stock market has been on a tear, yet the country’s economy is in the dumps. So why do so many people believe — undoubtedly incorrectly — that the stock market has decoupled from reality? The economy many people experience, while bleak, is local, personal and, for the most part, either not publicly traded or plays only a small part in the stock market’s moves. To explain why these personal experiences have so little effect on equity markets, we must look more closely at the market role of the weakest industry sectors. The surprising conclusion: The most visible and economically vulnerable