Mon, Feb 18, 2019 - Page 15 News List

Global market risks expected to drag on Airtac sales

By Chen Cheng-hui  /  Staff reporter

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.

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