Mon, Apr 15, 2019 - Page 16 News List

Auto parts suppliers’ see sales decline amid weak demand in main markets

By Chen Cheng-hui  /  Staff reporter

Auto parts suppliers tracked by Jih Sun Securities Investment Consulting Co (日盛投顧) reported lackluster sales for last month as demand remained weak in major markets, despite the number of working days returning to normal compared with the previous month.

Affected by persistent feeble demand in China and the US, as well as the tepid market sentiment, many suppliers reported falling sales for last month compared with the same period last year, with some posting double-digit percentage declines, Jih Sun said.

“We believe the outlook for the sector in the next few months would not be much different,” Jih Sun analyst Linus Shih (史聖國) said in a note on Thursday. “The business and valuations of auto parts suppliers would continue to face pressure.”

According to company regulatory filings, Tsang Yow Industrial Co (倉佑實業), which makes powertrain components, saw sales drop 41.34 percent to NT$168.59 million (US$5.46 million); Hota Industrial Manufacturing Co (和大工業), which makes gears and shafts for transmissions, posted a decline of 20.3 percent to NT$502.63 billion; metal sheet and bumper manufacturer Tong Yang Industry Co (東陽實業) reported a 13.01 percent fall to NT$1.97 billion; Hiroca Holdings Ltd (廣華控股), which focuses on interior trim, made 7.33 percent less with NT$662.06 million; and Chian Hsing Forging Industrial Co’s (江興鍛壓) sales were 6.02 percent lower at NT$228.11 million.

Bucking the downward trend, motorcycle parts supplier Eurocharm Holdings Co (豐祥控股) reported that sales rose 24.86 percent to NT$467.7 million; Kian Shen Corp (江申工業), which supplies body frames, beams and suspension parts, posted an increase of 15.69 percent to NT$135.85 million; Yusin Holding Corp (永新), which develops cylinder products, saw sales increase 14.47 percent to NT$133.82 million; wire harness maker BizLink Holding Inc (貿聯控股) increased 12.3 percent to NT$1.9 billion; and sunshade supplier Macauto Industrial Co (皇田工業) grew 8.65 percent to NT$547.25 million.

In the first three months of the year, combined sales at auto parts suppliers fell 4.4 percent from a year earlier and the headwinds for the sector are likely to linger for the rest of the first half, as Taiwanese firms are among the primary victims of weaker global auto sales and trade tensions, KGI Securities Investment Advisory Co (凱基投顧) said in a note to clients on Thursday, citing data from 47 domestic suppliers.

Auto sales in China fell 14.2 percent year-on-year in the first quarter, while sales in the US dropped 1.8 percent over the same period, KGI said, citing statistics compiled by the China Passenger Car Association and the US Department of Commerce’s Bureau of Economic Analysis.

“We expect the sector’s sales growth to see recovery and its earnings momentum to resume in the second half of the year, when automakers start to regain their production momentum,” KGI analysts led by Jennifer Liang (梁姿嫺) said in the note. “The relatively lower comparison base of last year also helps.”

KGI said that companies in the electric and autonomous vehicle segments should be a bright spot this year, with Eurocharm, Hota, BizLink, Cub Elecparts Inc (為升電裝工業) and Global PMX Co Ltd (智伸科技) among its favorite picks in that space.

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