Sat, Jun 22, 2019 - Page 12 News List

Shihlin forecasts revenue from China might fall 15-20%

By Kwan Shin-han  /  Staff reporter

Shihlin Electric & Engineering Corp (士林電機) yesterday said that revenue from China might decline 15 to 20 percent this year, due to the US-China trade dispute and a sluggish Chinese market.

However, it expects increased demand for its electrical components from Europe and the US, while capacity expansion from a new Vietnamese factory would help keep revenue unchanged from last year, Shihlin said.

“Sales in China this year might fall between 15 and 20 percent due to higher US tariffs on exports of electrical parts,” a company official, who asked to remain anonymous, told the Taipei Times by telephone. “A sluggish Chinese economy and a weak stock market are keeping consumers cautious on spending.”

“We plan to divert orders of electrical parts from China to Taiwan and Vietnam,” the official said. “We also aim to avoid losses by broadening our customer base and adjusting product portfolios in China.”

Chinese units contributed 30 percent of the company’s total output last year, but that is likely to fall this year, while factories in Taiwan and Vietnam last year contributed 60 percent and 10 percent respectively, which should rise, he said.

Improved orders for electrical parts mainly used in heavy motorcycles in Europe and the US would be one of the driving forces, with annual revenue growth of between 20 and 30 percent, the company said.

It started supplying electrical parts and motors for local electric scooter companies this month, which could help boost sales this year, it said.

A new factory in northern Vietnam is to specialize in motorcycle parts and is expected to be completed in October, allowing it to start contributing to revenue at end of this year at the earliest, it said.

The company operates two existing factories in Vietnam, which manufacture transformers and motorcycle parts, giving the company flexibility over its production lines if the US-China trade dispute escalates, it said.

Shareholders on Thursday approved the distribution of a cash dividend of NT$1.5 per common share, implying a payout ratio of 55.15 percent based on last year’s earnings per share of NT$2.72.

That was a dividend yield of 3.21 percent based on the stock’s closing price of NT$46.8 in Taipei trading yesterday.

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