Tesla Inc’s Taiwanese suppliers are expected to receive a boost after the US maker of electric vehicles posted a profit for the third quarter and announced that it would be holding a trial production run at its Shanghai plant ahead of schedule, analysts said.
After Tesla on Wednesday delivered on chief executive Elon Musk’s promise to report a profit for the third quarter, Jih Sun Securities Investment Consulting Co (日盛投顧) said in a research note on Thursday that it is optimistic about the performance of the US firm’s Taiwanese supply chain.
Jih Sun has maintained its “buy” rating on the shares of wire harness maker Bizlink Holding Inc (貿聯控股), Chian Hsing Forging Industrial Co (江興鍛壓), which makes automobile, mechanical and motorbike parts and forged products, Global PMX Co (智伸科技), which makes auto parts and medical components, LED module maker Excellence Optoelectronics Inc (聯嘉光電) and QST International Corp (恒耀國際), which produces automotive fasteners, the note said.
“Tesla Inc’s production and shipment volume in the third quarter reached a record high, and the quarter turned profitable as previously announced, with overall production, sales and operational status continuing to improve,” Jih Sun analyst Linus Shih (史聖國) said in the note. “Future observations are still focused on changes in shipments and output, the fourth-quarter results, free cash flow and the progress of mass production at its Shanghai plant.”
Tesla’s third-quarter results and its earnings guidance were also a positive sign to Yuanta Securities Investment Consulting Co (元大投顧) analyst Kenny Chen (陳景文), who said that they had helped ease concerns over margin deterioration.
The key would be how many vehicles Tesla is going to deliver in the next two years, after it pledged to sell at least 360,000 vehicles this year, Chen said in a separate note on Thursday.
“The global EV [electric vehicle] market saw slower year-on-year growth as of the first eight months of 2019, against the backdrop of falling subsidies and fast growth in the past two to three years. However, Tesla’s shipment growth is better than the overall market thanks to the Model 3. We believe this has proven that so far there is no reason for concern as there is not currently a ‘Tesla killer’ in the market,” Chen said.
Yuanta forecast that Tesla’s production would increase 36 percent next year and 29 percent in 2021 on the back of the Model 3’s global expansion and mass production of the Model Y, which would be a positive catalyst to revenue growth for Taiwanese components suppliers, including BizLink, Excellence Optoelectronics, electrical terminal supplier K.S. Terminals Inc (健和興端子) and Hota Industrial Manufacturing Co (和大工業), which makes gears and shafts.
In the first nine months of this year, BizLink posted revenue of NT$17.32 billion (US$566.1 million), up 10.52 percent from the same period last year, while Excellence Optoelectronics posted sales of NT$3.15 billion, up 25.03 percent from a year earlier.
Global PMX posted revenue of NT$3.66 billion in the first nine months, an increase of 12.06 percent year-on-year, while Chian Hsing posted cumulative sales of NT$2.16 billion, up 1.33 percent.
K.S. Terminals posted revenue of NT$2.57 billion, down 1.87 percent; Hota posted revenue of NT$4.51 billion, down 17.18 percent; and QST posted revenue of NT$7.42 billion, down 9.58 percent year-on-year.
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