Kung Long Batteries counting on Vietnam

By Kwan Shin-han  /  Staff reporter

Wed, Apr 24, 2019 - Page 12

Kung Long Batteries Industrial Co (廣隆光電) said it is focusing on selling high-margin products in the first half of the year and expects a better second half due to growing momentum in Vietnam.

Liu Huang-wei (劉晃瑋), spokesperson for the maker of batteries used in cars and motorcycles, said although the first half has been flat, growth in Vietnam is around the corner.

Production of motorcycle batteries could reach 150,000 per month in the second half of the year due to increasing orders from Japanese motorcycle brands in that country, from the 120,000 or so at present, Liu said.

Kung Long will continue delivery of large-sized uninterruptible power supply (UPS) batteries in the first half of the year based on orders won last year with Vietnamese telecommunications companies, Kung Long said.

The company currently produces 2 million uninterruptible power supply (UPS) batteries a month, Liu said.

UPS system-related batteries made up 68 percent of its total revenue in the first quarter, while batteries for motorcycles accounted for 13 percent, batteries for electric vehicles 12 percent, batteries for cars 3 percent and other battery-related products accounted for 4 percent, company data showed, similar to last year’s numbers.

Asia contributed 26 percent to first-quarter revenue, while Europe made up 23 percent, Vietnam about 22 percent, the US 20 percent and Taiwan 7 percent, company data showed.

Given its flat performance in the first quarter, the company decided to adjust its selling strategy.

“We will focus more on selling higher gross margin products to maintain steady revenue in the first half amid the decrease in numbers of products sold,” Liu said.

The company attributed its flat performance to the US-China trade dispute and Brexit uncertainties, which weighed on material prices.

Kung Long mainly produces lead-acid batteries, which have a higher price-performance ratio, wider fields of application, higher stability, are safer and recyclable, compared with lithium-ion batteries, the company said.

Raw materials make up 80 percent of total costs, of which lead often accounts for 80 to 90 percent, Liu said.

The company last year produced an average of 370 twenty-foot equivalent units (TEU) of batteries per month, Liu said.

In the first quarter that number was reduced to 340 TEUs due to the Lunar New Year holiday, and the quarter being the low season for UPS batteries, Liu said.

The company raised its prices on low gross margin products by 1 to 3 percent, starting this quarter, to reflect labor and material costs, Liu said.

First-quarter revenue totaled NT$2.01 billion (US$65.1 million), a 1.22 percent growth from NT$1.98 billion a year earlier.

It reported earnings per share of NT$12.03 for last year, up from NT$11.04 a year earlier.

The company’s earnings per share averaged 9.49 in the past seven years.

Kung Long said it plans to distribute a cash dividend of NT$10 for last year, which translates into a payout ratio of 83.13 percent.