China market hits Tong Yang profit

By Kwan Shin-han  /  Staff reporter

Tue, Jul 16, 2019 - Page 11

Tong Yang Industry Co Ltd (東陽實業), which manufactures bumpers and automotive sheet metal, yesterday reported that pretax profit for the first half of this year fell 7.11 percent year-on-year to NT$1.26 billion (US$40.58 million), or NT$2.24 per share, due to a sluggish automotive original-equipment manufacturing (OEM) market in China.

Sales from the firm’s OEM business in the first six months fell 40 percent to NT$2.79 billion, while revenue from its aftermarket business rose 5 percent to NT$7.8 billion, Tong Yang said, adding that it saw foreign-exchange gains of NT$48 million over the period.

“Although we only have an order visibility of two months, we still expect our OEM business to rebound in the fourth quarter as we enter the peak season, which would lead to a better second half of the year than the first half,” a company public relations official, who asked to remain anonymous, told the Taipei Times by telephone.

“Growth momentum in the second half of this year will mostly come from high-margin aftermarket auto parts, as demand grows in Europe, the Americas and China,” the official said, adding that the US made up more than 50 percent of its aftermarket sales in the Americas.

Tong Yang said it would expand its aftermarket business — including sales of a water-based coating for plastic automotive products, lightweight hoods and electroplating products — thanks to the growing market for alternative-fuel vehicles.

Analysts forecast that Tong Yang’s net income this year would increase 6 to 8 percent and its gross margin would improve by 1.6 to 1.9 percentage points on the back of the expanding aftermarket business.

The company’s revenue this year is expected to increase 5 percent on the growing contribution in the past two quarters of its Chinese subsidiary, FAW Group Co Ltd (一汽富維), if Beijing advances incentive measures for the Chinese vehicle market, the analysts added.

Tong Yang shares yesterday closed down 0.11 percent at NT$47 in Taipei trading. The company’s stock price has climbed 27.03 percent this year.