Some brokerages have raised their target share price on Taiwanese pneumatic product maker Airtac International Group (亞德客) on expectations that the company’s earnings will rise further along with global automation trends.
However, others say the China-based company’s pace in overseas expansion outside China is to become increasingly critical to whether it can sustain long-term growth.
Shares of Airtac have risen 118.18 percent over the past 12 months on the Taiwan Stock Exchange, outperforming the broader market by 107.69 percent over the period.
“There are various reasons behind the increasing adoption of automation equipment across the manufacturing industry, such as increasing labor costs, the need to improve production yields and higher product precision requirements,” Yuanta Securities Corp (元大證券) researcher Steve Huang (黃柏璁) said in a note yesterday. “We believe Airtac is set to benefit from this clear ongoing trend.”
Yuanta has raised the company’s share price target on the stock to NT$400 from NT$375.
Airtac, set up in 1988 and registered in the Cayman Islands, runs production facilities in China and is the second-largest pneumatic equipment maker in that country with a 14 percent market share.
On Monday, the company released its first-quarter financial results, showing net profit of NT$378.09 million (US$12.5 million), down 9.4 percent quarter-on-quarter, but up 44 percent year-on-year, with earnings per share (EPS) of NT$2.22.
Revenue for the first quarter was NT$1.83 billion, up 3 percent quarter-on-quarter and 27 percent year-on-year, thanks to recovering end demand, the company said in a stock exchange filing.
Gross margin expanded by 2.67 percentage points annually to 56.28 percent last quarter and operating margin grew by 4.51 percentage points to 30.4 percent over the year, the filing showed.
Yuanta said Airtac is expected to experience sales for this quarter of NT$2.44 billion, up 33 percent from last quarter and 19 percent from a year earlier.
Gross margin is likely to keep growing to 56.4 percent this quarter and operating margin to increase to 32.4 percent, with earnings set to rise 53 percent from last quarter to NT$3.39 per share because the second quarter traditionally shows strong demand for the pneumatic equipment market, Yuanta said.
Daiwa Capital Markets is also upbeat about the company’s earnings outlook, citing Airtac’s new product launches and the firm’s cost reduction from replacing labor with automated equipment in its production plants and vertical integration of key components.
“Airtac’s first-quarter results were in line with our forecasts,” Daiwa analyst Christine Wang (王琦清) said in a separate note on Monday. “We expect second-quarter EPS of NT$3.07, up 38 percent quarter-on-quarter.”
Daiwa has recommended a six-month target price of NT$350 on Airtac, representing a 4 percent rise over the company’s closing price of NT$336 yesterday.
HSBC Securities head of equity research Jenny Lai (賴惠娟) said Airtac has benefited from strong market-share gains in China, due to a combination of its expanded sales channel and product portfolio.
However, with China contributing about 15 percent of global pneumatic equipment demand, there is a potential risk to Airtac, which generates more than 80 percent of its total sales from China, Lai said in a report on Monday.
“Global expansion is likely to become increasingly important to support long-term growth,” Lai said of Airtac’s latest strategy in leveraging distributors in Europe to expand its reach there.
HSBC has lifted its stock target price to NT$342 from NT$313.
KEEPING UP: The acquisition of a cleanroom in Taiwan would enable Micron to increase production in a market where demand continues to outpace supply, a Micron official said Micron Technology Inc has signed a letter of intent to buy a fabrication site in Taiwan from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion to expand its production of memory chips. Micron would take control of the P5 site in Miaoli County’s Tongluo Township (銅鑼) and plans to ramp up DRAM production in phases after the transaction closes in the second quarter, the company said in a statement on Saturday. The acquisition includes an existing 12 inch fab cleanroom of 27,871m2 and would further position Micron to address growing global demand for memory solutions, the company said. Micron expects the transaction to
Nvidia Corp’s GB300 platform is expected to account for 70 to 80 percent of global artificial intelligence (AI) server rack shipments this year, while adoption of its next-generation Vera Rubin 200 platform is to gradually gain momentum after the third quarter of the year, TrendForce Corp (集邦科技) said. Servers based on Nvidia’s GB300 chips entered mass production last quarter and they are expected to become the mainstay models for Taiwanese server manufacturers this year, Trendforce analyst Frank Kung (龔明德) said in an interview. This year is expected to be a breakout year for AI servers based on a variety of chips, as
Global semiconductor stocks advanced yesterday, as comments by Nvidia Corp chief executive officer Jensen Huang (黃仁勳) at Davos, Switzerland, helped reinforce investor enthusiasm for artificial intelligence (AI). Samsung Electronics Co gained as much as 5 percent to an all-time high, helping drive South Korea’s benchmark KOSPI above 5,000 for the first time. That came after the Philadelphia Semiconductor Index rose more than 3 percent to a fresh record on Wednesday, with a boost from Nvidia. The gains came amid broad risk-on trade after US President Donald Trump withdrew his threat of tariffs on some European nations over backing for Greenland. Huang further
HSBC Bank Taiwan Ltd (匯豐台灣商銀) and the Taiwan High Prosecutors Office recently signed a memorandum of understanding (MOU) to enhance cooperation on the suspicious transaction analysis mechanism. This landmark agreement makes HSBC the first foreign bank in Taiwan to establish such a partnership with the High Prosecutors Office, underscoring its commitment to active anti-fraud initiatives, financial inclusion, and the “Treating Customers Fairly” principle. Through this deep public-private collaboration, both parties aim to co-create a secure financial ecosystem via early warning detection and precise fraud prevention technologies. At the signing ceremony, HSBC Taiwan CEO and head of banking Adam Chen (陳志堅)
RSS