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.
Anna Bhobho, a 31-year-old housewife from rural Zimbabwe, was once a silent observer in her home, excluded from financial and family decisionmaking in the deeply patriarchal society. Today, she is a driver of change in her village, thanks to an electric tricycle she owns. In many parts of rural sub-Saharan Africa, women have long been excluded from mainstream economic activities such as operating public transportation. However, three-wheelers powered by green energy are reversing that trend, offering financial opportunities and a newfound sense of importance. “My husband now looks up to me to take care of a large chunk of expenses,
SECTOR LEADER: TSMC can increase capacity by as much as 20 percent or more in the advanced node part of the foundry market by 2030, an analyst said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to lead its peers in the advanced 2-nanometer process technology, despite competition from Samsung Electronics Co and Intel Corp, TrendForce Corp analyst Joanne Chiao (喬安) said. TSMC’s sophisticated products and its large production scale are expected to allow the company to continue dominating the global 2-nanometer process market this year, Chiao said. The world’s largest contract chipmaker is scheduled to begin mass production of chips made on the 2-nanometer process in its Hsinchu fab in the second half of this year. It would also hold a ceremony on Monday next week to
State-run CPC Corp, Taiwan (CPC, 台灣中油) yesterday signed a letter of intent with Alaska Gasline Development Corp (AGDC), expressing an interest to buy liquefied natural gas (LNG) and invest in the latter’s Alaska LNG project, the Ministry of Economic Affairs said in a statement. Under the agreement, CPC is to participate in the project’s upstream gas investment to secure stable energy resources for Taiwan, the ministry said. The Alaska LNG project is jointly promoted by AGDC and major developer Glenfarne Group LLC, as Alaska plans to export up to 20 million tonnes of LNG annually from 2031. It involves constructing an 1,290km
TECH CLUSTER: The US company’s new office is in the Shalun Smart Green Energy Science City, a new AI industry base and cybersecurity hub in southern Taiwan US chip designer Advanced Micro Devices Inc (AMD) yesterday launched an office in Tainan’s Gueiren District (歸仁), marking a significant milestone in the development of southern Taiwan’s artificial intelligence (AI) industry, the Tainan City Government said in a statement. AMD Taiwan general manager Vincent Chern (陳民皓) presided over the opening ceremony for the company’s new office at the Shalun Smart Green Energy Science City (沙崙智慧綠能科學城), a new AI industry base and cybersecurity hub in southern Taiwan. Facilities in the new office include an information processing center, and a research and development (R&D) center, the Tainan Economic Development Bureau said. The Ministry
RSS