Tsang Yow Industrial Co (倉佑), which makes automotive power-train components, is mulling a capacity expansion plan totalling more than NT$300 million (US$9.94 million) this quarter for a possible new cooperation with auto parts supplier Magna International Inc.
The company plans to spend NT$200 million to acquire a plot of more than 23,141m2 near its factory in Chiayi County and an additional NT$100 million to purchase the necessary equipment, company president Su Chi-tse (蘇祈澤) told reporters yesterday.
“The expansion is likely to be completed within a year,” he added.
The expansion is aimed at shipping more parts of automatic transmissions to Magna, a supplier for General Motors Co and Ford Motor Co, according to Su.
Tsang Yow is to start distributing 120,000 units of parts for automatic transmissions a year to Magna in the third quarter, which is expected to increase its revenue by US$3 million a year, Su said.
Magna’s order will contribute US$1.5 million to the company this year, he said.
Currently, the company is in talks with Magna for an order of 450,000 units of parts for automatic transmissions in both 2017 and 2018, he added.
Once completed next year, the capacity expansion would allow the company to ship 330,000 units of its products a year, Su said, adding that the company intends to continue raising its capacity in the future.
Starting in the third quarter, the company will also ship its products to ZF Friedrichshafen AG, a supplier for Mercedes Benz, Su said.
The company is set to post 20 to 30 percent growth in revenue this year from NT$1.82 billion last year on the back of rising orders, after it reported a net profit of NT$39.65 million, or NT$0.43 per share for last quarter, company data showed.
The figure was about as flat as NT$36.96 million a quarter ago.
Su said the year-on-year profit increase was due to new orders from its clients and improvements in product mix, which raised its gross margin to 17.78 percent last quarter from 12.87 percent a year ago.
The company expects its profit to reach NT$1.5 per share this year, with a gross margin of higher than 17.78 percent this year.
On its debut on the Taiwan Stock Exchange yesterday, the company’s shares rose 24.78 percent to NT$28.2.
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