Autoparts maker I Yuan Precision Industrial Co Ltd (謚源) said it plans to start shipments of tire pressure monitoring systems (TPMS) next month, in an effort to diversify its product portfolio from cooling fans and blowers. TPMS also offers wider gross margins, the company said.
Some US customers have already placed TPMS orders, I Yuan president and chairman Wu Chieh-shih (吳碣石) said on Wednesday at a media gathering in Taipei.
The products could begin making a small contribution to revenue this quarter, Wu said, without elaborating.
TPMS uses a device inside each tire that monitors tire pressure and sends signals to the driver about tire status in real time. Many countries have mandated that all vehicles sold must have TPMS as standard equipment to reduce the probability of accidents.
According to autoparts maker Cub Elecparts Inc (為升), the annual market demand for TPMS is about 50 million units in North America, 40 million in Europe and 160 million to 220 million in Asia.
Wu said several clients in the EU and the US have begun to adopt TPMS as essential equipment in their vehicles. In light of the big growth opportunity, I Yuan has set a sales target of 1 million TPMS units for next year, he said.
The company plans to start shipping TPMS to the North American markets next month, followed by shipments to Europe early next year.
The company said the gross margin of TPMS is anticipated to reach up to 40 percent this quarter.
Part of the reason for the wide margin is that the company holds some core technologies, which eliminates the need to pay any extra royalties. The company’s patent pool also allows it to avoid intellectual property rights disputes with rivals, it said.
Besides TPMS, the company is working on the research and development of brushless motors, but Wu did not elaborate on the company’s capital spending for its R&D projects, nor the R&D budget’s proportion to the company’s annual sales.
Last month, I Yuan saw its sales edge down 0.57 percent to NT$69.64 million (US$2.3 million) from NT$70.04 million a year earlier, with cooling fans and blowers making up about 72 percent and 21 percent of the company’s sales respectively.
In the first three quarters of this year, the company reported sales of NT$641 million, a decline of 5.22 percent from a year earlier. Earnings per share were NT$2.23 in the first half of the year, compared with NT$2.67 in the same period of last year.
On Friday, the company’s board approved a capital increase plan to improve its financial structure.
The company plans to raise fresh funds by issuing 4 million new shares at NT$90 each, according to a company filing to the Taiwan Stock Exchange, a discount of 25.9 percent based on I Yuan’s closing price of NT$121.5 on Friday.
Once the recapitalization scheme is completed by the end of this year, I Yuan expects to see its capital more than double to NT$678.78 million from NT$318.78 million.
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