Merida Industry Co (美利達) could see revenue contribution from electric bicycles rise to 30 percent of its total revenue this year, from 20 percent last year and 10 percent in 2016, as the electric models have become very versatile, analysts said.
“Currently, there are many ways to use electric bicycles, such as for mountain climbing, carrying stuff and passengers, and daily commuting. The new smart model is expected to hit the market in 2020, with more efficient batteries, and we expect the market demand to increase gradually,” Jih Sun Securities Investment Consulting Co (日盛投顧) researcher Satin Lin (林子楹) said on Thursday.
Merida shipped 93,300 electric bicycles last year, up from 57,000 in 2016.
In the first seven months of the year, the company’s e-bike shipments reached 90,000 units and the figure for the whole of this year could amount to 150,000-160,000 units, Lin said in a client note.
“Merida’s orders for electric bicycles could grow by 40 to 50 percent in 2019, compared with this year’s,” Lin said. “E-bike sales are also to increase by 40 percent in 2019.”
In the first seven months of the year, Merida posted cumulative sales of NT$15.33 billion (US$498.84 million), up 26.36 percent from the same period of last year.
Net income for the first half of the year was NT$550.13 million, up 22.98 percent from NT$447.32 million a year earlier. Earnings per share rose from NT$1.5 to NT$1.84 over the same period.
Gross margin fell to 12.04 percent, compared with 12.55 percent a year earlier, while operating margin also dropped from 5.04 percent to 4.62 percent, company data showed.
The European anti-dumping duties do not affect Merida, as none of the firm’s electric bicycles or high-end bikes are made in China, Yuanta Securities Investment Consulting Co (元大投顧) said.
“However, with the US-China trade war escalating, the likelihood that the US will impose an additional 25 percent tariff on bikes that are exported from China is increasing. With trade tension intensifying, Merida’s margins may end up being pressured,” Yuanta analyst Peggy Shih (施姵帆) said in a separate note on Aug. 13.
Merida shares have advanced 18 percent this year, compared with the broader market’s 3.96 percent rise, while bigger rival Giant Manufacturing Co’s (巨大機械) shares have declined 18.96 percent over the period, Taiwan Stock Exchange data showed.
Merida’s share price has been stronger than Giant’s due to Merida’s strong electric bicycle sales, lower capacity in China, and overall less negative impact from the US-China trade war, Shih said.
However, Yuanta remains neutral on the company’s stock in view of its weaker margins and its relatively high valuation, she said.
Merida shares on Friday closed at NT$147.5 and Giant ended at NT$132.5 in Taipei trading.
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