Hiroca Holdings Ltd (廣華控股), a southern and central China-focused automobile components supplier, on Tuesday said that it was entering the auto market in eastern China following five years of effort after securing orders from China’s leading automobile group, SAIC Motor Corp (上汽集團).
The company’s subsidiary in Shanghai has received orders for two new vehicles from SAIC Motor and expects to gain orders for another two passenger cars later this year, Hiroca president Steven Huang (黃建中) told an investors’ conference in Taipei.
The company remains cautious about sales for this quarter, as the Chinese auto market has remained sluggish and its Chongqing plant, which supplies for Ford Motor Co and Daimler AG, still faces pressure amid a US-China trade dispute, Huang said.
However, sales for next quarter are expected to grow from a year earlier thanks to the orders from SAIC Motor, he added.
Hiroca, which mainly sells plastic interior decor, saw a 44.33 decline in net income to NT$187.44 million (US$5.97 million) in the first half of this year, while earnings per share decreased from NT$4.02 to NT$2.24.
Gross margin improved 1.26 percentage points to 25.73 percent in the first six months, as the company shipped more high-value products, such as dry printing parts, Huang said.
The company aims to become a tier-1 supplier to major auto brands by offering more high-value components and integrated solutions, he said.
It counts Nissan Motor Co, Honda Motor Co and Toyota Motor Corp among its major clients, as the three Japanese firms contributed 71.13 percent of sales in the first half of the year.
To better serve its clients, the company is considering building a plant near Shanghai, he said, adding that there is a 70 percent chance it would start construction on a plant in Taicang City later this year.
The company also plans to install new production lines for dry printing parts at its plants in Dongguan, Wuhan and Kaifeng later this year, Huang said.
Its plant in Guanajuato, Mexico, which makes parts for vehicles to be exported to the US, is to get a new production line for in-mold printing parts in November, as Hiroca works to avoid risks from the US-China trade dispute, chief financial officer and spokesperson Huang Sheng-chang (黃盛昌) said.
The plant is expected to start contributing earnings next year on improved management efficiency, after reporting lower net losses in the first half, he said.
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