The nation’s major auto parts suppliers are expected to report a double-digit percentage decline in sales this year as the COVID-19 pandemic continues to weigh on demand, although the effects of the outbreak have gradually eased, Jih Sun Securities Investment Consulting Co (日盛投顧) said.
Despite hopes for the year-end peak season, it would take quite some time for suppliers’ operations to return to the levels seen before the outbreak, Jih Sun analyst Linus Shih (史聖國) said in a note on Thursday last week.
“Jih Sun still maintains a reserved outlook on the overall auto parts sector,” Shih said.
The analyst’s remarks came after more than two-thirds of the 33 auto parts companies that Jih Sun covers reported an annual decline in sales for last month, and about one-third reported a monthly drop.
Overall, the sector’s sales performance last month was weaker than in July, ending three consecutive months of recovery as major automakers took summer breaks and the aftermarket business entered the traditional low season, the report said.
On a positive note, the effects of the pandemic continue to fade and the sector’s annual decline in revenue is shrinking, it said.
In regulatory filings last week, firms that reported significant annual sales declines included Hiroca Holdings Ltd (廣華控股), which supplies automotive interior parts and saw sales drop 23.05 percent to NT$511.09 million (US$17.32 million); Macauto Industrial Co (皇田工業), which supplies sunshades and reported a decline of 19.91 percent to NT$401.07 million; and Hota Industrial Manufacturing Co (和大工業), which makes gears and shafts, and reported a drop of 18.71 percent to NT$420.77 million.
Precision machine maker Global Tek Fabrication Co (時碩工業) saw its sales decline 15.68 percent to NT$292.72 million; metal sheet and bumper supplier Tong Yang Industry Co’s (東陽實業) sales dropped 14.52 percent to NT$1.43 billion; and Tsang Yow Industrial Co (倉佑實業), which makes automotive powertrain components, reported that its sales dropped 12.82 percent to NT$158.7 million.
Bucking the downward trend, Kian Shen Corp (江申工業), which supplies body frames, beams and suspension parts, reported that sales rose 51.91 percent to NT$81.58 million; China Fineblanking Technology Co (和勤精機), a manufacturer of metal stamping products, saw sales increase 21.23 percent to NT$203.17 million; Tung Thih Electronic Co (同致電子), a supplier of smart parking systems, posted a rise of 12.53 percent to NT$580.42 million; and Turvo International Co (宇隆科技), a precision machining and metal processing service provider, gained 10.33 percent in sales to NT$202.04 million, Taiwan Stock Exchange (TWSE) data showed.
In the first eight months of the year, most auto parts suppliers still reported a double-digit percentage decline in sales, while some companies — including E-Lead Electronic Co (怡利電), an auto electronics manufacturer focusing on infotainment head units, and Right Way Industrial Co (正道工業), a supplier of casting and forging parts — posted declines of 30 percent or more, TWSE data showed.
“Therefore, even if there are traditional peak-season effects before the end of the year to drive better-than-expected operating momentum in the fourth quarter, the sector’s overall sales in 2020 would still see a double-digit percentage decline compared with 2019,” Shih said.
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