Companies in the bicycle industry are expected to benefit from record-low inventory at distributors, new lifestyle trends and continued growth momentum in the electric bicycle sector during the post-COVID-19 pandemic period, analysts said.
Taiwan’s leading bicycle maker Giant Manufacturing Co Ltd (巨大機械) and bicycle chain maker KMC Kuei Meng International Inc (桂盟國際) would gain most from the rising demand for mid to low-end bicycles and strong sales growth of high-margin electric bicycles, Yuanta analysts led by Peggy Shih (施姵帆) said in a research note on Tuesday.
“Bicycles satisfy social distancing requirements and provide a safe way to commute and exercise amid the pandemic. This has helped the growth in overall bike demand,” they said.
Photo: Ritchie B. Tongo, EPA-EFE
Consumers’ increased demand for bicycles has led to healthy sales and supply shortages for mid and low-end models globally, the Yuanta analysts said.
It has also resulted in extremely low inventory at distributors, while boosting the capacity utilization rate for bike component suppliers, they added.
Yuanta analysts forecast that global bicycle demand would reach 110 million units this year, with high-end models comprising about 12 million of the total, including 2 million to 2.5 million high-end electric bikes.
Demand for mid to low-end models for commuting and leisure activities is likely to increase by 5 million to 10 million units this year, they said.
Meanwhile, demand for electric bicycles is expected to grow by a compound annual growth rate of 10 to 11 percent in the four years from last year, with annual sales in the EU and the US likely to increase to between 4 million and 4.1 million units in 2022, compared with 3 million units last year, the analysts said, citing bicycle suppliers’ estimates.
Giant, the world’s largest bicycle maker with 70 percent of capacity allocated to its own brands, reported revenue of NT$6.01 billion (US$211 million) for last month, up 12.01 percent year-on-year, while cumulative revenue in the first 11 months increased 9.65 percent annually to NT$64.25 billion, exceeding last year’s full-year revenue of NT$63.41 billion, company data showed.
“Giant can respond to market demand rapidly and adjust component purchases in a timely manner, therefore it suffered less impact from component shortages versus [its] peers,” the Yuanta analysts said.
The company has also seen its e-bike sales volume grow 20 to 30 percent year-on-year in the US and EU markets this year, the analysts said, adding that Giant’s e-bike market share is expected to rise in the US and EU next year from 7 percent this year, further supporting its gross margin growth.
KMC, the world’s leading chain supplier with a global market share of 80 percent, reported that its revenue last month grew 45.07 percent year-on-year to NT$631 million, the second-highest on record.
Its cumulative revenue in the first 11 months rose 15.38 percent to NT$5.47 billion, exceeding last year’s full-year figure, company data showed.
As “KMC plants are running at full capacity on the back of strong bicycle sales globally,” and given “bicycle chain migration driven by the e-bike trend, and rising demand for high-margin aftermarket bike products, we expect it to see gross margin expansion going forward,” the Yuanta analysts said.
Another major bicycle maker, Merida Industry Co Ltd (美利達), reported that its revenue last month rose 12.85 percent year-on-year to NT$2.28 billion, while cumulative revenue in the first 11 months decreased 3.69 percent to NT$24.67 billion.
The leading mid to high-end bicycle manufacturer distributes its products under the Specialized Bicycles Components Inc brand and its own brand.
As the Specialized brand’s high-end models account for 70 to 80 percent of Merida’s brand business, Merida would see less benefit from rising demand for mid to low-end models, the analysts said.
Merida bought a minority stake in Specialized, the fourth-largest bicycle maker in the US, in 2001.
The domestic unit of the Chinese-owned, Dutch-headquartered chipmaker Nexperia BV will soon be able to produce semiconductors locally within China, according to two company sources. Nexperia is at the center of a global tug-of-war over critical semiconductor technology, with a Dutch court in February ordering a probe into alleged mismanagement at the company. The geopolitical tussle has disrupted supply chains, with some carmakers reportedly forced to cut production due to chip shortages. Local production would allow Nexperia’s domestic arm, Nexperia Semiconductors (China) Ltd (安世半導體中國), to bypass restrictions in place since October on the supply of silicon wafers — etched with tiny components to
Singapore-based ride-hailing and delivery giant Grab Holdings Ltd has applied for regulatory approval to acquire the Taiwan operations of Germany-based Delivery Hero SE's Foodpanda in a deal valued at about US$600 million. Grab submitted the filing to the Fair Trade Commission on Friday last week, with the transaction subject to regulatory review and approval, the company said in a statement yesterday. Its independent governance structure would help foster a healthy and competitive market in Taiwan if the deal is approved, Grab said. Grab, which is listed on the NASDAQ, said in the filing that US-based Uber Technologies Inc holds about 13 percent of
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday received government approval to deploy its advanced 3-nanometer (3nm) process at its second fab currently under construction in Japan, the Ministry of Economic Affairs said in a news release. The ministry green-lit the plan for the facility in Kumamoto, which is scheduled to start installing equipment and come online in 2028 with a monthly production capacity of 15,000 12-inch wafers, the ministry said. The Department of Investment Review in June 2024 authorized a US$5.26 billion investment for the facility, slated to manufacture 6- to 12nm chips, significantly less advanced than 3nm process. At a meeting with
Taiwan’s food delivery market could undergo a major shift if Singapore-based Grab Holdings Ltd completes its planned acquisition of Delivery Hero SE’s Foodpanda business in Taiwan, industry experts said. Grab on Monday last week announced it would acquire Foodpanda’s Taiwan operations for US$600 million. The deal is expected to be finalized in the second half of this year, with Grab aiming to complete user migration to its platform by the first half of next year. A duopoly between Uber Eats and Foodpanda dominates Taiwan’s delivery market, a structure that has remained intact since the Fair Trade Commission (FTC) blocked Uber Technologies Inc’s
RSS