Automotive component supplier Hu Lane Associate Inc (胡連精密) saw its shares rally 6.41 percent yesterday amid optimism that its plan to form a joint venture in China with Lear Corp would help expedite the company’s expansion into the electric vehicle (EV) connector market and provide a growth opportunity.
Hu Lane, based in New Taipei City’s Sijhih District (汐止), said it entered an agreement with Lear’s Chinese subsidiary, Lear (China) Holding Ltd (李爾中國), on Wednesday to create a vehicle parts trading company in Yangzhou to enter the supply chains of global automakers through vertical integration.
The joint venture is to design and produce connectors used in existing and new-generation vehicles for global automakers, the companies said in a joint statement.
Photo: Chen Rou-chen, Taipei Times
The new company is likely to be formed in the fourth quarter of this year after receiving regulatory approval, the statement said.
“The cooperation between the two parties will enhance Hu Lane’s market position in the field of automotive connectors, and optimize our existing products and technological innovation capabilities,” Hu Lane chairman Chang Tzu-hsiung (張子雄) said in the statement.
Through vertical integration in the connector parts industry, the company plans to penetrate the supply chains of global vehicle makers, Chang said.
Hu Lane shares jumped to NT$124.5 yesterday on the Taipei Exchange, the highest in about six weeks, outperforming the over-the-counter market index’s 1.41 percent gain.
“We are positive on the long-term benefits of this collaboration. Lear will improve its competitive advantages in China thanks to Hu Lane’s production and cost management,” Yuanta Securities Investment Consulting Co (元大投顧) said in a note yesterday. “We expect this joint venture to help Hu Lane accelerate its penetration in European and US markets.”
Hu Lane mostly focuses on the Chinese market. About 58 percent of its second-quarter revenue of NT$1.17 billion (US$42.13 million) came from Chinese customers, including Changan Automobile Co (長安汽車), BYD Co (比亞迪汽車) and Geely Automobile Holdings Ltd (吉利汽車).
The deal would also help Hu Lane quicken its expansion into EV products, as Lear has been developing its EV-related business, covering high-voltage wire harnesses, electrical distribution systems, battery management systems, on-board chargers and AC/DC converters, Yuanta said.
Hu Lane has also developed high voltage connectors, and the two companies are likely to integrate their EV-related products in the short term, it said.
Lear generates 75 percent of its revenue from supplying car seats, and 25 percent from connectors, wire harnesses and automotive electronics, as well as EV systems, company data showed.
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