Taiwan to benefit from Beijing initiative: investors
As China's "One Belt, One Road" strategy and its Asian Infrastructure Investment Bank initiative gather steam, Taiwanese companies are likely to benefit from the immense surge in construction projects anticipated throughout Asia, according to Taiwan-based institutional investors.
The Asia Development Bank has estimated that annual demand for capital to fund basic infrastructure investment among governments in Asia will reach US$730 billion by 2020.
China International Capital Corp., the largest investment banking and research firm in China, said it anticipates that Beijing will pour more than US$1.65 trillion into its "one belt, one road" strat- egy over the next decade, much of which will flow to neighboring nations in Asia.
Meanwhile, the prospects of Taiwanese companies Asia Vital Components Co. ( ), and Power Mate Technology Co. ( ) have risen in the eyes of investors as they are deemed to be companies well-positioned to reap rewards as the Beijing-led initiatives take shape. Power Mate Technology Co. ( ), a power supply company that in 2010 secured a role in China's railroad equipment supply chain after its electronic equipment products received EN 50155 standard certification for railway applications.
Since its founding, Power Mate's products have been used in a number of demanding industrial applications including medical, weaponry, solar power and automobiles. The company is an original design manufacturer, and markets products under the brand name P-Duke.
Institutional investors said that Power Mate's presence in the industrial power supply niche market guarantees the company stellar profit margins of around 50 percent and steady demand from clients. Industrial components must meet stringent standards and require a lengthy certification process, so clients are less likely to switch suppliers once a partnership has been established, the institutional investors said.
Taiwan's Asia Vital Components Co. ( ), a thermal solution provider, in 2011 acquired a 45-percent stake in a subsidiary company formed with China's China South Locomotive & Rolling Stock Corp.
Local institutional investors are expecting the company to benefit from expected growth in demand for high-margin railway heat dissipation and electrical products including power resisters, water-cooled transformers and rackable connectors.
In addition to expected windfalls in the future, Asia Vital Components Co.'s computer server business has also been picking up and is expected to bring improved margins for the company, the institutional investors said.