Global up­grades to ben­e­fit au­to­ma­tion sup­pli­ers: re­search

The China Post - - LOCAL -

Tai­wan’s in­dus­trial au­to­ma­tion sup­pli­ers are no­table ben­e­fi­cia­ries of an ag­gres­sive global push to up­grade man­u­fac­tur­ing, ac­cord­ing to re­search by a U.S.-based bro­ker­age.

The bro­ker­age firm said that Tai­wan’s in­dus­trial au­to­ma­tion stocks have “re­treated” since the sec­ond quar­ter of the year as macroe­co­nomic weak­ness has re­sulted in softer sales, pro­vid­ing a good reen­try point to buy se­lect stocks due to their lower share prices.

“We view the cur­rent macro slow­down as a good op­por­tu­nity to se­lec­tively buy in­dus­trial au­to­ma­tion stocks,” said the U.S. bro­ker­age, whose name can­not be dis­closed be­cause it was of­fer­ing spe­cific fore­casts that could in­flu­ence the mar­ket.

“While the global in­dus­trial au­to­ma­tion mar­ket is dom­i­nated by play­ers from Europe, Ja­pan, and the U.S., Tai­wanese play­ers are catch­ing up in some key com­po­nents and en­try- level robots thanks to cost ad­van­tage, cus­tom­ized prod­ucts, and bet­ter lo­cal­ized ser­vice,” it wrote in a re­search note dated Aug. 20.

On the other hand, growth for Tai­wanese com­pa­nies fo­cus­ing on fac­tory au­to­ma­tion has slowed since 2014 due to their high re­liance on China, as well as a boost to their key ri­vals in Ja­pan from yen de­pre­ci­a­tion, the U.S. bro­ker­age said.

“How­ever, with eas­ing yen de­pre­ci­a­tion and sta­bi­liza­tion in China’s PMI (Pur­chas­ing Man­agers’ In­dex), we ex­pect these com­pa­nies to re­sume gain­ing mar­ket share. More­over, most of them en­joy higher op­er­at­ing profit mar­gins than their Ja­panese ri­vals,” said the U.S. bro­ker­age.

Con­sid­er­ing these fac­tors men­tioned above, the bro­ker­age main­tained its “over­weight” rat­ings on Delta Elec­tron­ics Inc. ( ), Air­tac In­ter­na­tional Group

), Ad­van­tech Corp. ( and En­no­conn Corp. ( ).

It also kept its “equal-weight” rat­ings on Chroma ATE Inc. (

) and Adlink Tech­nol­ogy Inc. ( ) and stayed “un­der­weight” on Hi­win Tech­nolo­gies Corp. ( ).

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