汇丰银行-asiaautomationstrongdemand,newproductsandmarginexpansion；upgradehiwintobuy-20170609-hsbc

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1、9June2017AsiaAutomationEQUITIESMACHINERYStrongdemand,newproductsandmarginexpansion;upgradeHiwintoBuyTaiwanChinademandlikelytoremainstrongBruceLu*AnalystMarginexpansiononpricehikeandnewproductsHSBCSecurities(Taiwan)CorporationLimitedBruce.kl.lu@hsbc.com.tw+886

2、266312861UpgradeHiwintoBuywithTPofTWD257(fromTWD204);JustinLin*MaintainBuyonAirtacwithTPofTWD418(fromTWD400)AssociateHSBCSecurities(Taiwan)CorporationLimitedJustin.yc.lin@hsbc.com.twStrongautomationdemandtocontinue:Accordingtoautomationplayersincluding+88626631286

3、9Hiwin,Airtac,TBI(4540TT,Notrated),Awea(1530TT,Notrated)andGoodway(1583TT,Notrated),automationequipmentdemandislikelytoremainstrongin*Employedbyanon-USaffiliateofHSBCSecurities(USA)Inc,andisnotregistered/qualifiedpursuanttoFINRAregulations2H17e,drivenbysemi,display

4、,OLED,automobileandaerospaceindustries.Automationcompaniesguidefor15-20%y-o-yoverallgrowthin2017erevenuewithvisibilityto4Q17e(vs.c.3monthsforwardvisibilityin2016).LimitedcapacityleadstoCAPEXexpansion:ThankstorobustdemandfromChina,AirtacandHiwinreported21%and32%y-o-

5、ygrowthinrevenuey-t-d,respectively.However,bothcompaniesareinatightcapacitysituation.Tosupportstrongorders,AirtacraisesitsCAPEXguidanceby15-25%(fromTWD2.2bn)forfactoryexpansion,andHiwintargetstoinvestTWD4-5bninverticalintegration,capacityexpansionandrobotmanufactur

6、ingin2017e.Marginexpansionin2H17e:Amidstrongdemand,Hiwinhasraisedthesellingpricesby5-10%andincreaseditsutilizationrate.Massproductionofin-houselinearguidesandswitchescansave40%ofcostsfromtheoriginalsupplier,andelectricparts’ramp-upshouldbodewellforthegrossmarginbys

7、ellingelectricandpneumaticpartsinthesamepackage.Newproductsacatalystfor2018e:Airtacplanstosellelectricpartproducts(nocontributionnow)directlytoclientsfrom2018onwardsandcanleverageitsexistingsaleschannelsandclients(70-80%ofclientsalsohavedemandforelectricparts)inac.

8、USD8-9bnmarket.Hiwin’smanagementisconfidentaboutitsrobotbusinessgrowthinthenext3-5yearsasthecompanycontinuestoupgradeitsrobotproductsandincreasec