汇丰银行-台湾休闲设备-taiwan bicycles：2q17 results preview，expect another weak quarter-20170712-hsbc

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1、Flashnote12July2017TaiwanBicyclesEQUITIESLEISUREEQUIPMENT&PRODUCTS2Q17resultspreview:ExpectanotherweakquarterTaiwanOur2Q17enetprofitforecastsforMeridaandGiantare49%JeremyChen*and16%respectivelybelowconsensusNon-techAnalystHSBCSecurities(Taiwan)CorporationLimitedjeremy.cm

2、.chen@hsbc.com.twBikesharingimpactdeepeningandcouldlinger+886266312866RetainReduceratingsonMeridaandGiant*Employedbyanon-USaffiliateofHSBCSecurities(USA)Inc,andisnotregistered/qualifiedpursuanttoFINRAregulationsMeridaWeexpectMeridatoreport2Q17netincomeofTWD255m(EPSTWD0.85),

3、down15%q-o-qand41%y-o-y,or49%belowstreetconsensusestimateofTWD497m.Wethinkconsensus2Q17eGPMof16.8%isoverlyoptimisticinlightofunfavourableFX,sharplylowershipmentvolume,andhighermaterialcost.Weforecast2Q17GPMtocomeinat12.8%vs.1Q17’s13.5%.WealsoexpectequityincomefromSpecializedt

4、ofallby56%toTWD85mn,down35%y-o-y.Merida’s2Q17revenuetotalledTWD5.26bn,down6.4%y-o-yasthegroup’sshipmentvolumetumbled32%y-o-yto305kunits.TheChinaoperationreporteda39.7%y-o-yshipmentdeclineto146kunits,withthecompanyblaminglabourshortagesatitsTaiwanplantfortheweakerthanexpecteds

5、hipment.2Q17ASPincreasedby12%y-o-y,thankstotheshipmentrampofe-bikes.AccordingtoMerida,itshipped40.6kunitsofe-bikesin2Q17,up50%y-o-y.Thecompanyexpectstotale-bikeshipmenttoreach~100kunitsin2017,upnearly80%y-o-y.GiantWeforecastGianttoreport2Q17netprofitofTWD682m(EPSofTWD1.81),do

6、wn19%y-o-y,butup32%q-o-q.Wenotethatournumbersare16%belowBloombergconsensus,largelyduetoourlowerGPMforecastof20.2%vs.theStreet’sestimateof21.5%.WethinkthatalowerutilizationrateinitsChinaplantandunfavourableFXareheadwindsforitsGPMin2Q17.Giant’s2Q17revenuetotalledTWD13.4bn,down9

7、.5%y-o-y.ThecompanyclaimedthatGiantEUandGiantUSAsalesreported“positivegrowth”excludingthecurrencyimpact.SimilartoMerida,GiantcitedcontinuingweaknessinitsChinaoperation.Stockratings✔VoteinAsiamoneyBrokersPoll2017ForMerida,weretainourReduceratingandTPofTWD126,whichisbasedon16.5

8、xVotingstarts6thJuly(1stdbelowthe4-yeartradingaverage)12-monthforwar