Sumeeko Expects to See Profit in Q3 (Though with Lower Revenue) and Peak in Q4

The automotive fastener manufacturer Sumeeko reported revenue growth in Q2 this year, the quarterly EPS landed at NTD 1.31 (only a slight increase compared to Q1’s NTD 1.23 and less than the market forecast). As Q3 is usually a low season for most industrial customers, Sumeeko’s revenue in July dropped back to NTD 0.105 billion, the lowest record of the year. The market report shows that Sumeeko’s revenue in August was very close to the result in July and its revenue will increase only when there are more orders in September. Accordingly, its revenue in Q3 will be lower than that in Q2. However, due to the depreciation of NTD, the profit for a single month is likely to go up. The high season (Q4) for the industry is approaching, Sumeeko may start to see increasing market demand on one hand, and may enjoy the benefits resulted from new order acceptances on another hand. Moreover, with its nearly completed Ping Tung-based new plant in Taiwan, the revenue of Sumeeko is very likely to reach the peak in the full year of 2015.

 

According to statistics, Sumeeko’s largest customer is GM (representing more than 10% of its revenue). The second largest is Toyota (representing 8-9%). As for Tesla and Chrysler, they represented 4% of Sumeeko’s revenue last year. Many of its major customers increased their orders this year. For example, Tesla, though reduced the sales forecast this year, still reported higher sales than last year, which boosted Sumeeko’s revenue to go up.

 

A market forecast shows that Sumeeko’s revenue may increase by 5-10% this year (which is though lower than the original expected 15% in the beginning of the year but is still the highest record in its history. EPS for the full year of 2015 is estimated to reach NTD 6-6.5 (similar to the level of last year). Analysts think that when the new plant is completed and new orders continue to bring benefits, next year (2016) will definitely be a better year for Sumeeko, meaning there may be higher revenue and profit for the company.