Taiwan’s biggest bicycle makers, Giant Manufacturing Co Ltd (巨大機械) and Merida Industry Co Ltd (美利達), last week reported annual declines in net profit and revenue in the first quarter due to the COVID-19 pandemic.
However, demand for bicycles is expected to increase in the US and Europe once lockdowns are lifted, as they are safer for commuting and a better sports option, which would be a positive development for the two bicycle makers, Yuanta Securities Investment Consulting Co (元大投顧) said last week.
Giant on Thursday reported that net income fell 7.96 percent year-on-year to NT$629.41 million (US$21.02 million) in the first quarter and consolidated revenue declined 9.33 percent to NT$13.32 billion. Earnings per share were NT$1.68, down from NT$1.82 a year earlier.
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The firm’s bicycle shipments totaled 800,000 units, down 20 percent year-on-year, mainly dragged down by the EU market, while electric bicycle shipments declined 9 percent from a year earlier.
“Although the US market was still in lockdown in March to April, US sales in April surged 40 percent year-on-year, as US bicycle stores are viewed as essential stores and can open during the lockdown, while there was a rising demand for mid-end products with a price range of US$500 to US$1,000 each, mainly for leisure sports activities and commuting,” Yuanta analyst Peggy Shih (施姵帆) said in a note on Friday.
“We expect that people in the EU market will also increase their demand for bicycles after lockdowns are lifted,” Shih said. “Its e-bike growth story will continue after a gradual economic resurgence.”
Merida’s net income declined 1.77 percent to NT$470.43 million and revenue fell 5.72 percent to NT$5.26 billion, while earnings per share were down from NT$1.6 to NT$1.57, the company’s financial statement showed.
The firm’s first-quarter bicycle shipments were 9.68 percent less than a year earlier at 206,270 units, while a 57 percent growth in electric bicycle shipments was offset by a drop in traditional bike shipments.
“Merida’s market demand has shifted to [low to mid-end] bikes with free on board prices of less than US$200 on average since the COVID-19 breakout in the US, EU and China, driven by needs for safer commuting,” Shih said in a separate note on Thursday. “The e-bike growth story is likely to continue with 10 to 15 percent year-on-year growth, but traditional high-end bikes are still likely to see 15 to 30 percent annual declines.”
Shares in Giant rose 6.42 percent to NT$199 on Friday, while Merida shares were up 1.65 percent to NT$154 in Taipei trading.
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