Hiwin sales tick up: a floor in machinery demand?

by SR on April 6, 2012

I’ve mentioned Hiwin Technologies (2049 TT) before in this post on Greece and cyclical machinery demand and also this one on Hiwin’s monthly sales for February 2012. To recap, we follow Hiwin because it is a leading and rapidly growing Taiwanese supplier of ball screws, and is one of the global leaders in this market, competing with larger suppliers such as Japanese bearing supplier NSK. Ball screws are used amongst other things for precise positional adjustments in machine tools, which are themselves a leading indicator of sorts for capex. So, if Hiwin is doing well, it suggests that capex is picking up.

Last month I pointed out that Hiwin’s monthly sales have imploded over the past few months, but argued that sales is a trailing indicator in an industry where lead times can easily come to 3 or 6 months. The key issue, then, is order flows. Unfortunately my colleague in Taiwan tells me that Hiwin is not what you’d call investor friendly and that past requests for meetings or conference calls have been rejected, so it’s difficult to get a feel for orders as opposed to sales. Still, in March 2012 Hiwin’s sales picked up nicely, suggesting that orders may have already bottomed. Given worrying signs of weakness in some other areas (a point I make in this post on Japan bearing orders) that seems like a positive to me. Nevertheless, I still prefer Toyota group auto parts or tyres to machinery at this point. (Click on graphic for larger image.)

Hiwin Tech monthly sales
While sales have risen, the share price has been pretty volatile over the past few weeks, falling from a recent high of NT$333 to NT$285.50 and recovering a little to its current level of NT$291. That’s a 12.6% decline, compared to a 2.9% decline in the Taiwan market over the same period. (Click on graphic for larger image.) Then again, the stock is still up 31.4% from its January lows and up 44.4% from the bottom it set in September 2011.

Hiwin Tech share price

 

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