Hiwin’s monthly sales fall again, but orders, not sales, are key issue

by SR on March 12, 2012

Hiwin Technologies (2049 TT) came out with monthly sales for February 2012 at the end of last week. Hiwin is a leading supplier of ball screws used in machine tools and other equipment, so it gives us a bit of a view into Taiwan-centric machine tool demand (although it has also grabbed market share in Japan from NSK). February sales were pretty poor, falling again for the third consecutive month of (precipitous) declines. Still, the impact on the share price, which has been a monster performer since earlier this year, has been limited. (Click on the chart below for larger image.)

Hiwin monthly sales

Also, it is probably fair to assume that the monthly sales are backward-looking given that lead times for this kind of component are measured in months rather than weeks. A colleague of mine said that she had no luck trying to get an IR meeting with Hiwin, so I don’t have much colour on this aspect.

The other thing to keep in mind is that although the decline in monthly sales looks (and frankly is) nasty, it is in percentage terms much smaller than the 74% percentage decline posted from the peak of 2009 to the bottom. Within a year, Hiwin’s monthly sales had returned to pre-GFC levels. (Click on the chart below for larger image.)

Hiwin monthly sales

Personally I remain a bit skeptical that the strong performance we have seen from some machinery stocks can be sustained. A lot depends on your macro view and if you believe that things will, over the next few months, show an emphatic improvement then of course you should buy cyclicals. On the other hand, we have had false dawns before over the past three years… See also this post from earlier today for the latest on Japan machinery orders.


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