TAIPEI, Taiwan — Shares of Giant Manufacturing Co. and Merida Industry Co., two of Taiwan’s biggest bicycle makers, moved higher Thursday morning on hopes that their sales will be boosted by solid demand in the huge China market, dealers said.
The optimism escalated in particular after Giant said a day earlier that its sales in China will continue to grow at a double-digit pace this year, while Merida said it will pay more attention to the fast growing China market, they said.
As of 11:26 a.m., shares of Giant had added 2.74 percent to NT$168.50 (US$5.65) with 609,000 shares changing hands, while shares of Merida had risen 5.06 percent to NT$176.50 on trading volume of 1.43 million shares.
The benchmark weighted index on the Taiwan Stock Exchange was up 0.41 percent at 7,830.13 points.
“As China continues to steam ahead economically, demand for bicycles for leisure purposes is on the rise,” Horizon Securities analyst Benson Huang said. “Buying in the two stocks was triggered by their upbeat assessments in the China market soon after the local bourse opened.”
In an opening ceremony held a day earlier for the Taipei International Cycle Show, Giant said the company’s sales generated from China for 2013 are expected to grow by 10 to 20 percent from a year earlier.
At the same time, Merida said the company has been “very upbeat” about the uptrend in the China market, adding that the particular market will be Merida’s focus in development over the next three decades.
“To my knowledge, the Chinese authorities are gearing up for advocacy of eco-friendly products, and promotion of cycling has become part of these efforts,” Huang said.
“The average selling price (ASP) of bicycles in China is increasing, and the two companies are benefiting from this favorable trend,” Huang said. The local media reported, for example, that Merida’s ASP in China stood at 2,500 Chinese yuan (US$403) in 2012, and the price is trending higher this year.
The reports also said that Merida’s sales in China totaled 870,000 units in out of its total sales of 2.27 million units in 2012, and that the figure is expected to top 1 million units or even hit 1.1 million units in 2013.
Huang said Giant is expected to post about NT$9.5 in earnings per share (ESP) for 2013, up from an estimate of NT$8.1-NT$8.2 for 2012, while Merida is likely to record NT$9.1-NT$9.2 in EPS for 2013, compared with a 2012 prediction of NT$7.9-NT$8.0.
Huang said the current Taipei bicycle trade show, the largest of its kind in Asia, also serves as a catalyst for the optimism, as the event has caught the attention of many investors in the local bourse.
The show, which will run through March 23, has 1,103 exhibitors, including 812 local firms, and is expected to attract 7,000 foreign buyers.