Kian Shen Eyes Lucrative ROI from Chinese Subsidiary in 2014

Kian Shen Corp., a Taiwanese original equipment (OE) vehicle-frame supplier with operations in Taiwan and China, recently said that it expects lucrative return on investment this year, as its Chinese venture Guangzhou NTN, an OE supplier of drive shafts, bearings, constant velocity (CV) joints etc., has won flooding orders from Chinese and international automakers.

Guangzhou NTN is scheduled to expand production capacity by 30% this year, after winning Nissan North America's orders for drive shafts.

In Taiwan, Kian Shen's revenue is driven by recovering commercial-vehicle sales and rising demand for truck chassis and bus frames.

Due to stagnant truck and bus demand in Taiwan last year, Kian Shen's core revenue on the island saw a minor decline, but the company's 2013  profitability remained high thanks to strong growth in its Chinese operation. For 2013, Kian Shen's earnings per share (EPS) is estimated at NT$4.3 (US$0.14), compared to NT$4.4 (US$0.15) in 2012.

Kian Shen is an affiliate of domestic Yulon Group. In China, Kian Shen has invested in four affiliates, including Guangzhou NTN, Fuzhou Fuhsiang (frame parts, metal parts), Xiamen Kinglong Kianshen Structure Products (bus frames), and Beijing NTN-Seohan Driveshaft Co., Ltd. (drive shafts).

Guangzhou NTN has been the most profitable Chinese subsidiary of Kian Shen, supplying drive shafts and other key parts to mainly Japanese automobile ventures in China, including Nissan and Honda, with its largest customer being Dongfeng Nissan, which sold about 920,000 new cars in 2013. Guangzhou NTN's second-largest Chinese client was Beijing Hyundai, which also scored record sales volume in China in 2013.

Institutional investors said that Guangzhou NTN reported cumulative earnings of more than NT$300 million (US$10 million) in the first three quarters of 2013, and for 2013 it is expected to contribute ROI of about NT$180 million (US$6 million) to the Taiwanese parent, or equal to NT$2.6 (US$0.09), more than 60% of Kian Shen's overall earnings.

Guangzhou NTN is scheduled to complete its eight-stage capacity expansion plan this year, without more room for expansion in the factory in Guangzhou.

Kian Shen said that the Chinese automobile market has been expanding, and both Guangzhou NTN's major customers Dongfeng Nissan and Beijing Hyundai have announced ambitious sales goals of one million new cars in 2014.