Dynamic Precision Expects Better Sales of Golf Club Heads This Year Than Last

With efforts on restructuring orders and downsizing gradually paying off, Dynamic Precision Industry Corporation, a sizable Taiwanese contract manufacturer of golf club heads, expects better sales this year than last year, according to the president, C.C. Tsai.

After several quarters of losses, Tsai pointed out that Dynamic Precision had decided to shut down its Guangzhou plant in China early last year as part of its turnaround strategy, given the plant's profitability had been severely undermined by excessive product complexity, while the increasingly difficult investment environment had hampered growth. Meanwhile, the president furthered, the company has also commenced improving management at its flagship factory in Kaohsiung, southern Taiwan.

Such efforts have paid off, as the maker began making profits in Q2, 2013 right after writing off extra losses of around NT$97 million (US$3.23 million) from the abovementioned factory shutdown, and finished the whole year with net profits of NT$13 million (about US$433,333) and EPS (earnings per share) of NT$0.21.

Another main factor driving Dynamic Precision into black, Tsai indicated, has been to restructure orders by focusing on contract manufacturing of higher-end products, hence  raising gross profit rate to a record high of 22%  after reversing from negative in the second quarter of last year.

Dynamic Precision leads its Taiwanese counterparts, including Advanced International Multitech Co., Ltd. and O-Ta Precision Industry Co., Ltd., with EPS of NT$1.22 in the first quarter of this year.

As to outlook for the rest of this year, Tsai is optimistic that Dynamic Precision will remain profitable in each of the remaining quarters, primarily because of a constant influx of orders from its largest customer, TaylorMade,  who is trying to boost its global market share and scheduled to launch new products in the third quarter, despite market climate expected to remain gloomy in the second quarter through the third quarter.

Additionally, Dynamic Precision's well-honed R&D and production capability also underpins  the president's optimism. Tsai emphasized that his firm has greatly improved the cycle time of  R&D and production process for a new product to only three weeks from three to five months. So the firm has worked with TaylorMade to develop 7-8 new product models so far, all for launch in the second half of this year.

To coordinate with customer's new product launch, Dynamic Precision has just expanded daily output of its three production lines of golf clubs, through improving equipment, from 500 units to 1,000-1,200 units each, having already invested NT$12 million (US$400,000) to set up a new one with maximum daily capacity of 1,200 units. (SC)

Dynamic Precision's Performance Q2, 2013-Q1, 2014
Quarter	Q2, 2013	Q3, 2013	Q4, 2013	Q1, 2014
Revenue	NT$438 M.	NT$509 M.	NT$626 M.	NT$536 M.
Net Profits	NT$0.02	NT$0.32	NT$0.77	NT$0.77
EPS	NT$0.02	NT$0.50	NT$1.21	NT$1.22

Source: Market Observation Post System