汇丰银行-台湾休闲设备-taiwan bicycles：2q17 results preview，expect another weak quarter-20170712-hsbc.pdfVIP

Flashnote 12 July 2017   Taiwan Bicycles EQUITIES LEISURE EQUIPMENT PRODUCTS 2Q17 results preview: Expect another weak quarter Taiwan  Our 2Q17e net profit forecasts for Merida and Giant are 49% Jeremy Chen* and 16% respectively below consensus Non-tech Analyst HSBC Securities (Taiwan) Corporation Limited jeremy.cm.chen@.tw  Bike sharing impact deepening and could linger +8862 6631 2866  Retain Reduce ratings on Merida and Giant * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Merida We expect Merida to report 2Q17 net income of TWD255m (EPS TWD0.85), down 15% q-o-q and 41% y-o-y, or 49% below street consensus estimate of TWD497m. We think consensus 2Q17e GPM of 16.8% is overly optimistic in light of unfavourable FX, sharply lower shipment volume, and higher material cost. We forecast 2Q17 GPM to come in at 12.8% vs. 1Q17’s 13.5%. We also expect equity income from Specialized to fall by 56% to TWD85