Insight

For our special Made in Taiwan feature we invited our Taiwanese media partner Fastener World to provide an update regarding the current situation within Taiwan regarding Covid-19, as well as how fastener companies have been impacted.

When the Covid-19 outbreak first happened, Taiwan was one of the leading countries in the world in its approach. The country was well prepared for such a pandemic having been one of the country’s worst hit by SARS in 2003.

After the impact of SARS, Taiwan set-up its Central Epidemic Command Center (CECC) to manage future outbreaks. This meant the country was able to react quickly to Covid-19 and initially had significantly less cases than most countries in 2020, even without going into a national lockdown. However, in recent weeks there was a surge in cases. The reported daily number of cases peaked at 700 in May, but in June at the time of writing it was down to 100 to 200 – mostly within Taipei City to the north of the island. The number of cases within other regions of Taiwan have been sporadic in either single or double-digits. CECC is already on high alert and aware of the Delta and Lambda variants, and acknowledges a high risk of their invasion, which is why it is bulking up the defense line to stall or more preferably prevent them entering the country – creating a window of opportunity to complete vaccination.

Taiwan has therefore entered a Phase 3 self restriction mode, where the Taiwanese government has called for the citizens of the whole nation to restrict themselves at home, cancel transport tickets and refrain from any unnecessary outdoor activities, which the vast majority have been willing to comply with – meaning there has been no need to issue a citywide or national lockdown (Phase 4)
as of now.

To combat the rise in numbers, Taiwan is counting on vaccine supply from the USA and Japan, which the country will receive over the following months. It is also developing its own vaccine, which is expected to be rolled out no later than August if everything goes to plan.

Even with the current growth in cases, foreign investors are still optimistic for Taiwan’s ability to tackle the virus, with investments within industrial parks remaining strong. Taiwan’s Gross Domestic Product (GDP) has been growing at a steady rate throughout the pandemic, with the recent increase in domestic transmissions not expected to change much if containment policies succeed, reports the National Development Council (NDC).

Taiwan News reported1 that if the surge is contained, the NDC believes economic growth for Taiwan will be only 0.16% less than originally predicted for 2021. However, if the pandemic remains serious until Q3 2021, the impact on economic growth could expand to 0.53%, the Central News Agency Taiwan reported. NDC Minister Kung Ming-hsin said the cabinet’s extra Covid-19 relief budget of NT$210 billion (€6.2 million) was sufficient to support local business and to account for 0.9% of GDP growth.

The Taiwanese government had previously estimated that the economy had grown by 8.16% during Q1 of 2021, which was the fastest pace since the final quarter of 2010.

Taiwan’s exports grew 38.6% in May2 from a year earlier as countries around the world slowly come out of lockdown and looked to bounce back from the pandemic. Taiwan’s Ministry of Finance reported that exports in May totalled US$37.41 billion (€31.5 billion), while imports rose by 40.9% from a year earlier to US$31.25 billion. This left Taiwan with a trade surplus of US$6.16 billion for the month.

The export growth in May was the third straight month Taiwan’s exports had increased by double-digits. In March, total exports increased by 27.1% year-on-year, while in April they grew by 38.7%.

Figures from January to May showed that exports were up 30.2% from a year earlier at US$170.32 billion, and imports increased 26% from a year earlier to US$143.61 billion. So far for the year, the country has a trade surplus of US$26.7 billion.

The biggest contributor to export figures in May was electronic components at US$13.27 billion, a 29.6% increase compared with the same month in 2020. According to Taiwan’s Ministry of Finance, this was followed by information, communication, and audio video equipment at US$5.1 billion; metals at US$3.16 billion; plastics/rubbers at US$2.81 billion; and machinery at US$2.48 billion.

A sector that has been performing particularly strongly is the semiconductor industry, which has been a strong pillar and GDP contributor to Taiwan’s economy – especially since the US moved to strengthen ties with Taiwan alongside Japan. This is underlined by the exponential stock growth of TSMC.

The same growth has been seen in healthcare and would have continued in the construction industry, which was seeing increases in property prices, but the recent surge in cases has seen the housing market stall, which has impacted domestic demand for construction fasteners.

Financial reports for listed Taiwanese fastener companies 

Unsurprisingly, the end of 2019 is a dividing line for Taiwan’s fastener sales, with it being followed by the onset of the Covid-19 outbreak, with fastener companies reporting reduced sales as of the second quarter of 2020 until the end of the year.

On the right is a roundup of the top ranking Taiwanese companies based on their sales revenue for 2020.

Tycoons Group dominated the ranking in 2019 with the highest revenue but fell around 30% in 2020 due to the pandemic and was replaced by Tong Ming Enterprise at the top of the ranking. Tong Ming already made it to NT$8.8 billion revenue in 2019, and continued progressing 4% to NT$9.1 billion in 2020 when the pandemic hit.

One of the entrants in the chart with the largest growth margin in revenues is OFCO Industrial, up 59% from NT$1.1 billion to NT$1.8 billion. Next is Sheh Fung Screws Co Ltd growing 24% from NT$1.8 billion to NT$2.2 billion in revenue but with a smaller EPS growth margin. Sheh Fung is followed by Chen Nan Iron Wire Co Ltd with revenues up 15.1% from NT$1.5 billion to NT$1.8 billion.

The entrant with the largest revenue drop is the Asian aerospace fastener company NAFCO, which plummeted nearly 40% in revenue. This is not as a surprise, as it is well known that the world’s aviation industry was severely impacted by the pandemic last year. NAFCO managed to pull itself through and it still has a shot at ‘rising like a phoenix from the ashes’.

Overall, Taiwanese public listed fastener companies shared a common impact on revenues and profits in 2020. Indeed, the Taiwanese fastener companies were shrouded in a sentiment of market depression, but as they move into July 2021 and look back, they find themselves fortunate to have a stronger base and a continuously operating supply chain to get through that difficult time.

The market sentiment now is different from last year’s. Steel demand and price are surging, as are the inquiries from abroad. The top priority now is to grab as much as what the virus has taken from Taiwan.