11.01.2001
Peddling into China

• Cumulative 3Q01 revenues of NT$3.9bn (down 14% YoY) and operating loss of NT$6m confirm the weak operating environment for bicycle makers. After-tax profits came in at NT$515m, down 35% YoY. However, these figures could be misleading as Taiwan accounts for only 25%-30% of Giant’s production, revenues and earnings - under Taiwan GAAP, group earnings are only consolidated once a year. Group revenues as at end-3Q01 actually grew 7% to NT$11.4bn. Looking ahead to 2002, China will continue to drive group shipments up 9% YoY, or twice the worldwide growth rate, as Giant looks to double its market share there (from 3% currently) over the next two years. P/E and P/B multiples are both at historical lows of 10.7x and 1.7x, respectively, however we believe all the bad news has already been discounted. For longer-term investors, we believe Giant will Outperform over a 12-month horizon.