Taiwan-based Auto-parts Maker Y.C.C. Announces Acquisitions in China

Y.C.C. Parts Mfg. Co. Ltd., a Taiwan Stock Exchange (TAIEX)-listed automotive body-parts maker, recently publicized plans involving  acquisition projects in China with total investment exceeding NT$1.6 billion (US$53.3 million), including allowing the acquisition targets to eventually carry out initial public offering (IPO) in Taiwan, according to Lin Yi-hung, president of Y.C.C.

Lin stressed that Y.C.C. envisions to become a major auto-parts group by 2018 holding three to five listed auto-parts manufacturing affiliates, which will enable the company to pave the road to generate annual earnings equaling at least the firm's capitalization.

Y.C.C., according to Bloomberg.com makes and sells auto plastic parts in Taiwan and internationally, including bumpers, grilles, head lamp mounting panels, valances, head lamps, and others, which are sold in North America, South America, Europe, and Asia, being founded in 1986 and based in Chunghua County, Taiwan. The maker is recognized as a major maker of aftermarket (AM) replacement automotive body parts that went public in 2012. Its stable growth in recent years has motivated its decision to implement investment projects in China starting this year.

Earlier this year, Y.C.C. announced to acquire about 75.8 percent stake in a Samoa-based holding firm which fully owns the shares and operational right of Changshu Guanlin Automotive Trim Co., Ltd. in China. Guanlin is a Tier-2 original equipment (OE) supplier of automotive interior trims and airbag covers to international automakers such as Land Rover, Jaguar and many others.

The investment said investment began returning profits to Y.C.C. from March, lifting Y.C.C.'s monthly revenue past NT$150 million (US$5 million) in the month, higher than the monthly average of NT$120 million (US$4 million) in 2014. The Taiwanese auto-parts maker had revenue of NT$1 billion (US$33.3 million) in 2014, generating net earnings of about NT$75 million (US$2.5 million), with 2015 revenue projected to increase to about NT$1.3 billion (US$4.3 million).

To further expand its business, Guanlin recently tied up with a Taiwanese partner to set up an auto-parts manufacturing joint venture (with initial capitalization of about US$8.2 million) in Liaoning Province, northeast China. The new venture, in which Guanlin holds an 80 percent stake, will supply plastic auto parts to Chinese automakers, such as BMW Brilliance Automotive, Changchun FAW, etc., on an OE basis. The new plant is scheduled to kick off production by February 2016, with Gualin's annual revenue projected to outstrip NT$2 billion (US$66.7 million) once the new plant achieves full-capacity production.

Guanlin, according to industry insiders, will become Y.C.C. group's first overseas subsidiary to carry out IPO in Taiwan that is planned for 2018.

Lin added that two other acquisition projects are under way to cost altogether about NT$1 billion (US$33.3 million), with the two targeted enterprises to, if all goes to plan, to also be listed on the TAIEX. The president stressed that Y.C.C. currently is debt-free and so has sufficient financial capacity to carry out such acquisitions, with the targets to be exclusively companies engaged in automotive-related business and posting profit.