2017-12-06 | Editor:et_editor 576 pageviews

Taiwan’s Welldone Group Broke Even in First Three Quarters of 2017; Developing the Company’s Energy Ventures Requires More Time

Taiwan’s Welldone Group broke even from 1Q17 to 3Q17 in terms of operation. The company’s subsidiary units related to digital sales, telecommunications-logistics services, and online entertainment businesses posted profits during these three quarters. However, its green energy ventures experienced losses as more capital was spent on their development. On the whole, Welldone’s performance over the 1Q17-3Q17 period was not much different from a year ago.

Bullish on the long-term outlook of electric vehicles, Welldone continues its expansion into the markets for electric bicycles and scooters. As for its projects in Mainland China, a period of time is still needed before they can produce results and show up as contributions to the revenue stream.

The core business of Welldone’s parent company is the sales of prepaid mobile phone cards and virtual currency cards for online games. The parent company’s revenue growth is primarily driven by the continuing market share expansion for phone cards, especially within the customer group of foreign guest workers. There are also subsidiaries across a wide range of industries, including units engaging in online retailing, sales of digital content, and sales of concert tickets. The online retail unit is noted for becoming an import agent of foreign beauty products starting in 2016, while the digital content and multimedia units are well-recognized players in the licensing of TV series and the marketing of major concerts in Asia.

Welldone’s green energy ventures are led by its two subsidiaries Welltech Energy Inc. (WTE) and TD Hitech Energy Inc. WTE manufactures battery packs for consumer electronics in China and is in the process of transforming into a supplier of battery packs used in electric vehicles. As for TD Hitech, the company is currently responsible for developing battery packs for electric bicycles and scooters. TD Hitech is also working on battery swap stations for these vehicles.

A breakdown analysis of the total revenue earned by Welldone’s parent company and all its subsidiaries during the first three quarters of 2017 shows that digital services from the parent company represented a share of 61% in the total revenue. The share of the green energy ventures (i.e. WTE and TD Hitech) in the total revenue reached 29%. The shares of the telecommunication-logistics businesses and the digital multimedia (entertainment) operations accounted for 7% and 3% of the total revenue, respectively.

While the rest of Welldone’s subsidiaries saw steady revenue growth for the three quarters, its green energy units suffered continuing losses. The losses from WTE and TD Hitech for the period came to a total of around TWD 90 million, whereas the rest of Welldone’s subsidiaries achieved a total revenue of around TWD 70 million. Welldone’s average EPS from 1Q17 to 3Q17 stayed at negative TWD 0.06, which was only slightly lower than the average EPS of negative TWD 0.02 for the first three quarters of 2016. Welldone’s BVPS at the end of 3Q17 was TWD 12.63.

Welldone is optimistic about the outlook of the electric vehicle market and continues to invest in the development of high-power battery packs. Recognizing that Taiwan-based companies have faced challenges in trying to directly enter the supply chain for four-wheeled electric cars, Welldone intends to first establish a strong presence in China’s market for batteries used in two-wheeled vehicles. While most electric bicycles and scooters in China are still being powered by lead-acid batteries, the demand for lithium-ion batteries in this application is growing as their costs have improved in recent years. Furthermore, the Chinese government promotes the switch to lithium-ion batteries for electric vehicles as they are more environmentally friendly and lighter in weight. Welldone expects China’s market for lithium-ion batteries used in two-wheeled electric vehicles to take off in the near future and are working closely with partners in the industry to capitalize on this opportunity.

Welldone’s 1Q17-3Q17 revenue totaled TWD 2.234 billion, showing a year-on-year drop of 9.7%. The company maintains a trend of slight declines in its revenue results over the recent years as its green energy units are still spending to build themselves up. The rest of Welldone’s subsidiaries, on the other hand, continues to post steady revenue growths.

 

(Photo courtesy of Welldone Group.)

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