Duchuang/Shenzhen Business Daily reporter Dai Guangjun
On April 28, the Taiwan Stock Exchange listed company Huafu Technology released a major message saying that due to a fire in the mainland subsidiary Kunshan Handing at the end of last month, the work was suspended in order to cooperate with the local government's security rectification actions. Huafu estimates that the combined revenue in May and June will decrease by 57% and 54% respectively. If some of the production capacity is transferred, it is estimated that the production capacity this year will be reduced by about NT$1.55 billion compared with last year.
On the morning of March 31, an explosion and fire broke out on the northwest side of the CNC workshop of Kunshan Handing Precision Metal Company caused casualties. In order to strengthen and implement production safety and fire safety, the Kunshan government plans to conduct a major inspection and rectification of production safety in the entire region starting from May. Before the investigation and rectification is completed, the production activities will be suspended in Kunshan Handing's magnesium, aluminum, zinc, and titanium processing process, and the resumption of work will depend on the operation progress of the local administrative department.
Huafu said that during the major inspection and rectification campaign for safety production, Kunshan Handing announced to employees on April 26 that he could choose to resign on his own or continue to remain in office. If 75% of the basic employees choose to leave on their own, the company is expected to incur a fee of approximately NT$130 million.
Huafu said that since the company has no way to judge the local government’s approval of the resumption of work, before fully resuming work, it will automatically dispatch production capacity so that the Ma'anshan factory can accelerate production support, hoping to minimize the impact on the company’s business and customers as much as possible.
According to reports, the fire incident had a great impact on Huafu's operations. Huafu predicts that based on the monthly revenue of the same period last year, it is estimated that the consolidated revenue from May to June may decrease by about 57% and 54%, with the reduction amount being approximately NT$170 million and NT$160 million. Huafu's production capacity in the past three years was NT$3.204 billion, NT$3.391 billion and NT$4.004 billion respectively. Assuming that the local government allows Kunshan Handing to transfer part of its production capacity to the Ma'anshan plant by the end of May, it is estimated that the possible production capacity this year will be approximately NT$2.45 billion, and it is estimated that it may decrease by NT$1.55 billion.
In addition, Huafu's production in the past three years was 9.684 million, 18.448 million, and 27.474 million. Under the same as the above assumptions, it is estimated that the output this year will be approximately 15.617 million, and it is expected that it may decrease by 11.857 million.
Huafu Technology is a Taiwanese listed enterprise with a history of more than 60 years. It mainly serves the processing and manufacturing fields of light metal such as magnesium aluminum alloy , and provides customers with vertical integrated OEM services from mold development and design, magnesium alloy injection, magnesium aluminum die casting, CNC processing , coating and assembly. Its main production base is located in Kunshan, mainland China.
