Shares dip on news Giant sought supplier payment postponement

Shares in Giant Manufacturing sold off this week on reports in Taiwan that the company’s Head of Global Manufacturing sent a letter to suppliers seeking a postponement of payment.

Local media in Taiwan reports that the letter sent to suppliers sought a 45-day postponement of payment to those OEMs who would have been due to ship goods starting this month (December) and into March 2023.

At the time of writing, the share price has come back a few points, having dipped near 10% on Tuesday following the reports. Rival listed label Merida’s share price caught a cold off the news, similarly dipping from around 190 to 174.50 before rebounding.

The payment postponements are attributed to now well-reported weakening demand globally, where supply chains have more than caught up and there exists a glut of goods in most segments, most notably at the volume heavy lower-end of the market. This comes timed to a widely felt cost-of-living crisis in many countries and inflation still running hot, despite minor falls.

The company is said to have been granted some flexibility on orders and payments, with specific reference to a large Japanese company (reasonably guessed to be Shimano).

In a statement to the markets Giant announced the completion of a rights issue and has since issued convertible corporate bonds, raising approximately NT$6.75 billion to support the firm with working capital. The business’s operations remain normal.

As most in the global bike business are, Giant added that it remains bullish on the longer-term view of the global bicycle business and expects that inventory levels will stabilise to a more appropriate level in the first half of 2023. As for the first three quarters of 2022, the manufacturer saw net profits up 16.5% on the year prior, hitting NT $5.63 billion.