Taiwan Health Food Maker TCI Mulls Acquisition to Expand Market

(Bloomberg) -- TCI Co. is in talks with a health food maker about a potential acquisition this year that’s aimed at diversifying its production base, the company says.

The company hopes consumers will be more interested in the products it makes if it has factories outside China and Taiwan, executive deputy general manager William Liao said in an interview on April 17. TCI is a contract manufacturer of dietary supplements, health drinks and facial masks for other companies, according to its website.

“China will be our growth driver in the future as it is getting older and richer,” he said. “Our growth will benefit from China’s consumption upgrade.”

Taiwan Health Food Maker TCI Mulls Acquisition to Expand Market

Liao said TCI may get a deal done this year if all goes well, but declined to provide details, including the target company’s name and location, or the planned size of a deal. TCI plans to use its own cash for the deal, and has NT$4 billion ($130 million) on hand, he said.

The company paid $29 million in October for a minority stake in Shanghai Baiyuete Biotechnology Co., according to data compiled by Bloomberg.

The average analyst price target for TCI is NT$585.75, implying a gain of 30 percent from Monday’s close, according to data compiled by Bloomberg. That’s the third biggest upside among 104 Taiwan-listed companies with a market cap more than $1 billion and covered by at least seven analysts as of April 22. The company has 13 buys, and no hold or sell ratings.

TCI rose 0.6 percent at the close, paring its drop this year to 13 percent.

Other comments and data:

  • TCI’s 1Q sales rose 102.6% y/y to NT$2.58 billion, according to an exchange statement
  • The company wants to reach annual sales of NT$22.2 billion by the end of 2022, Liao said. Guidance for this year includes 30% growth for sales, with margins of 40-42%

©2019 Bloomberg L.P.