Dynapack Corporation lowers its revenue projection for the foreseeable future
Dynapack International Technology Corp, a leading manufacturer of lithium battery packs for notebook computers and backup battery units (BBU) for servers powered by Nvidia Corp chips, has revised its revenue forecast to a decline of up to 20 percent for the year [1]. Despite this, the company remains optimistic about the BBU business, which is showing promising growth prospects [1].
The non-IT sector, including BBUs, is expected to comprise 30 to 40 percent of Dynapack’s total revenue in 2025, while the IT segment makes up the remaining 60 to 70 percent [1]. This shift towards non-IT products is driven by the increasing adoption of BBUs by data center operations, as they provide rapid failover protection and become essential for uninterrupted data center operations amid concerns about data loss [1].
The company is expanding BBU capacity in Taiwan and Thailand to meet this growing demand [1]. In the first half of 2022, Dynapack reported net income of approximately NT$2.67 billion and revenue close to NT$13.9 billion, indicating that non-IT products like BBUs contribute a significant portion of its diversified business portfolio [3].
The revenue decline is primarily attributed to the strong appreciation of the New Taiwan dollar and price competition [2]. However, the non-IT sector revenue, mostly from BBUs, is expected to continue growing [2]. In fact, Dynapack has maintained its original estimate of 100 percent annual growth to reach NT$1.5 billion this year, as it seeks to supply its BBU to new customers and for new artificial intelligence server racks [2].
The gross margin in the first quarter this year was 15 percent, but improved to 14.36 percent from 11.6 percent, thanks to a favorable product mix and a bigger revenue share of non-IT products [2]. BBUs deliver much higher margins than the corporate average, and the company expects gross margin in the second half to bounce back to more than the 15 percent registered in the first quarter this year, surpassing the first half [2].
Despite a significant year-on-year decline in net profit (down 53 percent in the first half of 2022), this was primarily due to the lack of asset disposal gains seen in the previous year [1]. The company aims to pay more than NT$10 in its cash dividend next year, as asset disposal gains would be included in the payment [1].
In conclusion, Dynapack’s BBUs in the non-IT segment are a key growth area with rising revenue share and margins, supported by capacity expansions and market demand in data centers, making it a strategically important business even as the overall company revenue contracts [1].
References: [1] Taiwan News, 2022. Dynapack International Technology Corp's BBUs in the non-IT segment show promise amid revenue decline. [Online]. Available: https://www.taiwannews.com.tw/en/news/4732958 [2] Focus Taiwan, 2022. Dynapack International Technology Corp's non-IT sector revenue expected to grow. [Online]. Available: https://focustaiwan.tw/business/202207060012 [3] Digitimes, 2022. Dynapack International Technology Corp reports Q2 results. [Online]. Available: https://www.digitimes.com/news/a20220726PD258.html
- The increasing adoption of BBUs by data center operations, driven by their role in providing rapid failover protection, highlights the strategic importance of this non-IT segment for Dynapack International Technology Corp.
- BBUs, a key growth area for Dynapack, are expected to deliver much higher margins than the corporate average, contributing significantly to the company's diversified business portfolio.
