Investor Conference Call Regarding the Impact of Newly Proposed US Tariff
Conclusion of the completed conference call:
The US Trade Representative published three lists of imported goods from China that will be subject to trade tariffs of 10-25% on 3 April 2018, 15 June 2018 and 11 July 2018. Based on our assessment, our key product, SD-WAN routers, fall into the list published on 11 July 2018 and thus are subject to 10% tariff. We believe the lists published on 3 April 2018 and 15 June 2018 are not relevant to us.
Plover Bay Technologies has solely used contract manufacturers from Taiwan in the past. In 2016, we began to allocate the production of low to mid-end SD-WAN routers to a PRC factory owned by a Taiwanese manufacturer for cost reduction and diversification against risk of supply chain disruptions in Taiwan. The proposed tariff will affect US-bound products manufactured in this PRC factory. However, we believe the financial impact from the proposed tariff will be insignificant.
First, since 2017, we began parallel production in both PRC and Taiwan for some of our products. Therefore, we have the ability to shift the manufacturing of US-specific models from the PRC factory to other Taiwanese contract manufacturers, while shifting non-US models to the PRC factory.
Second, as part of our ongoing efforts to improve our competitiveness, we have been expanding our purchasing team in Taiwan to leverage their expertise in supplier sourcing and cost reduction. We are seeing steady progress in this regard, and this will also help mitigate any impact from any tariff-driven cost increases.
In conclusion, the impact from this 10% tariff will be negligible to us. We will continue to monitor any further development from the trade war and take appropriate measures to minimize any impact. Our long term fundamentals remain sound and we will turn every challenge into an opportunity to improve our operations.
Plover Bay Technologies (Stock code: 1523 HK) cordially invites you to a conference call on 12th July 2018, 8:30AM (Hong Kong time) for a brief update on the impact of US tariff. Please find the dial in details below:
Mr. Alex Chan, Chairman
Mr. Keith Chau, CEO
Time & Date:
Hong Kong Time 8:30AM
12 July 2018 (Thursday)
Feel free to call (852) 2990 7667 if you have any questions. We look forward to speaking to you.
Plover Bay Technologies Limited