【CHEM】Focuses on Three Key Hydrogen Sectors, Secures NT$30 Billion in New Green Energy Orders

Date: May 27, 2024
Source: Central News Agency
Reporter: Rongfeng Zhong

Chung-Hsin Electric & Machinery (CHEM) held its annual shareholders' meeting this morning at its Linkou facility in Guishan, Taoyuan. Chairman Chiang Fu-Nian announced that the company is advancing its hydrogen energy business along three key axes. By the end of this year, its hydrogen power modules are expected to be deployed in Taiwan's largest public bus fleet, with plans to expand into the Thai and Indian markets in 2025. Meanwhile, CHEM has secured NT$30 billion in new orders for green energy engineering and equipment this year.

Expanding Renewable Energy Investments
Chiang emphasized that small and medium-sized enterprises (SMEs) are driving strong demand for green energy. CHEM will continue to prudently evaluate investments in offshore wind and solar power plants to meet market needs.

Hydrogen Energy Business Focus
CHEM's hydrogen strategy is centered on three major areas: hydrogen-powered vehicles, on-site hydrogen production, and hydrogen power generation. The company has already established a track record in hydrogen power modules and expects to integrate them into Taiwan’s largest bus operator's fleet by year-end. Expansion into Thailand and India is scheduled for 2025. In hydrogen power generation, CHEM has partnered with Tunglit Logistics to supply hydrogen-generated electricity.

Strengthening Heavy Electrical Equipment Capacity
In the heavy electrical equipment sector, Chiang acknowledged that CHEM's high-voltage gas-insulated switchgear (GIS) has benefited significantly from Taiwan Power Company's Resilient Grid Plan. The company has expanded its manufacturing capacity from two plants to nine to meet surging domestic demand, operating at over 120% utilization. When asked about potential expansion in the U.S., Chiang stated that the company is closely monitoring global industry trends and U.S.-China relations before making any strategic decisions.
International Market Expansion

CHEM has already partnered with Taiwanese transformer manufacturers and is on track to begin shipments to the U.S. by the end of this year. Currently, exports of power equipment account for less than 10% of CHEM's total heavy electrical business, but the company is actively exploring growth opportunities in overseas markets.

Strong Order Backlog and Growth Outlook
As of Q2 2024, CHEM's total order backlog stands at NT$41 billion. In Q1 alone, the company secured NT$12 billion in new engineering and EPC contracts from private sector clients and Taiwan Power Company. For the second half of the year, CHEM anticipates an additional NT$10 billion in new orders, including NT$5 billion in offshore wind EPC projects and private-sector energy storage plants. Total new orders for 2024 are expected to reach NT$30 billion.

Diversified Business Strategy for Long-Term Growth
To ensure sustainable growth beyond the Resilient Grid Plan, CHEM is diversifying into energy storage operations, hydrogen energy, and power plant investments. The company aims to generate stable, long-term revenue for the next 20 years through power plant development, including ongoing investments in solar photovoltaic projects.

Financial Outlook
Analysts project CHEM's gross margin to reach 30% in 2024, with steady quarter-over-quarter growth in both profitability and operations. The company's annual revenue is expected to hit NT$24 billion, reflecting a 10% year-over-year increase, marking a new all-time high.