Shares of the nation’s No. 1 nonwoven fabrics manufacturer, Nan Liu Enterprise Co (南六), soared 6.88 percent yesterday as analysts forecast that its quarterly revenue would grow 35.43 percent sequentially next quarter after a production line for wet wipes becomes operational.
The company’s shares rose to NT$171 yesterday, while the TAIEX increased 0.91 percent.
Nan Liu’s revenue is expected to rise to NT$1.53 billion (US$51 million) next quarter from NT$1.13 billion this quarter, according to a First Capital Management Inc (第一金證券投顧) report published on Feb. 13.
A new production line for wet wipes is due to start operating next month and is expected to increase the firm’s revenue by NT$40 million a month, First Capital analyst Yu Pei-yu (游佩諭) said in the report.
Yu said the first quarter of the year is the slow season for the company because of fewer working days, while the second quarter is usually a peak season for the company’s sales of wet wipes.
Sales of wet wipes accounted for 34 percent of the company’s revenue last year, according to Nan Liu data.
Nan Liu is the largest contract wet wipe maker in Taiwan, accounting for a 60 percent market share in Taiwan and a 40 percent market share in China, the company said.
“Another reason for Nan Liu’s revenue to post sequential growth in the second quarter is because 30 percent of its clients are from Japan and they normally reduce their purchases in the first quarter to avoid a high inventory level on March 31, when the fiscal year in Japan ends,” Nan Liu finance department manager Chuang Chun-chin (莊春金) said by telephone yesterday.
Last year, the company reported revenue of NT$4.57 billion, up 23.44 percent from NT$3.7 billion the previous year, according to a company filing to the Taiwan Stock Exchange.
The company is optimistic about this year because its clients have increased their orders and the Chinese government has terminated its one-child policy, which is expected to boost the sales of diapers in China, Chuang said.
The company makes nonwoven polypropylene for diapers for Japanese firm UniCharm Co, Procter & Gamble Co and Kimberly-Clark Corp, Nan Liu said, adding that sales of nonwoven polypropylene accounted for 19 percent of the company’s revenue last year.
The company plans to launch two production lines for nonwoven polypropylene in August, which is expected to increase its shipments of the product by 650 tonnes per month to 1,600 tonnes per month, it said.